Reuters: Bankruptcy News: Alabama's Jefferson County votes to skip bond payment

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Alabama's Jefferson County votes to skip bond payment May 22nd 2012, 22:12 By Melinda Dickinson BIRMINGHAM, Ala. | Tue May 22, 2012 6:12pm EDT BIRMINGHAM, Ala. May 22 (Reuters) - County legislators for Alabama's bankrupt Jefferson County voted unanimously on Tuesday to skip a $15 million payment due Oct. 1 on about $200 million of Jefferson County general obligation warrants. The cash-strapped county declared bankruptcy in November with slightly more than $4 billion in debt, which is the largest municipal bankruptcy in U.S. history. Last month, Jefferson County skipped - for the first time - a $15 million GO bond payment as officials said they needed the money to pay for basic government services. Last week, Alabama state legislators turned aside a campaign to restore a local jobs tax that would have provided $60 million in revenue - a loss that county commissioners said will require more sharp cuts in Jefferson County's spending. "If there's no special session or help from the Legislature between now and October 1, I'm going to recommend this money be transferred to the general fund to help provide services for the citizens of Jefferson County," County Manager Tony Petelos said at a commission meeting. HURT BY LOST JOBS-TAX REVENUE The small jobs tax on wages earned in the area had provided about a quarter of the budget for the county, Alabama's most populous. But the tax was declared unconstitutional in 2011. Officials said they need to cut $40 million from current annual spending. They expect the next fiscal year's budget to total $180 million. The lost revenue from the jobs tax was a major reason why Jefferson County had to file for Chapter 9 bankruptcy. The county defaulted on its $3 billion of sewer system debt in 2008, but was current on its GO debt until last month. Overwhelmed by the massive sewer-system debt, Jefferson County filed for bankruptcy after the unwinding of a tentative agreement with creditors that might have cut the county's debt load by $1 billion. County finances had also been damaged by political corruption and the loss of the jobs tax. Link this Share this Digg this Email Reprints

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