By Brandon Moseley
Alabama Political Reporter
On Thursday, the Alabama Senate passed SB567 by a margin of 16 to 11. The bill, titled the Alabama Financially Distressed Counties Act, was authored by Senator Jabo Waggoner (R) from Vestavia. Sen. Waggoner has issued a written statement on the Senate’s passage of the massive new tax increase package. The bill if passed by the Alabama House and signed by Governor Bentley gives the Jefferson County commission unprecedented new powers to raise taxes on workers’ pay checks. It also gives the Jefferson County Commission the power to raise sales taxes countywide by as much as 1% once the current educations sales tax sunsets. It also gives the Commission sweeping new powers to raise gasoline taxes, rental taxes, storage taxes, and applies the occupation tax to licensed professionals like doctors, lawyers, CPAs, engineers, etc. for a total of about $62 million in anticipated revenues.
Sen. Waggoner’s written statement said that the law gives Jefferson County the: “latitude to come up with a package of revenue increases in order to balance the county budget. An amendment added a “sunset” provision that removes the taxing authority after 36 months.”
Sen. Waggoner told the Senators that voting to give a county authority to raise taxes on its citizens, consumers, and businesses is not voting for a tax, even though all the Senators know that the Jefferson County Commission will vote to raise taxes without allowing for any vote of the people of the county or the state. Sen. Waggoner said, “If you vote for this bill you are not voting for this tax. A tax cannot originate in the Senate (by law). We are merely giving the Jefferson County Commission the ability to deal with their financial problems.”
Critics of the Jefferson County Commission argue that Jefferson County has always had the ability to deal with their financial problems simply by assigning all of their sewer profits towards paying their sewer bond obligations and then downsizing all their other operations to fit the revenue that they already have. Jefferson County reportedly spends over $12 million a year on lawyers and lobbyists and over $50 million on Cooper Green hospital.
No other county in Alabama has an occupation tax. The taxes levied cannot exceed 20% of the largest general fund budget that Jefferson County has had in the five-year period prior to filing bankruptcy. Sen. Waggoner’s statement said that SB567 creates a framework for Jefferson County to meet the obligations of the bankruptcy determinations.
A similar bill was proposed in the 2011 legislative session, but was defeated largely through the efforts of Senate Rules Committee Chairman Scott Beason (R) from Gardendale. Prior to this session, Sen. Beason was stripped of his Rules Committee Chairmanship by his Republican colleagues. The powerful position was then given to Sen. Waggoner by the Senate Republican Caucus.
Jefferson County first got into trouble when various municipal sewer systems were sued by the Cahaba River Society for violations of the Federal Clean Water Act. Jefferson County then agreed to consolidate all of the various noncompliant sewer systems into one system owned and operated directly by the Jefferson County Commission. To settle the federal lawsuit, Jefferson County agreed to do all of the work necessary to comply with the law and stop all the sewer leaks.
Corruption set in almost immediately as Jefferson County Commissioners awarded un-bid contracts to cronies allegedly often for kickbacks. As debts increased, the Jefferson County Commission increased its bond debt which it frequently swapped for riskier and riskier debt instruments. County Commissioners Jeff Germany, Larry Langford, Mary Buckelew, Chris McNair, John Katapodis, and Gary White all pled guilty or were convicted of a variety of offenses in lengthy public corruption investigations by the federal government. When the economy soured Jefferson County stopped paying its sewer creditors defaulting on a $3.2 billion debt.
The current Jefferson County Commission was offered a settlement for their debts last year by their creditors which would have saved taxpayers over a $billion in principal alone. Instead of negotiating a settlement the Jefferson County Commission chose to take its chances by filing the largest government bankruptcy in the entire history of the American bond market. Two previous Occupation Taxes passed by Democrat controlled legislatures and were later thrown out by the courts. Jefferson County owes an estimated $4.3 billion in bonds it is not presently servicing.
SB567 now goes on to the Republican controlled Alabama House of Representatives. In 2010, Republican were swept into power for the first time in Alabama since the 1870s on a platform of smaller government, low taxes, ethics reform, and education reform.
Senator Waggoner has served in the legislature since 1966.