Top Stories Montgomery

Moody’s Investors Service said today that Jefferson County’s financial weakness might wind up damaging municipalities such as Hoover, Homewood and Mountain Brook.

The New York-based company, which evaluates the creditworthiness of companies and governments, said in a statement that Jefferson County serves as the property tax collector for cities within its borders. Customarily, Moody’s said, Jefferson County distributes property tax collections to the cities every month.

But Jefferson County’s budget shortfalls and reduced work force might imperil those distributions, leaving the cities in a cash crunch.

The tax collections, Moody’s said, are “filtered through a county government that is in default on its bonds, starved for cash and likely headed for bankruptcy…access to the money could be restricted if the county decides to delay either the collection or remittance of the taxes.”

Moody’s said it rates the creditworthiness of 10 Jefferson County cities that depend on the county. County-collected property taxes account for $233 million of the $950 million in total revenues the cities depend on. That works out to 25 percent, meaning the cities, on average, count on Jefferson County property tax collections for a quarter of their operating revenues.

This month, Jefferson County eliminated almost 1,000 jobs, or about half of its work force. The state’s largest county doesn’t have enough money to pay bondholders who lent $3.2 billion to repair and expand the sewer system. Budget cuts were forced by a March court ruling that found the occupational tax unconstitutional, eliminating $70 million in revenue, or about 44 percent of the discretionary budget.

Moody’s said bankruptcy filing by Jefferson County is probable. It would be the largest by a public body in U.S. history. Cities which depend on the county for tax collections would retain the right to their money even in bankruptcy, Moody’s said.

The affected municipalities and public agencies rated by Moody’s are Mountain Brook and its school district; Hoover and its school district; Homewood and its school district; Vestavia Hills; Birmingham; Trussville; and Fultondale. Moody’s said all are in sound financial shape, other than relying on shaky Jefferson County as a collection agent.

This entry passed through the Full-Text RSS service — if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers. Five Filters featured article: Ten Years Of Media Lens – Our Problem With Mainstream Dissidents.

Post Footer automatically generated by Add Post Footer Plugin for wordpress.