Alabama's largest county files for bankruptcy

In this Tuesday, Oct. 26, 2010, file photo, lightning illuminates storm clouds north of downtown Birmingham, Ala.
AP Photo

BIRMINGHAM, Ala. - Leaders of Alabama's most populous county have voted to file an estimated $4.1 billion bankruptcy, the largest municipal bankruptcy in U.S. history.

The Birmingham News reports the Jefferson County Commission's action came after spending about six hours over two days meeting with its lawyers to discuss legal options. Those options included a bankruptcy filing and a settlement with creditors on the county's $3.14 billion sewer debt.

Commissioner Jimmie Stephens made the motion to file bankruptcy, saying it's time to resolve the issue.

The county has been trying for several years to find a way to resolve its sewer debt crisis and fix its fiscal 2012 county general fund budget, which commissioners have said needs another $40 million.

Jefferson County's problems began with the corruption-plagued sewer project that went billions over budget. Poor investments and a loss of millions in tax revenue made things even worse.

Officials have tried cutting back everywhere they can. At the overcrowded jail, there's just one part-time deputy for every 100 inmates.

Lt. Debbye Guy says: "We're below federal regulations. We're always in danger, but this puts us more in danger."

Court Clerk Anne Marie Adams is using state funds to pay security guards at the courthouse, adding: "We would've had to shut the system down and it would have been a major problem."

Even small things - like a sewer leak at a county building - go unattended.

A Jefferson County bankruptcy may be the first in a string, as Detroit; Harrisburg, Penn.; and Pritchard, Ala., are all in danger.