FuckOneida County this is what BROKE does!
Posted in the Utica Forum
#1 Feb 19, 2012
#2 Feb 19, 2012
ONE county jail here is so crowded that some inmates sleep on the floor, while the other county jail, a few miles down the road, sits empty.
There is no money for the second one anymore.
The county roads here need paving, and the tax collector needs help.
There is no money for them, either.
There is no money for a lot of things around here, not since Jefferson County, population 658,000, went bankrupt last fall. There is no money for holiday D.U.I. checkpoints, litter patrols or overtime pay at the courthouse. None for crews to pull weeds or pick up road kill not even when, as happened recently, an unlucky cow was hit near the town of Wylam.
We dont do that any more, E. Wayne Sullivan, director of the roads and transportation department, said of such roadside cleanup.
This is life today in Jefferson County Bankrupt, U.S.A. For all the talk in Washington about taxes and deficits, here is a place where government finances, and government itself, have simply broken down. The county, which includes the city of Birmingham, is drowning under $4 billion in debt, the legacy of a big sewer project and corrupt financial dealings that sent 17 people to prison.
If you want to take a broad view, the trouble really began with the Constitutional Convention of the State of Alabama in 1901. The document that emerged there written to empower business interests and disenfranchise African-Americans and poor whites gives towns and counties little authority over local issues. Local taxing power rests with the state, though state lawmakers are loath to wield it today, in an age of anti-tax populism. Last summer, the Supreme Court of Alabama struck down a tax that was a crucial source of revenue for Jefferson County, finally pushing the county over the brink.
Officials here have only begun to grapple with the implications of life under Chapter 9 of the federal bankruptcy code, a municipal form of debt adjustment, rather than reorganization or liquidation. Until now, the most famous example was Orange County, Calif., which filed for Chapter 9 in 1994, after risky investments went horribly wrong. Many local governments are struggling to pay their bills these days, but hardly any have filed for bankruptcy. Notable exceptions include Harrisburg, the capital of Pennsylvania, Vallejo, Calif., and Central Falls, R.I.
This is really a journey without a road map, said John S. Young, the civil engineer who was appointed by an Alabama court to figure out how to fix Jefferson Countys sewer system. Today he is that projects official receiver in name only: a federal bankruptcy court has suspended his powers, ruling that the federal bankruptcy law trumps state laws that protect bondholders.
Ordinary citizens cant do much at this point. Jefferson County has even canceled municipal elections scheduled for this August. It seems that theres no money for voting booths, either.
IN late 2010, a Wall Street analyst, Meredith Whitney, caused a stir during an appearance on 60 Minutes. The $4 trillion market for municipal bonds, Ms. Whitney said, was headed for trouble. Within 12 months, 50 to 100 sizable defaults, possibly more, would rattle the market, she predicted.
The reaction was stunning. In a blink, billions of dollars flew out of the muni market. Mutual funds that specialized in such bonds were hit especially hard.
Ms. Whitneys prediction hasnt come to pass, and the muni market usually a dull-as-dishwater corner of Wall Street has since recovered.
Many muni experts called Ms. Whitney an alarmist, but she clearly touched a nerve. States, counties, cities and towns issue many billions of dollars worth of new munis every year, and those bonds pay for all sorts of things. Government bodies nationwide can borrow those billions at a low cost because munis are traditionally considered among the most conservative of investments. Without quick and easy access to this market, local government as we know it would fall apart.
#3 Feb 19, 2012
Thats why the developments in Jefferson County are so unnerving. About 300 municipalities nationwide are in default on their debt, but most of them are so tiny that they draw little attention. What is more, after New York City ran into financial trouble in the 70s, and Cleveland fell into a hole in the 80s, the federal bankruptcy code was changed to ensure that certain types of muni bonds would keep paying interest and principal even if the issuing government authority sought bankruptcy.
Yet Chapter 9 bankruptcies have been so rare, and Chapter 9s involving lots of bonded debt rarer still, that there is almost no legal precedent for what is happening in Jefferson County. Its lawyers are negotiating with roughly 4,000 creditors, from suppliers to hedge funds. The federal bankruptcy judge in the case is exerting enormous influence. By the time this is over, the lines between state and federal power may be redrawn when it comes to who, if anyone, can force a community to make good on its promises.
It could set a precedent for the whole market, said Matt Fabian, a managing director at Municipal Market Advisors, a research firm.
One possibility is that bonds backed by revenue from a particular public works project fees from a sewer system like Jefferson Countys, for instance will come to be viewed as riskier investments in general. Until now, many municipal bond investors assumed that they would be paid back almost entirely in the event of a bankruptcy. Orange County ultimately set a reassuring example; although it postponed a debt repayment, it made up for the delay by paying a higher rate of interest.
Now, who knows? Officials in places like Harrisburg are watching the developments in Alabama closely. Harrisburgs Chapter 9 filing was rejected by a federal bankruptcy court, but officials in that city still hope to wrest some concessions from creditors. Pennsylvania has passed a law that prevents Harrisburg from filing for Chapter 9 again, but that law expires on July 1.
NOT long after Jefferson County went bust, John S. Young was sitting under the arched windows of the Yale Club in Midtown Manhattan, trying to explain how all this started. Mr. Young, 58, had been brought to New York City by the Municipal Analysts Group of New York, a professional society, to give a briefing on the developments down south.
Mr. Young quickly recapped what just about everyone here knew: in 1996, the Environmental Protection Agency accused the county of dumping raw sewage into the Black Warrior and Cahaba rivers. Elected officials had to figure out what to do, and to figure it out fast.
Birmingham, which had thrived from Reconstruction to the mid-1960s as an iron and steel town, had been declining for years. Why not embark on a giant public works project, a Taj Mahal of sewage systems, to foster jobs and development?
Jefferson County began to borrow vast sums of money, but that money, it turned out, was a perfect medium for graft and contract-padding. Rather than replacing more than 2,000 miles of decrepit sewer pipes, the county dispensed contracts to build water treatment plants, pumping stations and administrative buildings, some on slag heaps left behind by closed steel mills.
All this debt was supposed to be paid off with revenue from the new sewer system in other words, by fees the county would charge residents whose homes were hooked up to the system. As the debt grew, so did those fees and the public outcry. By 2002, the average sewer bill in the county had doubled, to $18 a month.
One thing led to another. In an attempt to expand the system and add new ratepayers, the county tried to bore a giant tunnel beneath the Cahaba River, Birminghams main source of drinking water. But the tunnel was so unstable that the endeavor was abandoned. The county spent millions just to extract the boring machine, which had become entombed underground.
#4 Feb 19, 2012
That cost $19 million, Mr. Young told the bond analysts.Now its called the Tunnel to Nowhere.
Despite all this, the county still hadnt fixed its sewers, as the E.P.A. had required. It needed more money, but people were so angry that officials were afraid to raise rates further.
Desperate, Jefferson County turned to Wall Street, particularly to JPMorgan Chase. The bank was able to persuade the county to agree to a bond deal with terms that included complicated interest-rate swaps. Those swaps blew up during the financial crisis of 2008, leaving the county with even more debt than it had started with.
In addition, the project and its financing led to a variety of criminal and civil charges, with several officials and others receiving prison time. In one case, Larry Langford, a former president of the Jefferson County Commission and former mayor of Birmingham, was sentenced to 15 years in prison.
In another case, J.P. Morgan Securities dropped claims to $647 million in termination fees it had tried to make the county pay on the swaps, as part of a settlement that also called for J.P. Morgan to make payments of $25 million to the Securities and Exchange Commission and $50 million to the county.
As residents of the county saw more officials go to prison, public opinion hardened against paying the debt.
I dont accept the legitimacy of this debt, said Allyn Hudson, 32, an Occupy Birmingham organizer camping near the bankruptcy court.It shouldnt ever have been issued, and therefore it shouldnt exist. It shouldnt have been spent. Since it shouldnt have existed, were not going to pay it.
Although JPMorgan, in its settlement, let the county out of its swaps deal, the countys underlying debt remains outstanding. Today, the county is effectively shut out of the muni bond market and is coasting on reserves, further delaying work on sewers that dont function properly.Ive never seen a utility that had such big financial needs, and no access to the financial markets, Mr. Young said.
EVEN before the bankruptcy, the old industrial core of metropolitan Birmingham looked like a monument to urban blight. About a quarter of the people in Birmingham live below the poverty line. Its different in the suburbs, where the money is, and where many homes have private wells and septic systems.
Downtown, at the courthouse, the line for car license tags snakes down a corridor. The county has shut its satellite courthouses, so everything now gets done here. Every department is short-staffed. The sheriff, Mike Hale, cant afford to pay overtime. There is also outrage that the county paid Mr. Young, the court-ordered receiver, a little more than $1 million for 14 months work.
The countys road crews are patching only big potholes; resurfacing can wait. The tax collector has laid off four agents, at a savings of $180,000. But the math of bankruptcy doesnt always work well. Last year, those four agents collected $2.7 million from delinquent taxpayers, so its possible the county is losing money in this arrangement.
#5 Feb 19, 2012
Down U.S. 11 from Birmingham is the city of Bessemer, where the second county jail, refurbished a few years ago at a cost of $11 million, sits empty and unused. The county cant afford to pay for the guards. At the county jail in Birmingham, meanwhile, a 20-year-old program under which certain inmates were released pending trial, provided they wore electronic monitors and underwent drug tests, has been cut. That saved $2 million, but now the jail is overcrowded.
David Carrington, the president of the Jefferson County Commission, has floated the idea of freeing several hundred inmates.We cant be in contempt of court, Mr. Carrington said.
Sheriff Hale refuses to consider that. The county, he said, has a duty to protect its citizens.
Here and there, new projects have sprouted up as if nothing has happened. The Logan family just broke ground on a $64 million ballpark for the Birmingham Barons, the minor league baseball team. Over in Hoover, a bedroom community that stretches over parts of Jefferson and Shelby counties, the police department bought 30 new Chevy Tahoes last year and sold a few of its old ones to Sheriff Hale.
And yet David Sher, a local businessman, said everyone wonders how the county will ever get out of this financial mess.
People are desperate to think of anything they can to get the money, he said.
The federal bankruptcy judge overseeing the case, Thomas B. Bennett, has already rendered a sobering appraisal. It is highly unlikely, he wrote in a decision in January, that what was loaned can ever be repaid.
#6 Feb 19, 2012
#7 Feb 19, 2012
Try getting off some of these public parasites off the public payroll that was the point but indstead you try to make stupid jokes. Typical public parasites!
#8 Feb 19, 2012
How do you do that?
#9 Feb 19, 2012
Try having an original thought,instead of copying a NY Times article
#11 Feb 19, 2012
There should be terms limits and financial limits for all elections. The troubles all began because the locals allowed and or influenced those Arcuri's their delisional dreams that they run this area.
This all goes back and YOU wait and see YOUR Obama will be removed from office for TREASON against this country and this act will also include some of the politically big-time locals and Cuomo! When Obama is taken out, Bush is going to!
#12 Feb 19, 2012
Let's get Rufie also
#13 Feb 19, 2012
What's the name of the President of the NAACP?
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