Birmingham Cuts Services After Losing Tax Money
A court decision striking down Jefferson County, Alabama’s commuter tax — combined with an impasse in the state legislature — has led to the shutdown of significant government services, Bloomberg reports.
Alabama’s most populous county is preparing to stop road maintenance, close courthouses and shutter services for the elderly after a court struck down taxes that pay for about 35 percent of its budget.
Jefferson County, which includes Birmingham, released a plan to cut $52 million from its budget as it appeals the ruling against its business and occupational taxes to the Alabama Supreme Court. Without that revenue, the county has said it is at risk of running out of money as soon as this month.
The loss of the tax money was another blow to a county that has been struggling to avoid bankruptcy since last year, when Wall Street’s financial crisis caused its interest bills to soar on more than $3 billion of bonds. The challenged taxes provided about $75 million in the fiscal year ended Sept. 30 to the county, which is forced to balance its budget under state law.
“I’m not expecting that this is going to go easy into the night, but I’m abiding by the law,” county Commission President Bettye Fine Collins, a Republican, told reporters in Birmingham. “People who thought this was some kind of game are finding out this reality.”
The proposed cuts, outlined in a series of proposed resolutions released today by Collins, would slash deeply into the government’s services and include closing a nursing home for the indigent, declaring a moratorium on enforcing zoning and littering laws, and scrapping local development contracts. They would also bring a halt to the enforcement of building codes, close the county’s laundry, and shut down the agency that assists senior citizens.
Rob Port notes the tendency of local officials faced with revenue to “immediately threaten to cut back on some of the things government does that the taxpayers value most” even though “there’s more than enough fat to be cut from government budgets without resorting to things like closing down firehouses.” That certainly happens. I can think of several occasions where Friday night football was threatened with cancelation when school boards were piqued at failed bond initiatives.
That doesn’t seem to be the case here, though. The Birmingham News account of the cuts notes, “The list does not include cuts to the sheriff’s office, Environmental Services Department or Cooper Green Mercy Hospital. County officials said they wanted to avoid eliminating essential services in the first round of cuts.” Further,
The budget reductions — which total $51,761,563 — range from closing all satellite courthouses at an estimated saving of $8.3 million to abolishing the county’s employee tuition reimbursement program at an estimated saving of $68,847. Many of the cost-saving measures have been discussed for months, since commissioners learned they might lose the occupational tax.
What we’ve got here is a county government that is simultaneously providing services that votes want but unable to raise taxes because voters don’t want to pay for them. They tried the common solution in these cases — extracting the taxes from people who can’t vote in the jurisdiction in question — and succeeded until a judge ruled that they had to quit. This of course exacerbates the original problem because, in the interim, people got used to even more services that were, in essence, free.