The financial crisis over Jefferson County’s sewer debt will not cause layoffs or otherwise effect employee benefits, Commission President Bettye Fine Collins said Thursday morning.
During the commission’s weekly work session, Collins read from a memo to county employees assuring them that their jobs and benefits are not at risk.
By the contracts with bond holders, the sewer system debt is payable only from the net revenues of the sewer system, Collins said. That means other county services will not be effected. What’s more, the debt service comes after other sewer operating expenses, such as payroll.
While that’s good news for county employees, the commission and its advisors are still struggling over how to keep the county out of bankruptcy. On Wednesday, the county announced that it would not post collateral or insurance to stop terminations of 13 interest rate swaps. Thursday, Collins seemed more upbeat, indicating that the county might be able to work with its creditors to avoid bankruptcy.
“I really believe that we are going to be able to work something out,” Collins said. “I think we are all in a ‘have-to’ mode. I can’t reiterate that strongly enough.”
Still, Collins offered no new plans for dealing with the debt crisis. Solutions such as a temporary tax or raising sewer rates are unfair to ratepayers and the poor, she said.
“Those at the poverty level, those parents on the free lunch programs - I don’t know how much they can bear,” she said. “They’re probably paying $4 a gallon for regular gas and everything in sight is going up except their salaries or their Social Security checks.”
Read the complete text from Collins memo to county employees below.
To: Employees of Jefferson County, Alabama
From: Commissioner Bettye Fine Collins
Date: March 6, 2008
RE: Effect of Sewer Debt on County EmployeesIn recent weeks, newspapers and local television stations have reported extensively on the County’s financial condition. These reports have caused many of the County’s employees to worry about their jobs and benefits. The information in this memorandum is directed to the our employees in response to their questions. It is not directed to investors in the County’s debt securities.
It is important to understand that the County’s debt problems relate to the sewer system. The problems faced by sewer system are serious, but they will not interfere with the County’s ability to operate and meet its obligations to employees and trade creditors. The sewer system debt is payable only from the net revenues of the sewer system (after payment of all the sewer system’s operating expenses, including payroll). This means a couple of things:
- First, the sewer system debt is not a general obligation of the County. The holders of the sewer system debt have no valid claim against the County’s general budget, the County’s assets, or non-sewer system revenues.
- Second, the County pays all operating expenses of the sewer system (including payroll) before making any payments on the sewer system debt.
As employees of the county, you probably have many questions and concerns. I would like to offer the following answers to some frequently asked questions:
- Does the County expect layoffs as a result of the sewer system debt problems? No. The County does not expect or intend to lay off employees. The sewer system debt is payable only from sewer system revenues after operating expenses. The sewer system debt does not directly affect other aspects of the County’s operations. The County will not have to lay off workers to deal with the sewer system’s financial problems.
- Will the sewer system debt problems affect employee health insurance and other benefits? No. The sewer system’s financial problems do not interfere with the County’s provision of benefits to its employees. The sewer system’s debt will not change payroll, health insurance and other employee benefits.
- Do sewer system debt problems put the pension plan at risk? No. The County’s pension plan assets are separate from the County’s assets and obligations. The sewer system’s debt problems do not threaten your pension.
- How are the County’s vendors treated? The expenses of operating the sewer system are paid before the sewer system debt. The holders of the sewer system debt are entitled only to net revenues, after payment of all operating expenses. The County’s non-sewer system vendors are paid from the different funds that are not subject to the sewer system debt.
The County Commission faces difficult decisions on the sewer system debt. However, these decisions will not be made at the expanse of the County’s employees. We are hard at work on a plan to put the sewer system on a sound financial footing. I hope to be able to communicate this plan to you in the coming weeks. Until then, I ask that you bear with us, knowing that the solutions to the sewer system’s problems do not threaten your job, your benefits while working for the County, or your pension. The County values its employees, and I am committed to maintaining the quality and loyalty of our work force.
Popularity: 75% [?]
March 6th, 2008 at 4:12 pm
“Still, Collins offered no new plans for dealing with the debt crisis. Solutions such as a temporary tax or raising sewer rates are unfair to ratepayers and the poor, she said.”
Simple question here: if the sewer system’s users aren’t the ones who should step up and fix the problem, then who should?
March 6th, 2008 at 7:12 pm
If the good citizens of Jefferson County must now use outhouses for their daily needs, so be it. No sacrifice is too great to protect the fringe benefits of municipal sewer workers.
March 7th, 2008 at 1:09 pm
The commish suggests that the problems with the sewer bonds will not effect the county or its emloyees. If there is a default on the sewer bonds, then the GO bonds for the county will be adversely effected in the market. In fact the yields on the GO bonds have gone up significantly in past weeks. Th cost of financing for the county is effected and this will impact employees of the county in many ways for a very long time.
March 7th, 2008 at 3:06 pm
oh thank god! i was so worried! good to hear we are dealing with our CRISIS by ruling out any spending cuts.
April 9th, 2008 at 3:39 am
As a student of history, this seems allot like 1929, when little regulation, and public mismanagment bankrupted the country. Whatever happened to the notions of giving the job to the lowest bidder, and pay as you go. I guess I always thought it would be the Chinese who would do us in by calling our massive debt. I never imagined it would be our own elected officials who would so endanger the public treasury by betting the farm on these bond-swapping schemes. Reminds me of Roosevlet’s inaugural in 1932: “The money lenders, seeing that their schemes are no longer working, have now fled their towers.”