By Adam Smith

The North Jefferson News



Jefferson County Commissioners are examining whether or not to refinance the 1 cent sales tax bond used for school construction to help pay down the $3.2 billion sewer debt.

County commissioner Jim Carns, who oversees environmental services, spoke to the Gardendale Chamber of Commerce about the debt and what commissioners and bond insurers have proposed to help alleviate the crisis and hopefully save the county from bankruptcy.

Carns said refinancing the sales tax bond, which provided $1 billion in new school construction for the county, is just one option. However, he said it would take the county asking the state to change the state law that says the bond money can only be used for schools.

“I didn’t like the sales tax, but I liked what it brought,” Carns said. “The way to get out of the huge debt is the 1 cent sales tax. We can bring that back and finance it for 40 years. It’s not a new tax, it’s just increasing the existing tax.”

Carns said despite the rising costs of the sewer and the threat of bankruptcy looming, non-sewer users should not be penalized. It was reported last week that county commissioners Sheila Smoot and George Bowman had not ruled out supporting a non-user fee for county septic tank users.

Carns said two of the county’s bond insurers had told The Birmingham News that the non-user fee was a viable option to get out of debt, but the commission refused the plan.

The plan was to charge the county’s 104,000 septic tank users $32 a month, which would bring in $38 million collectively. He said the insurers used a case in Mobile as an example.

Carns said about 1,000 residents in Mobile were charged as much as $10 a month, but only because they chose not to tie onto readily available sewer lines. He said if the same principles were applied to Jefferson County, only about 4,000 to 8,000 residents would be affected.

“If you take that template and run the same numbers, that would only bring in about $100,000 a month or $1.2 million a year,” he said. “It would be a goofy thing to do.”

Carns added that even if the non-user fee were a viable option, it would be tied up in lawsuits for years before the county saw any revenue from the fee.

Additionally, members of both Gardendale and Warrior’s city councils have spoken out against the fee at recent meetings. The City of Warrior voted to write a letter to the county commission to voice opposition to the fee.

Carns also gave a brief synopsis of what led to the sewer debt and how the county went from paying $130 million in interest annually on the sewer to $260 million. Gross annual revenues for the sewer system are only $193 million.

“That is comparable to having a $10,000 home mortgage and making $6,000 a month,” he said.

Carns said a downgrade in the rating of two county bond insurers caused a downgrade in the rating of the sewer bonds, which led to the county having to pay more interest and penalties on the loans. He said those two insurers, who had in the past made safe investments, were heavily involved in sub-prime lending.

“We did not do anything wrong,” Carns said. “We were paying our bills and moving along.”

The commissioner also touched on rising residential rates, which have increased 325 percent over the last 11 years, with an average rate of $63 a month. “We pay more of a percentage in sewer costs than any other county in the south,” he said.

Following the meeting, Carns spoke briefly about Santek’s proposal to accept garbage from outside Jefferson County into landfills in Mt. Olive and Pinson.

He said he didn’t know when the county would make a decision on the proposal and he said it was too early to tell if he would be in favor of the measure or not.