Unfortunate trickle-down effect
Published 10:08 pm Friday, August 7, 2009
I read a lot of newspapers. Probably more than your average person.
The revelation that Jefferson County’s struggle to avoid bankruptcy could — if even remotely — effect our county is somewhat disturbing.
From what I’ve witnessed and from what we’ve published in this newspaper, Marengo County and its municipalities are fiscally sound.
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In the past several weeks, I’ve seen several headlines foretelling of multimillion-dollar budget cuts to personnel and services, even the number of deputies who patrol a county, across the state.
I grew up in Jefferson County, and up until a few years ago, I had many family members who lived there. I think they sensed the impending disaster and got out before the shoes finally dropped.
Still, I have friends who live there and I’ve followed their sewer bond issue with a high level of interest.
The crux of the story is simple. Jefferson County borrowed several million dollars to upgrade its sewage system. Now, the county is out of money and more than $300 million behind in payments. The warrants were secured with future net revenue from the water and sewer system. Now, county residents face enormous sewer fee hikes, and the county itself is facing bankruptcy.
This entire disaster is a shining example of poor management on just about every level, from the people at the top to the people at the bottom.
I was in attendance at a recent Rotary Club meeting in Demopolis when State Rep. A.J. McCampbell let us all know the fallout from a bankruptcy filing — should one take place — would leak well beyond county lines.
Municipal bond ratings, McCampbell said, are issued in part according to the fiscal heath of the state. Jefferson County, the state’s most populous county and home to the state’s largest city, could become a black hole for the equivalent of municipal credit ratings across the entire state.
If Jefferson County does file for bankruptcy, and it’s far from all said and done, bond ratings — the equivalent of a credit score — across the state could decrease in counties not even contiguous to Jefferson.
Basically, that means if the City of Demopolis wanted to make a major improvement or take on a major project, a lower bond rating would translate to a higher interest rate on the bond.
Considering most bonds are issued for millions or billions of dollars, even a slight increase in interest rate translates to several hundred thousand dollars.
Luckily, local projects like DHS new Tiger Stadium are complete. Demopolis mayor Mike Grayson said no major projects currently rest on the city’s radar screen, but you never know.
Hopefully, this situation gets ironed out in Jefferson County, and not at the expense of those who are otherwise not involved.
It would be a shame for a city or town to miss out on something like Tiger Stadium, which will be christened tonight, due to the mismanagement of others.