As Mississippi and Alabama hold their Republican primaries, we go to Jefferson County, Alabama, where the financial situation is so grim that it cannot hire enough staff to run today’s election. Critics say Jefferson County, home to Birmingham, represents some of the worst consequences of the pro-corporate agenda backed by leading Republican candidates. Late last year, it filed the largest municipal bankruptcy in U.S. history after failing to refinance nearly $4 billion in debt. Jefferson County was deep in the red after reaching a complicated scheme with Wall Street investors to finance the cost of rebuilding a broken sewer system. The county reached an agreement with the Wall Street giant JPMorgan to refinance through interest rate swaps, but later sued the firm after its debt ballooned on what was initially a $250 million project. Earlier this month, a bankruptcy judge ruled Jefferson County’s bankruptcy filing can proceed, rejecting the pleas of creditors including JPMorgan Chase Bank and Bank of America. For more, we’re joined from Birmingham by Barnett Wright, a senior reporter who covers Jefferson County for The Birmingham News. [includes rush transcript]
This is a rush transcript. Copy may not be in its final form.
AMY GOODMAN: We go now to Birmingham. The Republican primary heads to the South today with votes in Alabama and Mississippi. We’re turning to a county in Alabama where the financial situation has grown so grim they can’t even hire enough staff to run today’s primary.
Critics say Jefferson County, home to Birmingham, Alabama’s largest city, represents some of the worst consequences of the pro-corporate agenda backed by leading Republican candidates. Late last year, it filed the biggest municipal bankruptcy in U.S. history after failing to refinance nearly $4 billion in debt. Jefferson County was deep in the red after reaching a complicated scheme with Wall Street investors to finance the cost of rebuilding a broken sewer system. The county reached an agreement with the Wall Street giant JPMorgan to refinance through interest rate swaps, but later sued the firm after its debt ballooned on what was initially a $250 million project. Earlier this month, a bankruptcy judge ruled Jefferson County’s bankruptcy filing can proceed, rejecting the pleas of creditors, including JPMorgan Chase Bank, Bank of America.
For more, we’re going to Birmingham to Barnett Wright, who is a senior reporter who covers Jefferson County for The Birmingham News.
First, tell us what’s happening today on primary day. Who is running this election, with the county in bankruptcy?
BARNETT WRIGHT: Well, first of all, good morning and thanks for having me.
What’s happening is that the county is running the elections, Amy. The only problem is, they don’t have the manpower that they’ve had in previous elections. You mentioned the bankruptcy. They’ve had a financial crisis, which has led to layoffs of hundreds of workers, many of them in the General Services Department, which is responsible for the maintaining of the voting machines and also for the elections. Therefore, they’ve had to lay off those workers. They’ve had to use replacement workers from different county departments, probate court, land planning, and they are filling in for those workers who are no longer on the payroll.
AMY GOODMAN: And so, what does this actually mean? Are the elections usually run by county staff? Now it’s volunteers, or people are coming over from other places, as well as volunteers? And—
BARNETT WRIGHT: Yes. They are volunteers, but what it means is that if you worked in the probate court’s office, you would now have to go out and help man some of the polling places, some of the precincts. If you worked in the land development department, and your primary role or responsibility was to assist some of the staff there in land planning, that you’re now at the voting precincts.
You know, the problem is, what happens if a machine breaks down? The county officials will tell you that the replacement workers have been trained, you know, but that’s almost a recipe for disaster. The institutional knowledge has been laid off. Those individuals are no longer on staff. So what you have to do is you have to trust that a replacement worker will come in and be able to rectify whatever problems you have at the polling places or precincts.
AMY GOODMAN: Barnett Wright, how did Jefferson County get into this mess, and what was the role of JPMorgan Chase?
BARNETT WRIGHT: Well, there were two tracks, Amy. One was the sewer debt crisis, in which the county borrowed more money than they could pay back. One of the problems is that there was allegations of corruption on both sides, that the banks, primarily JPMorgan, had a role in giving the county money that—deals that they didn’t understand, interest rate swaps. There was also allegations of wrongdoing on the county side, in that they accepted different bribes. So they had the sewer debt crisis. The country could not pay back the money. They negotiated unsuccessfully.
On the other hand, you had the occupational tax revenue. The county had occupational tax which brought in about $66 million per year. That was ruled unconstitutional by a judge. So, those two tracks, the county—A, they couldn’t repay the money on the sewer debt crisis, and B, they lost use of the occupational tax, which depleted the general fund. So they had no money coming in for operations on the general fund side, and they had no money to repay the loans by JPMorgan and other banks.
AMY GOODMAN: So, we’re talking about an initial price tag of what? $250 million that ballooned to $3 billion for Jefferson County, Alabama?
BARNETT WRIGHT: No, it was about a billion. It started off at a billion dollars, and it ballooned to $3.2 billion in sewer debt. I think the $250 million may have been one of the initial loans or initial amount borrowed for the sewer rehabilitation. But it was in total, if you add up all the money borrowed from all the different banks, it was about a billion, and that escalated to $3.2 billion.
AMY GOODMAN: The primary, of course, is being held today in Alabama. Are the Republican candidates addressing this dire issue? What has been the issues they have raised?
BARNETT WRIGHT: Well, they’re not talking about Jefferson County finances. They’re talking about the same—Amy, they’re making the same speeches that they’ve been on the stump making all across the country. The focus is on President Obama. The focus is on—Mr. Gingrich is talking about $2.50 gas. They’re not addressing, based on what I’ve heard, any specific interest of Alabama. It’s just the same speech that you’ve heard in all the other primaries that they’ve run in.
AMY GOODMAN: And yet, the crisis that Jefferson County is facing, give us some examples, everyday examples, of what it means to be the largest municipal bankruptcy in U.S. history.
BARNETT WRIGHT: That’s a great question. One of the big problems is the lines for car tags. Normally, if you want to get your car tags, you go to the Jefferson County courthouse.
AMY GOODMAN: Your license plate.
BARNETT WRIGHT: It usually takes—when I got my car tags, Amy, back in April, it took me about five to seven minutes. Now it takes four hours or more. You had a man collapse in line waiting for his car tags. There was a fight last week between two people in line waiting for car tags.
Another example, the roads department here in Jefferson County, they usually pick up road kill. There was a cow that was found dead on the road. There was a call to the roads department, and the caller was told that they could not pick the cow up. So, they’re not picking up road kill. They can’t pick up the carcasses, and it was just left to the coyotes to take care of that.
AMY GOODMAN: Well, we’ll see if they can pick up the ballots today, and we’ll see how Alabama gets counted. Barnett Wright, we want to thank you very much for being with us, senior reporter who covers Jefferson County for The Birmingham News, speaking to us from Birmingham, Alabama.