In a recent post we talked about the fact that Jefferson County has filed for bankruptcy after a tentative agreement with creditors fell through. A judge overseeing the case - which is the largest U.S. municipal bankruptcy ever-has delayed a decision to set a deadline for a workout plan.
As most people are aware, the recession is taking its toll not just on individuals and families, but on cities and counties across the U.S. Jefferson County filed the largest municipal bankruptcy in U.S. history last year. The county has recently cut back on services as officials expect to run out of reserves by October. Cuts have taken place that affect services at its hospital for the poor, the roads department is no longer picking up road kill, and the county has skipped a debt payment to preserve cash.
A lawsuit has been filed on behalf of 130,000 Jefferson County sewer system customers. The filing claims that rate payers of the sewer system have paid $1.6 billion unnecessarily because of Wall Street financing techniques and the corruption of more than 20 county office holders. The suit follows a November 9 municipal bankruptcy filing, a result of close to $3 billion of sewer system debt.