Alabama's debt-ridden Jefferson County laid off about two-thirds of its 3,600 employees on Monday because of plummeting revenues, a move that will sharply curtail services in areas ranging from roads to courthouses. The cuts are just the latest blow to Jefferson, whose population of 660,000 includes Birmingham, the state's largest city and its economic powerhouse. They come after the county racked up around $4 billion in debt by using exotic financial instruments to fund a revamp of its sewer system.The work force cuts will hit the roads and transportation, revenue and security departments, and cuts will also affect the courthouse and information technology department as well as laborers paid on a per-hour basis, according to a senior county official.
The county has been forced to make drastic cuts because of a lawsuit questioning the legality of a county occupational tax, which raised $78 million annually and was vital to the county's operation.
Although the revenue is still being collected, it is being held in escrow under orders by an Alabama Supreme Court justice pending a decision on the tax case. Some members of the state legislature hope to pass a new tax bill this month to raise revenue for Jefferson County.
County workers placed on administrative leave under the cuts will be entitled to unemployment and some health-care benefits and will be called back after 45 days, according to a senior county official.