Alabama wants to make sure debt-laden Jefferson County doesn't file for what would be the largest municipal bankruptcy in history, a state official said late Wednesday.
While it isn't willing to offer a "cash bailout" to Jefferson County, the state is open to providing a type of "credit enhancement" that would make a deal between the county and its sewer creditors "more palatable," Alabama Finance Director David Perry said in an interview.
That "credit enhancement" could involve making Jefferson County's sewer system an independent entity apart from the county, which Mr. Perry said could help lower the rate that would have to be paid when billions of dollars in sewer debt are eventually refinanced. Such a move would require the passage of state legislation, he said.
"We're willing to do whatever it takes" for the county to avoid filing bankruptcy, Mr. Perry said. But he warned, without elaborating, that Gov. Robert Bentley "wouldn't do anything that's not in the best interests of both the county and the state." Mr. Bentley, a Republican, previously said he'd support a bankruptcy filing by Jefferson County if its officials chose that course of action.
Jefferson County, home to the state's largest city, Birmingham, has struggled for about three years under the weight of $3.2 billion in sewer debt after a failed bond financing.
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