Alabama Supreme Court Clears the Way for Jefferson County to Refinance School Bonds

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Solomon Crenshaw Jr.

Officials gathered to announce victory in a suit over a school tax and bonds.

Jefferson County Commission President Jimmie Stephens summed up an Alabama Supreme Court ruling during a press conference Friday afternoon.

“What’s it mean? It means it’s a great day for the citizens of Jefferson County, for all citizens of Jefferson County,” he said. “It enables Jefferson County to proceed in refinancing the county school tax warrants that is guaranteed by the 1 cent county sales tax.”

Commissioners sought a state law revising that county sales tax law so they could refinance the warrants at a lower price and divide the remaining money from the tax more broadly. A circuit judge struck down that law, but Friday the Alabama Supreme Court upheld it.

“Taxpayers’ dollars that were directed to New York and to the financial institutions will now be directed to the benefit of the citizens of Jefferson County,” Stephens said. “After refinancing the outstanding debt, and without raising any taxes on our citizens, approximately $60 million each year would be distributed.”

The general fund of Jefferson County will get about $36 million. That, Stephens said, will go toward rebuilding the county’s infrastructure and providing incentives for economic development.

Each year, the public school systems in Jefferson County will split about $18 million. That money has no strings attached, Stephens said, allowing each system to use its share of the money as it sees fit.

Other entities benefiting from the tax revenues are:

  • Jefferson County Community Services Fund, $3.6 million for public purposes and qualified nonprofits certified by the United Way.
  • Birmingham-Jefferson County Transit Authority, $2 million to leverage for up to $10 million in federal matching money.
  • Birmingham Zoo, $500,000 for educational programming, animal care and exhibits.

Commissioner Joe Knight thanked citizens for their patience while they dealt with potholes and waited for hours in line to renew their car tags because satellite courthouses were closed.

“We’re going to use this money and we’re going to be frugal with it,” Knight said. “But we’re going to get Jefferson County back on the playing field where it should be.”

As officials took their turn at the podium, the repeated theme was that it took teamwork to make this happen.

“This gives us a chance to show what happens when we work together,” said Sen. Rodger Smitherman, D-Birmingham. “This is a model and I hope this model continues to move forward.”

“Patience is virtue and we have been quite patient throughout this whole process,” said Patrick Sellers, chairman of the board of the Birmingham-Jefferson County Transit Authority. “Patience will also breed progress, progress for our citizens, progress for those who depend on the greatest public transportation in this country. You’ll see a very new transit (system) very soon in our county.”

Stephens said there will be “no grass growing under our feet” when it comes to getting money to the stakeholders who benefit from today’s Alabama Supreme Court ruling.

“As soon as we’re able to go to market, we will,” Stephens said.

The commission president said the commission is looking to go to market in the second quarter of this year. Realistically, he said it will be fall before the money is collected, and it must be collected a year before it is distributed.

Knight acknowledged that the ruling must still be validated before Circuit Judge Michael Graffeo. “They have two weeks to appeal,” Knight said. “But all the issues have been resolved by the Supreme Court.”

 

The lawsuit stemmed from a law the Legislature passed involving Jefferson County’s 1 cent sales tax for school construction.

Graffeo ruled that the Legislature did not follow state law governing how bills are passed when they’re brought up before the budgets are adopted. He struck down the law, an act that eventually led to Amendment 14 on the November general election ballot.

That amendment stated that any local laws passed by the Legislature in that manner were retroactively approved even if the vote had not met the technical requirements of a Budget Isolation Resolution.

Supporters of Amendment 14 said that, without it, hundreds of local laws were in danger. Opponents argued in court filings that the danger to other local laws was minimal, and that he Legislature had used a constitutional amendment to overturn a court ruling in this case.

In reversing the trial court ruling, the Supreme Court:

  • Held that constitutional Amendment 14 on November’s ballot applied retroactively, and under the amendment, Act 2015-226, which was the law passed to revise the Jefferson County tax, does not violate the Budget Isolation Resolution provision.
  • Held that Act 2015-226 does not violate the constitution, which prohibits local laws that conflict with general laws.
  • Held that Act 2015-226 did not violate constitutional provisions that prohibit local laws that regulate property taxes, authorize the issuance of debt and establish non-tax liens.
  • Held that the county was not required to give notice of issuing its warrants because it has not yet entered into a binding agreement to issue the warrants.

 

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