Alabama debacle teaches budget lessons to all

Jefferson County in Alabama ran out of money and is threatening to lay off two thirds of county employees. Its empty bank accounts forced it to:
— Tell the director of the public nursing home that the county no longer can afford to bury indigent patients.
— Lay off the staff of the cafeteria at the juvenile detention center, leaving no way to feed the 28 children there.
— Tell school districts they will have to wait six months to get their share of property taxes.
— Let as many as 1,400 other county workers know they soon will be out of a job.
A lot of the problem is the recession. Sales and property taxes are down $40 million.
Jefferson County also brought much of its misery on itself by borrowing billions in a sewer bond boondoggle that left it owing huge sums for interest and principle while more than 20 people, including three former county commissioners, have been convicted of bribery and kickback schemes stemming from the sewer contracts.
It also had been collecting a form of income tax that made up about 25 percent of its yearly income using a law that had been repealed in 1999.
There is no light at the end of Jefferson County’s tunnel. The state legislature and Gov. Bob Riley have yet to help.

IF THERE IS GOOD to be found in this sorry tale it is in the lessons taught to Alabamans and the rest of us.

Jefferson County’s commission allowed itself to believe that the dishonest investment bankers who put together that enormous bond package had found a way to get them billions of dollars that some other generation would pay for and then the locals were as bad or worse when they used their ill-gotten money to pad their own pockets.
Alabama citizens learned that county government could be as corrupt and stupid as AIG and the other Wall Street finaglers had been — perhaps they will be more careful in the future when they go to the polls.
Every unit of government learned, or should have learned, that a tax structure that depends too much on one source of money, such as taxes on income or sales, can be more vulnerable to a downturn in the economy.
These past two years, for example, Kansas has suffered because consumers have cut back on spending, reducing in-come from the sales tax dramatically. Vermont is running close to bankruptcy because it de-pends too much on the personal income tax which has tumbled because of high unemployment.
Lesson: State and local governments should base their budgets on three-legged stools: property taxes, sales taxes and income taxes on businesses and individuals. One or more of these sources of income are likely to be stronger than the others when downturns come — as they always will.

— Emerson Lynn, jr.