Waste in the Sewer: The Collapse of Accountability and Transparency in Public Finance in Jefferson County, Alabama

Authors


Michael E. Howell-Moroney is an associate professor of public administration in the master of public administration program at the University of Alabama at Birmingham. His research explores contemporary problems and salient issues in urban policy and administration.
E-mail:mhowellm@uab.edu

Jeremy L. Hall is an assistant professor of public affairs at the University of Texas at Dallas. His research focuses on the intersection of public policy, public sector performance, and economic development. His research has received awards from the National Association of Schools of Public Affairs and Administration and the Southeastern Conference for Public Administration.
E-mail:Jeremy.Hall@utdallas.edu

Abstract

Following failed auctions for sewer debt in April 2008, major bond rating companies downgraded Jefferson County, Alabama’s bond rating to D (default) triggering massive mandatory payments by the county to its creditors. At the time of writing, the county teeters on the brink of actual default and bankruptcy, unable to pay service on its $3.3 billion sewer debt portfolio. If the county defaults, it will be the largest municipal bankruptcy in United States history, eclipsing Orange County, California’s 1994 default. The intriguingly complex tale of the Jefferson County debt crisis is recounted here by identifying and examining failures of transparency and accountability by local bureaucratic and political actors, private financial institutions, as well as the larger regulatory framework governing public finance. Enhanced regulation of local government and the financial sector plus greater local government capacity to close accountability gaps and thus prevent future crises of similar scale in this or other jurisdictions are recommended.

Ancillary