By J. Mac Holladay, PCED, CCE; CEO
Last week I had just finished reading Michael Lewis’s new book, Boomerang. Lewis, as always, has written a profound and clear book recounting on how Iceland, Ireland and Greece collapsed as meaningful economies. He then drills down on Vallejo, California, our first city to declare bankruptcy. Each of these places displays an arrogance, an outlook , and actions that can only be described as stupidity flamed by incredible greed in the public and private sectors.
Then it happened. Jefferson County, Alabama declared bankruptcy. As we worked on the first Birmingham regional strategy in decades last year, there was one premier public sector issue that all agreed upon. They all said that there could not be default on the water and sewer bond issue. And yet that is what has happened. A few have gone to jail for their role, but some including, the giant JP Morgan Chase, have paid no price at all. I know the local private sector leadership worked countless hours to find an answer as did the current elected leadership. An agreement reached in the early fall slipped away. So now Jefferson County is bankrupt. What happens to any and every major infrastructure project? Can they even issue bonds for new schools? Does the County cease to exist as an entity?
The connection between the tiny Greek economy and all of us has been made very clear as we have watched the EEC partners work toward a solution. We are all in this together like it or not. In the same way Jefferson County’s troubles are not unique or isolated. While they will affect all of Alabama most directly, there are lessons for every community in America. They include insuring “due diligence” on every major investment, being realistic in our income outlook, and certain of our revenue sources. We need good sound local governments. They are vital to all of us. We cannot afford to have Vallejo or Jefferson County repeated again and again. If we allow it, “Boomerang” will be the norm for a long time to come.
