02/15/2012 06:35 pm ET Updated Feb 16, 2012

Jefferson County, While Bankrupt, Relies On 'Volunteer' Staffers For Election

In bankrupt Jefferson County, Ala., the financial situation has grown so grim that the county does not have the money to hire enough elections division staffers to run the state's March Republican primary.

Since filing the nation’s largest municipal bankruptcy in 2011, Jefferson County officials have slashed more than $95 million from local government spending, cut 750 workers and initiated the process of laying off another 180 employees. Even with these cuts, Jefferson County -- home to Alabama’s largest city and about 660,000 people –- faces a projected $40 million budget shortfall this year.

If any more cuts are made, the county risks violating state and federal election laws during Alabama’s Republican primary, warned County manager Tony Petelos in January. The county's election division now has only about 90 employees, compared with nearly 250 workers last year, Petelos said. The county has a total of 182 voting sites, which will make covering the polls with adequate staff a challenge on Election Day, March 13.

"What I said then is true now,” Petelos said Wednesday in a phone interview. “We just don’t have the manpower we need. But we’ve worked on it and with some teamwork, I think we’re going to make the election happen.”

What’s happening in cash-strapped Jefferson County represents an extreme version of the crisis facing municipalities around the country. The huge shortfalls in tax revenue in the aftermath of the Great Recession -- and the cries for small, ruthlessly efficient government, for that matter -- don't always jibe with the services that public agencies are expected or legally required to provide.

To staff the upcoming elections in March, Petelos will use employees from other divisions who have volunteered for election duty and who will be paid at their ordinary rate. Petelos will send his administrative assistant to the election division, and staff from other county offices, including the land planning and storm water divisions, will also pitch in, he said. The precise number of staffers to be redirected is not yet clear. They will receive limited training on details like, say, which church-based polling sites require a call to the pastor before election machines can be placed in the fellowship hall. To pull off the election, the county staff, on loan from other departments, will not do their usual jobs.

"Roads and Transport will be delivering election machines a few days before the election," Petelos said. "So, yes, they won't be out there cutting grass or repairing roads during that time."

Jefferson County also does not have a chief accountant, a finance director or a chief financial officer. But this week, county commissioners approved a plan to hire a capital structure and investments manager to oversee its $4.2 billion debt and investment portfolio.

The county’s new capital structure and investments manager -- someone with a deep understanding of the bond market, municipal finance and debt management -- will play an essential role in helping the county emerge from bankruptcy protection, Petelos said. The manager’s $130,000 salary, about $85,000 more than the area's median household income, represents less than a quarter of the $600,000 that the county had paid a team of outside investment consultants each year, Petelos said. The county commission fired the outside team in 2011.

“Maybe if we had somebody with knowledge of the bond market in-house years ago, Jefferson County would not be in the position that it is in today,” said Petelos, referring to the county’s bankruptcy and a high-risk bond-financing package that has mired the county’s finances.

Jefferson County was forced to declare bankruptcy in November. The move followed years of legal wrangling. Last year Alabama's Supreme Court declared invalid a tax that brought about $66 million in annual revenue to the county, about 45 percent of the general fund. Jefferson County could no longer cover debt payments associated with a massive sewer-improvement project that had been initiated in the 1990s.

County officials approved the sewer project after pollution was discovered spilling into area rivers and a group of area environmentalists filed suit. In the early years of the past decade, commissioners also approved a complicated refinancing deal for the bonds used to pay for the sewer system project. The deal was supposed to lower the county’s interest rate payments. It has had the opposite effect instead.

More than 20 Jefferson County officials have faced political corruption charges in connection with the refinancing deal.

This story has been updated to add more detail about Jefferson County's elections division.