July 16, 2009, was a very busy day in the financial crisis currently facing Jefferson County.  First, Jefferson County Circuit Judge Joseph Boohaker ordered the Jefferson County Commission to reinstate funds to the Jefferson County Sheriff’s Department budget.  Further, the Court directed both parties to negotiate in good faith to amend the Sheriff’s budget for the remainder of the fiscal year.  At the same time, Governor Bob Riley refused to declare a state of emergency for Jefferson County, saying that his power to declare states of emergency does not cover financial crises.  Additionally, the County Commission agreed in a civil lawsuit pending before Circuit Judge Scott Vowell that they would not take steps against Cooper Green Mercy Hospital without notice to the Court – while a protest against the County Commission’s proposed cuts to the hospital took place on the courthouse steps.  And, to top it all off, the County Commission announced that the lay-offs of hundreds of workers may be avoided by 30-45 day leaves of absence, during which time the effected employees would continue to have insurance coverage.

Amid this swirl of activity, the legislative delegation continues to debate the necessity of enacting some new form of the occupational tax and how such a potential new tax could work legally.  Jefferson County Representative John Rogers, in an interview with the Birmingham News, reiterated that he and other members of the legislative delegation approached the County Commission five years ago about the legality of the occupational tax and the necessity to fix it.  Representative Rogers states that their overtures were rejected.

Judge Boohaker made an interesting finding on page 15 of his Order, based on the testimony of Jefferson County Director of Revenue and acting Finance Director Travis Hulsey:

Hulsey testified that though the budget approved provided for a transfer into the General Fund of $17,421,500 from the Bridge and Public Building Fund, this transfer was never made.  The transfer would have been possible had this sum not been encumbered with the payment of debt obligations paid from the Bridge and Public Building Fund.  However, the expected claims on the said fund were more than originally anticipated which meant that the said 17,421,500 transfer could not be made.

This finding raises questions not only about the management of the General Fund, which received approximately 24.5% of its annual income from the occupational tax, but also the management of other funds under the control of the County Commission.  Not clear from Mr. Hulsey’s testimony is what debt obligations were paid with the $17,421,500 that could have been paid into the General Fund and that would have alleviated the short-fall currently faced by the County. When taken in consideration with the ever-changing position of the County Commission regarding its proposed cuts, more questions are raised than answered.  There is no question that a major overhaul of the County’s financial operations will result from the invalidation of the occupational tax and that, taken in conjunction with the sewer debt debacle, a financial crisis looms.  However, it becomes clearer each day that the issues facing Jefferson County extend far beyond the validity of the occupational tax.

The last several weeks have provided a number of positive trends for consumers.  First, as widely reported in the media, the Obama administration has proposed the development of an agency to be known as the Consumer Financial Protection Agency to set standards for banks and mortgage lenders to follow for mortgage loans, investigate financial institutions and enforce the new credit card consumer protection laws recently passed by Congress.  The new agency would step in and centralize responsibilities that are now divided among several governmental agencies, and would have the authority to restrict or prohibit mortgages that take advantage of consumers through hidden fees. The proposal is strongly supported by consumer advocates and, not surprisingly, is drawing the ire of the banking industry.

As the administration moves forward with attempts to strengthen consumer protection in light of the ongoing financial crisis, the administration is clearly moving away from the position of the Bush administration seeking Federal preemption of state regulations.  The Obama administration appears to be encouraging states to take a stronger stand on behalf of consumer protection – a move that could be seen as a major turning point for consumers across the country.

In another interesting development, the Third Circuit Court of Appeals has issued an opinion finding the Federal Nursing Home Reform Amendments allow residents of county-run nursing homes to seek redress for poor treatment under the civil rights laws of the United States.    As the Court stated, “The language used throughout the FNHRA is explicitly rights-creating.  … These provisions make clear that nursing homes must provide a basic level of service and care for residents and Medicaid patients.”  The Court went on to state that residents of county-run nursing homes have the right to be free from abuse, involuntary seclusion, and discipline that is physical or chemically restraining that is not required to treat a medical condition or symptom.    Hopefully more Circuits will adopt this opinion and bring the protection so desperately needed to nursing home patients across the country.