Court to hear arguments over occupational tax

By Alan Collins

BIRMINGHAM, AL (WBRC) - Jefferson County Commissioners say a hearing scheduled for Wednesday before the Alabama Supreme Court on the county's old occupational tax is critical.

The court will hear oral arguments over a decision by a judge forcing the county to pay up to $50 million in refunds to those who paid the occupational tax after its was declared illegal in 2009.  Commission President Bettye Fine Collins said Tuesday if the county has to pay the money it will lead to job layoffs.

"I can't predict what will happen," Collins said. "I know if we lose we will have to look at our operation and make major reductions."

The county is also fighting an order by DeKalb County Judge David Rains which added $10 million in interest to the refund amount.

Judge Rains ruled in January 2009 the county's occupational tax was illegal.  The decision and subsequent failed appeals by the county led to the county losing tens of millions of dollars in revenue last year, forcing the county to place hundreds of employees on administrative leave and temporarily close satellite courthouses.  The courthouses were reopened and most of the employees were returned to work last November after the new occupational tax, passed in August 2009, took effect.

Collins said the county's current job tax law had a retroactive clause which made the previous occupational tax legal.  Therefore, she believes the county does not owe any refunds.

Jim McFerrin, one of the three attorneys who filed the lawsuit challenging the old tax, said that claim is unconstitutional.

"The constitution is clear," McFerrin said. "The county is asking the Supreme Court to rewrite over the language of the constitution."

Commissioner Shelia Smoot said she objects to McFerrin and the other attorneys trying to pocket $17 million in legal fees out of the refund amount.

"When attorneys are asking for $17 million in fees and the community they are claiming they are fighting for to get back to this county are only getting a $56 check," Smoot said.

McFerrin said the county commissioners have cost the taxpayers big bucks by fighting the judge's ruling and now fighting the refunds.

"As we sit here today, just because the county didn't obey the court's ruling, they accumulated $3 million in interest," McFerrin said.

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