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Jefferson County Bankruptcy Foreshadows Fate of Cities in Crisis

  • After revenue loss, Alabama county cut back then went bankrupt
  • States, cities facing big budget gaps as jobs, taxes disappear
An empty street in Birmingham, Alabama on April 28.
An empty street in Birmingham, Alabama on April 28.Photographer: Maranie Staab/Bloomberg

A massive share of the local government’s tax revenue disappears. Elected officials lay off employees and shutter a health-care facility used by the poorest residents. Road work grinds to a halt. Residents wait in hours-long lines to renew their licenses.

That was 2011 for Jefferson County, Alabama, whose financial crisis may preview what’s ahead for local governments hammered by the worst economic collapse in decades.