Jefferson County, Ala., Files Largest Municipal Bankruptcy

(Butch Dill/AP Photo)

Jefferson County, Ala., which contains the city of Birmingham, filed for bankruptcy on Wednesday after suffering for three years from the collapse of a sewer bond refinancing. It is poised to be the largest municipal or county bankruptcy in U.S. history, reported the Wall Street Journal.

Defaulting on more than $3 billion of debt over the sewer deal, the county had come close to filing for bankruptcy months ago, but negotiated a tentative agreement with creditors in September.

The commissioners for the most populous county in the state voted Wednesday in a meeting to file for bankruptcy in a 4-to-1 vote.

Gov. Robert Bentley said he was disappointed in the filing.

“Bankruptcy will negatively impact not only the Birmingham region, but also the entire state,” he said, according to the Journal.

The county reportedly was so strapped for cash and public spending problems became so chronic that bridges were not repaired. For safety, school buses drove around them,  accruing 1,722 miles in detours for an added cost of $2.5 million a year, according to Bloomberg.

Jefferson is the seventh municipality or county to file for bankruptcy this year, following Harrisburg, Pa., last month.

Since 1937, when Chapter 9 filings first became an option for municipalities, there have been only 625 filings, according to Chicago attorney James Spiotto, who has written books on the subject. Six filed in 2010.

ABC News’ Alan Farnham contributed to this report.

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