Federal inmates will no longer be housed in the Covington County Jail after the U.S. Marshals terminated their contract with the county Thursday — a decision that will cost the cash-strapped county more than $300,000 in annual revenue.

Inmates were removed from the jail Thursday morning, escorted out by jail staff, and placed onto a Department of Corrections bus one week to the day after the New Year’s Day escape of federal inmate T.C. Harris.

Harris crawled through a hole in the interior perimeter fence, scaled the outside fence and hitched a ride to Mobile County before being arrested there by U.S. Marshals last Thursday.

On Tuesday, Sheriff Dennis Meeks cited negligence by the jail staff as the reason behind Harris’ escape but stated he did not believe the incident would affect the housing contract.

However, that seems not to be the case.

Meeks said he was initially notified of the U.S. Marshals’ decision Tuesday, and by Wednesday was told the inmates would be picked up Thursday. There was no reason given by the Marshals, he said.

A call to the U.S. Marshals was not immediately returned Thursday.

“They didn’t give us an official reason,” Meeks said. “But one can assume it’s because of the escape. We do know we’ve lost (the contract) for now, but we don’t know about the future. We don’t really know what it holds, but we hope we can get it back.”

The loss of the contract is a blow to the cash-strapped county, Commission Chairman Lynn Sasser said.

“We’re in a financial jam,” Sasser said. “And if you don’t know, a jam is on the farthest side of a crunch. It’s not good.”

County administrator Brenda Petty, Sasser and District 1 Commissioner David Ellis met with Meeks Thursday afternoon to discuss the implications of losing the contract.

As they were heading into the meeting, Petty said the situation “is serious.”

“At this time, we just have to seriously re-evaluate this budget — even more so than before,” Petty said.

The three-year federal inmate housing contract, approved in July 2008, called for the Covington County Jail to house approximately 20 inmates per day and was expected to generate more than $324,000 annually for the county. Under the agreement, the monies collected were to be divided 50-50 between the sheriff’s office and the county’s general fund.

“This contract was supposed to be a way for the sheriff’s office to generate additional revenue,” Meeks said. “We were proud to get it, but we didn’t have it six months ago and we survived.

“We’ll survive now. We still have another 180 inmates to take care of,” he said.