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Senate Votes Not to Repay the Trust Fund

Brandon Moseley

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By Brandon Moseley
Alabama Political Reporter

On Wednesday, April 13, the Alabama Senate passed Senate Bill 267 sponsored by State Senator Bill Hightower, which is a constitutional amendment which diverts most of the BP oil spill settlement money to new road construction.

In 2012 voters were asked to go to the polls and approve borrowing $437 million from the Alabama Trust Fund (ATF) to prop up the state’s troubled general fund (SGF) to avoid cuts to programs like State parks, prisons, mental health, and the struggling Alabama Medicaid Agency. The economy would be booming by 2016 and the State would be able to avoid deep cuts to the services by raiding $146 million a year from our investments. When conservatives appeared to be winning the debate, arguing instead that the State should down size its agencies and services rather than plundering the trust fund, supporters of the plan said that the state would pay the ATF back.

Then State Senator Bryan Taylor (R) from Prattville and then State Representative Jay Love (R-Prattville) both took a leadership role in the 2012 campaign to convince Alabama voters to vote “Yes” on the controversial amendment which allowed the state government to draw $437 million from the Alabama Trust Fund: interest on which funds Forever Wild, county roads, and the General Fund budget. Sen. Bryan Taylor pre-filed a bill to require that the State pay back the money taken from the Trust fund. Critics of Sen. Taylor’s plan say that if the state had really wanted to pay the money back they would have included it in the amendment itself. Sen. Taylor told the Birmingham News, “If we’re all going to be out talking about paying the trust fund back, we need to do it by law, so no one can wiggle out of it later on.”

Senator Paul Sanford (R-Huntsville) said, “I have two bills being drafted that offer both a short-term and a long-term payback option. These two measures are a solid starting point for the Legislature to build upon in guaranteeing that the Alabama Trust Fund is restored and enhanced.” Sanford’s plan mandated that all monies from the future BP oil settlement would go to pay off the debt.

Then State Senator Scott Beason (R-Gardendale) urged the voters to vote no and tell the legislature not to raid the trust fund. Beason warned that this is not the first time that the legislature has raided the trust fund. “We have tried this budgetary band aid solution before. In November of 2008 the people approved a drawdown on the trust fund to prop up the State budgets. After that raid and bailout, the pressure to reform the system was relieved, and there was no effort to correct the problems in spending, waste, and fraud. At least in 2008, there was a provision to pay the borrowed funds back; a provision that this year’s amendment seeks to avoid.” Beason said, “We must revitalize how state government and its budget works. Earmarking has made it easy for elected officials to hide from responsibility. I have been in the meetings where innovative solutions have been discussed and seen legislators balk because a special interest group might see a restriction in ‘their’ money. The world will not end if the referendum fails. We can provide a government that serves the people. We can protect those who are unable to take care of themselves. We can do both and ensure that your children benefit from a robust trust fund. It just takes leadership and resolve.”

Sen. Taylor said, “Mandating repayment by law will keep critical pressure on this and future legislatures and governors to implement the reforms necessary to put Alabama on a sound financial footing for the next generation.”

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In 2013 the legislature passed a resolution to pay back the raided money. Alabama Governor Robert Bentley (R) signed the legislation and said then, “We made a commitment to the voters that the Alabama Trust Fund would be repaid, and we are fulfilling that commitment. We are also working to find more savings and make government more efficient. Over the last two years, we have identified $750 million in savings. From that total, more than $528 million in savings have already been realized, and the rest of the savings will be realized in future years. Working with the Legislature, we will reach our goal of identifying a billion dollars in savings by the end of this term.”

Gov. Bentley has now reversed his position and is urging the legislature to divert most of the BP money to roads.

On Wednesday the Alabama Senate passed the controversial Constitutional Amendment, SB267, to not pay back the $437 million and instead use the BP oil settlement money on roads, most of it in South Alabama.

State Representative Phil Williams (R-Huntsville) said, “The Governor makes the news with helicopter wallets and Celine Dionne. Scandal sells news! Meanwhile a once in a lifetime negotiation begins and concludes with many not paying attention. Should most of this massive settlement go to our friends in south Alabama? They want roads and tax payer subsidized homeowners insurance. They are powerful and usually get what they want. Or do we payoff debt?”

Sen. Bill Hightower said in a statement, “I cannot understand why some in the State are unwilling to recognize the tremendous damage the coast received from the Oil Spill. Investing in roads across the state will yield a tremendous Return on Investment to our communities, while the ATF fund only provided a break-even (0 percent) return last year. It doesn’t take a Finance degree to see the best investment for Alabama. My continued stand is that the coast should be adequately recognized in this settlement. Paying off debt, and putting people to work to improve the roads which choke our economy, is the best use. Let’s get Hwy 98 completed.”

Under the Hightower bill Mobile and Baldwin counties would get $260 million for road projects and the rest of the state would share a total of about $230 million. $5 million would go to Strengthen Alabama Homes, a program created in 2011 to help people retrofit their houses to guard against catastrophic wind damage.

Widening US 98 between Mobile and the Mississippi line and extending the Baldwin Beach Express from Interstate 10 to Interstate 65 are two projects which this would reportedly greenlight.

State Treasurer Young Boozer said the state should instead pay off the debts and restore the Alabama Trust Fund. The state uses interest off of the ATF to funder Forever Wild, county roadwork, and the state general fund. That interest revenue has declined due to the economy and that $600 million in principal has been spent by the legislature.

SB267 would pay off the 2008 $162 million trust fund raid passed under the administration of Gov. Bob Riley, which is required by law; but not the $437 million 2012 raid.

The Senate rejected Boozer’s plan and instead passed SB267. Only Senators Arthur Orr, Bill Holtzclaw, Paul Sanford, Slade Blackwell, and Jim McClendon voted “No.”

SB267 now moves to the Alabama House, which is also considering a measure to raise gas taxes for more road work.

If the Bill receives the 3/5s support needed to pass the Alabama House it would still have to be ratified by Alabama voters.

 

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