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Legislature Ends In Deadlock over How to Spend BP Money

By Brandon Moseley
Alabama Political Reporter

Tuesday, May 3, the Senate failed to pass the House version of the BP oil settlement raid. The issue could possibly be settled in a Summer Special Session or left unresolved going into the 2017 Regular Legislative Session.

State Representative Tim Wadsworth (R-Arley) wrote that the announcement was made on the House Floor after Senate leaders failed to reach any kind of an agreement. Wadsworth said, “The BP bill that passed the House that paid off $454 Million debt that is owed by State and allocated $55 million to Medicaid and the balance of funds used to build roads in area affected by Katrina is DEAD in Senate. House original general fund budget added $15 million plus addition earmarks and BP bill added $55 million to Medicaid over the previous year. However, since Bill is dead in House we may be heading for a Special Session.”

State Senator Bill Holtzclaw (R-Madison) wrote, “I received several emails and phone calls in the last few days asking me to support the House version of the BP Oil Spill Payment; most notably so that it would fund Medicaid. The bill was lost in a committee vote this afternoon. There will be reports of what occurred but following is my take from a front row seat.”

Sen. Holtzclaw said, “As background, the state will receive $1B over several years as a settlement with BP. As you might imagine, the sides quickly formed before this session began to determine how the funds should be distributed. Several plans advanced that would essentially sell the $1B in a bond issue in return for a cash settlement.”

Holtzclaw said that he could not support the bill as written by the House. “I had several objections to the bill but following are the top three: 1) for reasons lost on me the bill actually extended the payback period by 7 years of the current Peoples Trust Act (paying back $161M borrowed from Rainy Day Fund in 2011 through a defined payment schedule)…strike one. 2) The $70M in funding pledged for Medicaid was not specifically earmarked for Medicaid; it was simply categorized as “legislative intent”…strike two. 3) The bond issue is fuzzy at best (technical term) but the numbers we were provided showed that the state would receive about $65 per one-hundred dollars on the bond issue. In other words, we would loose $35 per one-hundred in order to float the risk of a cash settlement over the terms of the settlement…strike three.”

Sen. Holtzclaw said, “I could not support the bill however a substitute bill was introduced in committee today that I could support. It was still a bond issue but it paid off all of the money borrowed in the past, freeing up future funding obligated to those payments. It also specifically funded Medicaid at $70M. A motion was made to table that bill in committee but that motion failed. The next move should’ve been to take a final vote on the bill but politics got in the way and the meeting was adjourned, effectively killing the BP Settlement bill for this session.”

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State Senator Bill Hightower (R-Mobile) objected to the substitute bill because it did not give more money to the coastal counties that were most effected by the oil spill. Senator Bill Hightower (R-Mobile) said, “Today was the day that it needed to pass out of committee and unfortunately, it failed. A colleague in the north submitted another bill which took all the coastal money out and that just wasn’t acceptable. I want to thank my colleagues on the coast that stood with me and supported me along the way. We had agreement in the House that money was going to go to the coast. We had broad agreement in the Senate, but It was just a few Senators who decided it wasn’t going to move forward. This is unfortunate for the coast but the delegation is going to continue to fight to bring the appropriate amount of dollars to coastal Alabama. Afteral this is where the BP oil spill occurred. We are going to continue to fight for those dollars and serve you well in Montgomery.”

Wadsworth explained what would happen to the money if the legislature does not act. “Since the Senate did not pass the BP bill the below is what occurs. The State will receive $100 million from BP funds this summer. Of that amount the first $50 million goes to Gulf State Park. The next $15 million goes to make a partial payment on Rainy Day Fund Debt. The remaining $35 million goes to a discretionary fund controlled by Governor who can either pay debt or allocate it to Medicaid.”

The $50 million that goes to Gulf State Park will be used to construct a $110 million beach front convention center and hotel that Governor Bentley has been relentlessly pursuing for two years.

Sen. Holtzclaw said, “The Silver Lining? The next installment of the BP Settlement will still come into the State General Fund and automatically be distributed throughout the budget. All this on the next to last day of the 2016 session. I’m sure we’ll see this again next year.”

The failure of the effort to use the BP oil money for road projects around the state combined with the failure to pass a gas tax increase means that there will be no extra money in the 2017 budget to address transportation issues.


Brandon Moseley is a former reporter at the Alabama Political Reporter.

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