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House Passes BP Oil Settlement Raid to Prop Up Medicaid

By Brandon Moseley
Alabama Political Reporter

Wednesday, August 17, 2016, the Alabama House of Representatives passed a plan to take the BP oil settlement revenue stream and sell it to investors for one time money. This scheme would prop up the troubled Alabama Medicaid program for another year and allow Alabama Governor to implement his vaunted Regional Care Organizations (RCOs), pay off some of the money that the State legislature has raided from the Alabama Trust Fund, and give South Alabama some much fought for road improvements.

State Representative Wil Ainsworth (R-Guntersville) said, “The House has done its part to find a solution. We just passed the BP bill. It will repay $161 million to the Rainy day fund, $287 million to the Alabama Trust Fund, will fund Medicaid, and will direct $191 million to Baldwin and Mobile counties for Hwy. 98 and Beach Express project which will help with tourism.”

State Representative Mack Butler (R-Rainbow City) announced, “HB 36 has passed which provides for the allocation of BP monies.”

State Representative Christopher John England (D-Tuscaloosa) said, “The BP bill will set aside some money to deal with the current shortfall in Medicaid. We passed that bill on to the Senate today.”

State Representative Ed Henry (R-Hartselle) said, “We have been working on how to handle the BP settlement that the State received. This is not the $1.5-$2 billion that the coast has already received. There is a large divide between members on how to spend it. Many of us want to pay our debts off in full and allow the remainder to be used for a road project in Mobile County. However the prevailing position for now is to allow Mobile to get 20 percent of the funds and only partially pay back our debt.”

Rep. Butler said, “By paying off debt we free up the debt service monies and earn money from our own money we are paying back to ourselves? It’s a smart move without a shadow of doubt. The money we borrowed was borrowed from “We the People of Alabama” and we are paying back “We the People of Alabama.”

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House Minority Leader Craig Ford said in a statement, “According to the settlement the state reached with BP, the company is supposed to pay the state $850 million in annual installments between now and 2033. What the BP bill does is take out a bond (i.e., more government debt) to pay off a significant portion of our current debt–which is close to $700 million. The remainder of the bond will be used to help fund Medicaid and some other government expenditures. That debt will, in turn, be paid off with the annual payments from BP.”

Rep. Butler explained, “Before I got to Montgomery they borrowed 161 million and then another 437 million from ourselves (Alabama Trust Fund) which currently generates around 150 million each year to the budget. Paying the money back increases greatly the interest which will increase the contribution to the general fund plus it frees up the debt service monies.”

After BP raid proponents passed the legislation, Rep. Henry said, “We were not able to garner enough support to pay off all the debt. Maybe the Senate will have better luck.

House Bill 36 now moves to the Senate for its consideration.


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

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