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BP Settlement Bill Passes Legislature, Signed By Governor

Susan Britt

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By Susan Britt
Alabama Political Reporter

MONTGOMERY—On Wednesday, the bill proposing use of BP Settlement funds to pay back debt to the General Fund, free up money for Medicaid and appropriate money for Southern Alabama counties passed out of a joint conference committee, the House and the Senate, and was then signed by Governor Robert Bentley.

After many hours spent in both chambers, over several legislative days, the Alabama Legislature passed HB36 sponsored by Representative Steve Clouse (R-Ozark).

In the late afternoon, the Senate voted 22-8 to concur with changes made in joint conference committee earlier in the day. The Governor signed it almost immediately, putting it into effect upon his signature.

The bill, restructured by the committee, will use $640 million of the BP Settlement funds to:

–Repay $161 million to the Rainy Day Account for funds transferred to the General Fund in Fiscal Year 2010.

–Pay $238 million against funds owed to the Alabama Trust Fund (ATF) for money borrowed to cover deficits in FY2013, FY2014, and FY2016.

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–Provide $120 million to Medicaid for FY2017 and FY 2018.

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–Allocate $120 million to Baldwin and Mobile counties for road projects.

–Restructure payments to the ATF extending the last payment from 2020 to 2023.

–Reduce the annual payment to $13 million (payments for 2017, 2018 and 2019 are covered by the lump sum).

The original House version proposed to repay $287 million to the Rainy Day Account, but the final version reduced that to $238 million.

ATF payment amount was proposed at $422 million expunging the debt. As passed, HB36 will pay $238 million of the amount owed but restructure future payments in the People’s Trust Act to be $13 million with the final payment being extended from 2020 to 2033.

Medicaid will be funded the initial $70 million as provided through savings of $35 million in loan interest, paired with $35 million from the Governor’s Office. HB36 added the remaining $15 million appropriation closing the “Medicaid gap” that will allow the State to enter into the Federal Regional Care Organization (RCO) plan.

The House version of the bill provided a 3-year Medicaid plan, but the in the final version it was reduced to a 2-year plan.

Initially, the $15 million for Medicaid was provided through an amendment passed on the Senate Floor by Senator Trip Pittman (R-Daphne) reducing the amount proposed to be received by Districts 91 and 92.

In the joint committee meeting, Clouse said, “By reducing the amount of the debt paid and the amount given to Baldwin and Mobile counties would free up $105 million for FY2018.”

Further reductions to payment of the ATF debt paired with a further reduction of payments to Baldwin and Mobile counties provided an additional $105 million for Medicaid in 2018. Estimates for the 2018 additional need in the fund range from $135 million to $150 million.

Rodger Smitherman’s (D-Birmingham) previous amendment to ensure that Medicaid physicians would be returned to their previous reimbursement levels before the August 1 cuts, and to ensure that $4 million would be reserved for those on dialysis was also included in the language of the final bill.

Allocations for Baldwin and Mobile counties were first proposed for $198 million but settled at $120 million.

According to the bill, “The remaining proceeds not to exceed $120 million to be distributed $65 million to Alabama Department of Transportation District 91 for Highway 98/Highway 158 from the Mississippi State line to Interstate 65 and $55 million to ALDOT for District 92.”

Language in the bill sets up the Alabama Economic Settlement Authority, creates a BP Settlement fund and grants powers to the authority to issue bonds guaranteed by the future payments of the BP Deepwater Horizons Settlement.

Both Senate majority and minority leadership thanked all of the legislators for their work.

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