Alabama won a huge victory last week when the BP Oil settlement was announced. As a part of that settlement, the state will receive $2.3 billion dollars over the next 18 years, with a billion of those dollars being given to our state’s General Fund budget. That means legislators now have to determine what is the best use of that money.
Smart leaders like Rep. Steve Clous (R-Ozark) and Sen. Arthur Orr (R-Decatur), who chair the state House and Senate General Fund Budget committees, see this as an opportunity to pay back the state’s existing debts. I couldn’t agree more. Over the last few years the state has withdrawn over $598 million from the rainy day account in the Alabama Trust Fund. So far, even though a bill was passed setting a schedule to pay it back, we’ve only deposited $15 million in the account.
The state also owes $114 million to the Centers for Medicare and Medicaid Services for overpayments and adjustments from the federal government.
Paying back our debts is the most responsible thing we can do with that money, and should be our first priority. Not only would this keep us on schedule for paying back the debt, it would also generate more money for the General Fund budget.
Like any savings account, Alabama’s Rainy Day fund receives interest payments. Every year, those interest payments go back into the state’s General Fund. And just like the interest payments on your personal savings account, the more money there is in the account, the larger the interest payments. So by repaying the money that was taken out of the Rainy Day Fund, we will generate larger interest payments that will then go into the General Fund budget.
What better way to ensure stability in our budget than to take the unexpected windfall from BP, pay back our existing debts and create money for the General Fund via the savings account’s interest? After those debts are paid off, we will still have about $288 million still left. I believe that money should be used to fully fund the PACT program.
Thousands of families in Alabama were promised that if they bought into the PACT program, their children’s college tuition would be fully paid for. But the state has not honored that commitment. Since 2010, families have only been reimbursed tuition at the 2010 rate, even though tuition costs have continued to rise year after year.
In my opinion, this is another debt the state owes. The state made a promise to these families, and the state didn’t keep its end of the deal. We need to fully fund the remaining PACT participants and reimburse those who have been shortchanged by the state since 2010.
If, after paying all these debts, there is any money left over, then I think that money should be used to support our gulf coast. Those living along our gulf coast were the ones hit by the oil spill, and they are the ones who should be benefiting from this money.
Alabama has some of the most beautiful beaches in the world, and we need to take advantage of our natural resources. For too long, groups and associations based in Alabama have traveled out of state to hold conventions and other meetings because we don’t have a proper convention center at the beach. Instead, they host their conventions in places like Biloxi or Destin.
This is just like the lottery: instead of keeping our money in Alabama, we are sending our money to our neighboring states. By investing in a convention center, we can generate millions of dollars (without raising taxes) and create thousands of new jobs along our coast.
We also need to use some of the money to connect I-65 directly to the coast to generate easier access and more tourism. It is already halfway completed, so let’s finish the job and make it more convenient to get to the beaches through a true expressway. It will also generate more jobs and more revenue for the General Fund and Education Trust Fund budgets through lodging and sales taxes. This is a much better way to generate revenue than the Republican Tax Package that raises taxes across the board.
State leaders need to be wise in how we use this money. Paying back our debts and investing in our natural resources is not just the morally right thing to do, it’s the smart thing to do.
Craig Ford is a Democrat from Gadsden and the Minority Leader in the Alabama House of Representatives.