The Alabama Legislature returned to Montgomery this week for what may end up being only the first of more special legislative sessions.
Gov. Robert Bentley said the purpose for this legislative session was to vote on a lottery to fund Medicaid and other general fund proposals.
While the lottery is being debated in the Senate, the Alabama House of Representatives is debating how to spend $850 million from the BP oil spill settlement.
But the devil is always in the details, and what these bills are really about is debt.
In the “call” (the official proclamation from the governor calling the legislature back into session), the governor wrote that the purpose of this special legislative session is to pass “Legislation providing funding for Medicaid, infrastructure investment, and/or debt repayment.”
The section of the governor’s lottery bill that states how the lottery revenue will be spent says, “the balance of the proceeds shall be deposited in the State General Fund for the ordinary expenses of the executive, legislative, and judicial departments of the state and for principal and interest payments on the public debt.”
The lottery proposal from Sen. Jim McClendon (R-Springville) would also create more debt. His lottery bill would call on the state to borrow $85 million to fund Medicaid for the coming year and then use the lottery money to pay back that debt over the next year or two.
The BP bill also deals with debt. 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.
So, in other words, this would be like paying off one credit card with another credit card, with the expectation that you are guaranteed a certain amount of money coming in each year to pay off the second credit card over the next 17 years.
But what if BP has another oil spill or some other disaster that keeps them from making their payments? What if BP goes bankrupt or becomes insolvent? Now the state has taken on more than $600 million in new debt that has to be repaid.
And why does the governor want his lottery bill to be used to pay back debt? Is his lottery bill in reality just a plan to finance his super-prisons bill, which he has already pledged he will bring back in the 2017 Legislative Session, and which would put the state in debt by as much as $1.5 billion over the next 30 years?
I support the lottery wholeheartedly, but not if it’s only purpose is to facilitate more borrowing and spending without a plan to pay it back.
While I believe the coastal counties should get most of the BP money because they were the ones who were most affected by the oil spill, if we are going to use the BP money for something else, paying off our debts and getting our fiscal train back on track is probably the best use of that money.
But what I don’t agree with is furthering an endless cycle of creating more and more runaway debt. And this special legislative session is costing the taxpayers more money so the legislature can address issues that should have been solved during the regular legislative session earlier this year.
At some point, we have to stop relying on debt to get us through from year to year and start coming up with real solutions.
Alabama House of Representatives.