Proration declared, county schools to lose about $500K

Published 11:50 pm Thursday, September 16, 2010

Gov. Bob Riley on Thursday declared another 2 percent proration for the rest of the fiscal year, blaming the action on a lawsuit filed against BP by Attorney General Troy King.

BP told state officials that it would not pay Alabama’s $148 million claim for lost tax revenue because of the lawsuit.

The increase in proration would cost Escambia County Schools about $500,000.

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A lion’s share of the claim — $116 million — would have gone to the Education Trust Fund. The spending cuts amount to $113 million.

“If that lawsuit hadn’t paralyzed our negotiations, we wouldn’t have to make these additional cuts to education funding,” Riley said in a statement. “One man made a brash, reckless decision to sue BP while the state was still working to recover lost tax revenue from the company. He did it without consulting me or local officials on our coast. No other state’s attorney general has sued BP at this time and King’s lawsuit stopped our ability to recover these tax dollars before the end of this fiscal year.”

Riley also blamed BP for the situation.

“As the admitted responsible party, the company should live up to its commitments, even though the lawsuit stands in the way,” Riley said. “No one is going to benefit from this nonsense except the lawyers.”

The Education Trust Fund entered fiscal year 2010, which started Oct. 1, with proration of 7.5 percent. The economy was on track to be able to sustain proration at 7.5 percent for the entire 2010 fiscal year until the BP oil disaster in April. The state estimated the disaster resulted in a loss of $148 million in lost tax revenue that would have gone to the state from May through September, including $116 million in revenue that was earmarked for the Education Trust Fund.

The state is legally required to have a balanced budget, so when revenues fall short, proration is necessary.

“As I’ve said all along, litigation is an option that can be exercised if it becomes necessary,” Riley said. “But it should never have been the very first step.”