MONTGOMERY, Ala. — BP has declined for now to pay Alabama on its $148-million claim for tax revenue lost by the massive oil spill — a move that caused the governor to cut funding sharply for schools for the rest of September.
State school officials said the 2 percent cut ordered yesterday by Gov. Bob Riley would amount to about one-fourth of what local school systems would normally receive in September. The cut does not affect salaries, but it can put a hole in the budget for supplies and repairs.
“Many will have to borrow money to get through the September payroll,” said state school Superintendent Joe Morton.
BP officials said the lawsuit filed by Alabama Attorney General Troy King was part of the reason for their decision not to begin making payments on the $148 million claim sought by Gov. Bob Riley.
Because the state is not receiving the BP payments, Riley said he had no choice but to cut the education budget by an additional 2 percent yesterday. It already had been cut 7.5 percent due to revenues falling below expectations in the struggling economy.
Riley blamed the cuts to the education budget on King filing the lawsuit despite Riley’s vocal objections.
“If that lawsuit hadn’t paralyzed our negotiations, we wouldn’t have to make these additional cuts to education funding,” Riley said.
The governor also did not spare BP.
“BP can’t escape blame either. As the admitted responsible party, the company should live up to its commitments, even though the lawsuit stands in the way,” Riley said.
King, who like Riley is a Republican, said the governor is getting in the way of efforts to receive payments from BP.
“We’ve tried it the governor’s way and it did not work. Now it is time for him to get out of the way and let us do our job. It is obvious that BP is not dealing in good faith and is using every excuse possible to keep from paying its obligations both to the individuals and businesses with claims as well as to the state,” King said.
Craig Pouncey, assistant state school superintendent for financial services, said the increased cut is no surprise because tax collections have been falling below expectations all year. “We have been anticipating this happening,” he said. “Things have not rebounded to the point they need to.”
He said state school officials had cautioned city and county school systems to prepare for deeper cuts — and to be ready for more when the new fiscal year starts Oct. 1 because the conditions that caused the extra cuts Thursday will still be around in two weeks.
“There is not a whole lot of difference between Sept. 30 and Oct. 1,” he said.
Paul Hubbert, the head of Alabama’s teachers’ union, the Alabama Education Association, said additional proration was anticipated. He said the recent receipt of federal stimulus money will help offset some of the effects. “That’s going to give a little wiggle room to school districts,” he said.
He said no one will go without pay, but they will go without other things.
“It certainly means supply money won’t be there in a lot of places, and maintenance will be deferred,” he said.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info