President's Message - Legislative Preview 2001

Counties Oil Lease Money Protected -- For Now

For a long time, people in county government pointed at December of 2001 with anticipation. But the much-awaited event came and went this year with little fanfare.

In the early 1980s, then-Governor George C. Wallace agreed to give counties and cities ten percent of the investment income from the Alabama Trust Fund when (AND IF) the income exceeded $60 million per year. County officials began to wait and wait and wait.

Few, if any, observers expected that $60 million threshold to be reached until December of 2001. It was on that date that the Alabama Trust Fund and the state's other fund of oil lease revenues, the Heritage Trust Fund, would merge into one fund with a corpus of more than $2 billion. This merger would ensure that the $60 million trigger would be reached and the county revenue would begin to flow.

However, because of growth in oil activity in Alabama's gulf waters and prudent investment decisions, the trigger point was reached about five years early and counties began receiving revenue in the late 1990s.

The real fight over this money came that first year, when legislative leaders sought to balance the ailing state general fund budget by taking away the county and city oil lease payments. The thinking by some in the Legislature was that none of the counties had expected the revenue until 2001 anyway, so why not use it to balance the budget.

Well, most of you remember that the effort to take the county revenue was soundly defeated on the floor of the House of Representatives. But that little skirmish signaled the need for us to protect this revenue against any attacks.

This first effort actually backfired to the point that during the 2000 election Alabama voters soundly approved a constitutional amendment ensuring that counties and cities continue to receive a total of 20 percent of the investment revenue each year.

Last year counties divided about $9 million from the trust fund. That figure is expected to grow substantially now that the two trust funds have merged, albeit with little fanfare.

Because of this background information, it is not surprising that county officials from throughout the state rose to attention when folks around Montgomery began discussing the use of trust fund revenue to solve the recent education budget crisis. We had all been down that road just a few years earlier.

However, this time the prevailing opinion in the Alabama Legislature was to protect county and city revenue, even at the cost of delaying some of the education payments being proposed. A host of legislative leaders stood early and often to backup our cause -- Senate President Pro Tem Lowell Barron, Senate Majority Leader Tom Butler, Senate Minority Leader Jabo Waggoner, Senators Hank Sanders, Gerald Dial and Tommy Ed Roberts, House Speaker Seth Hammett, House Ways and Means Chairman Richard Lindsey and House Rules Committee Chairman Jack Venable.

In fact, the words of Rep. Venable proved to be prophetic. He sponsored the 2000 constitutional amendment that put the county-city protection language into the constitution. And during the debate on the House floor back then, he said that it was important to protect the city and county money because one day there would be a funding crisis in state government. And, he said, the legislature should not be tempted to again go after the county and city revenue.

He was right. The presence of that constitutional amendment -- which Venable sponsored in the House and Sen. Bobby Denton sponsored in the Senate -- was our "ace in the hole" this year. Even those who wanted to take the county and city revenue, and there were some of those, were faced with the realization that such a move would require not only a legislative act, but also a statewide referendum to supercede the 2000 vote.

In the end, the Legislature did pass a proposed constitutional amendment that provides a safety net for this year's education budget and establishes an account to guard against future proration of the education budget. Both of these functions will be financed with the STATE'S portion of the trust fund investment earnings.

The constitutional amendment is very clear in its language -- thanks to our staff and our legislative friends. The county revenue cannot be reduced. The amendment even includes language to ensure that the bridge bond issue program will go on as scheduled and will not be affected by this proposal.

So, in June of 2002 Alabama voters will again be faced with a constitutional amendment impacting the Alabama Trust Fund. They must decide if they want to use investment earnings from that fund as a roadblock to proration.

That decision is one we will leave to the voters throughout the state. There is plenty of time and there will be plenty of discussion about that issue.

The important part for county officials to remember is that no matter how the voters ultimately view this proposal, December of 2001 has now come and gone and the county revenue is here to stay. As long as we keep our guard up.