Another raid on the state's piggy bank

By Bob Martin

Tuscaloosa businessman and Riley detractor Stan Pate sued the governor, contending Riley erred when he put $63 million in interest awarded Alabama from the Exxon Mobil litigation into the state’s General Fund instead of the Alabama Trust Fund.

A Montgomery circuit judge agreed with Pate in April, ruling that the funds should go into the Alabama Trust Fund. The trust fund was created by the people in 1985 and succeeded the Alabama Heritage Trust fund created in 1982. Today the fund, the state’s piggy bank, has about $3.2 billion invested for hard times.

However, the Supreme Court overruled that decision last week saying Pate didn't have legal standing to bring the suit.

Riley’s raid on the fund was necessary, he has said, in order to fill gaps in the state’s general fund, which is predicted to be in proration before year’s end.

Pate told the AP the ruling did not surprise him because the state court system is financed by the General Fund and the courts faced spending cutbacks if the lower court’s ruling stood.

"I am disappointed and angry that the justices of the Alabama Supreme Court have chosen to be milkmaids for the governor as he squeezes $63 million from the public treasury intended for the long-term benefit of all Alabama citizens," Pate said, and he predicted someone with legal standing will re-file the lawsuit.

I can’t say whether or not the high court justices were influenced because an opposite result of the lawsuit would have caused them some fiscal discomfort. I do believe though that the justices should have stepped aside and allowed a court to be appointed which would not have had even an appearance of bias. By not taking that approach the court gives Pate’s accusations some traction.

This is just another glaring instance whereby the politicians decide to take the easy out by grabbing money from the state’s savings account rather than raising revenue or reducing employee numbers to pay for the general services of state government. After all, we are again ranked by the Census Bureau as paying the lowest per capita local and state taxes in the nation. And with over 35,000 state employees, the work force paid out of the general fund is the largest in a decade.

Now the good news

Montgomery attorney Jere Beasley, who is representing the state in the lawsuits against multiple pharmaceutical manufacturers, told me last week the state could receive as much as $1 billion in actual damages if it wins or settles the remaining 69 cases. The lawsuits involve claims that the drug companies overcharged the state’s Medicaid program for prescription medications.

Beasley says that so far the verdicts have been very good to Alabama. Juries have already awarded the state $329 million and Atty. Gen. Troy King has sent a letter to the remaining companies offering them a 30-day window to settle or go to trial.

Beasley said the state is involved in negotiations concerning possible settlements with four or five of the drug companies, but would not say which ones. Beasley told me that he believes most of the plaintiffs will eventually agree to settlements.

Alabama is Volkswagen’s pick?
Reuters, in reports from Frankfurt over the weekend, says Alabama will be the likely home of the new Volkswagen manufacturing plant, beating out two other states, the German industry newsletter Automobilwoche said on Saturday, citing senior company sources.

Other sources last week predicted that Chattanooga, Tenn. and north Alabama would both be winners with an assembly plant being built near Huntsville and an engine facility in the Tennessee city.

A VW spokesman has said that a decision on the location of the plant had not been made and that Alabama, Tennessee and Michigan remained in the running. A decision is expected by July 21, the spokesman said.

Daimler's Mercedes Car Group has had a manufacturing plant in Alabama for years and ThyssenKrupp, an important supplier of automotive steel, is also opening a production facility in the state just north of Mobile.

Bob Martin, editor and publisher of The Montgomery Independent, has taken over The Alabama Scene from longtime political columnist and Cherokee County native Bob Ingram, who died recently.