Gov. Phil Bryant could ask legislators in this week’s special session to decide how to divvy up money the state is receiving as part of the settlement for the 2010 BP oil spill after they work on a plan to find additional revenue for the state’s and local governments’ growing infrastructure needs.
The primary reason the governor called for the special session – set to begin at 10 a.m. Thursday – is to try to reach an agreement on addressing transportation needs on both the state and local levels. A solution to the infrastructure issue has eluded legislators for multiple years. As expected, the official call Bryant issued late Tuesday proposes diverting use tax revenue from education and other state services to transportation and enacting a lottery with its revenue dedicated to transportation.
Bryant has said he also would like legislators to address the BP settlement funds in the special session. Clay Chandler, a spokesman for Bryant, said the governor “likely” would add BP after transportation issues are considered.
How to divvy up the funds the state receives as compensation for the 2010 Deepwater Horizon explosion and ensuing oil spill, like transportation, has been a difficult issue for legislators to resolve.
Many believe the bulk of the money should be spent on the Gulf Coast. But some legislators from other parts of the state are not so sure.
“We should divide it up among all 82 counties equally,” said Rep. William Tracy Arnold, R-Booneville.
What is at issue is $750 million the state is slated to receive as compensation for lost sales tax revenue as a result of the massive oil spill that hurt tourism and other economic activities on the Gulf Coast.
The state already has received $150 million of the settlement funds and the Legislature has spent about $50 million of that amount on primarily Gulf Coast-related projects.
Since the settlement funds were compensation for lost economic activity on the Gulf Coast, many including Lt. Gov. Tate Reeves and the governor, believe the bulk – if not all of the money – should go back to the coastal region.
“Setting aside BP funds for the Gulf Coast means that the settlement will benefit the region of Mississippi most impacted in the 2010 disaster,” said Reeves, in January after the Senate passed legislation to direct all the funds to the Coast. “I’ve talked extensively with folks in the seafood and tourism industries, restaurant owners and other community leaders about the change in the coastal economy since the oil spill, and I’m convinced this is the right thing to do for all of Mississippi.”
The primary author of the Senate bill was Sen. Brice Wiggins, R-Pascagoula. But earlier this week Wiggins did not want to speculate on what would happen in the special session.
The $750 million is part of a $2.2 billion settlement Attorney General Jim Hood and others negotiated with BP. The bulk of the funds outside of the $750 million for economic damages to the state is going for environmental restoration projects on the Coast. In addition, the coastal counties and municipalities have received other funds for various issues related to the oil spill, including the reimbursement of at least a portion of the sales tax revenue the municipalities lost.
During the 2018 regular session, both Reeves and Speaker Philip Gunn said the leadership was close to agreement on how to divvy up the BP funds. Reeves said the agreement entailed providing 75 percent of the funds to the coastal counties and divvying up the rest for projects in other parts of the state. What was at issue, Reeves said was that House members wanted the BP funds the state currently has on deposit – about $100 million – to be used to pay for projects across the state. Reeves said legislators ran out of time before deciding how to allocate those funds.
“I will say I felt like we were making good progress during the session,” Gunn agreed. “We just ran out of time.”
Whether a proposal that diverts 75 percent of the revenue will pass with rank-and-file legislators remains to be seen.
“I think since the whole state suffered (based on loss sales tax revenue) it should be 75-25 the other way,” said Rep. Preston Sullivan, D-Okolona.
The argument of Sullivan and others is that municipalities receive only 18.5 percent of the revenue from sales taxes (7 percent on most retail items) collected within their borders. The rest goes to state coffers. In other words, it was the state treasury most impacted by the loss of sale tax revenue from the coast after the oil spill and the $750 million settlement was designed to compensate the state, not just the Gulf Coast, they argue.
Sen. Hob Bryan, D-Amory, believes the state’s political leadership is missing an opportunity to best utilize the settlement funds to help deal with the transportation woes.
“I’d establish a state infrastructure bank, fund it with money from the BP settlement and whatever other funds we can afford,” he wrote in a recent commentary. “I’d have it issue bonds, and I’d allocate those funds to cities and counties, based on population, for real, true infrastructure projects. Compared to the current plan, local governments would get more money and the people would get more infrastructure. If there’s going to be a lottery – which I oppose, by the way – that’s where the lottery proceeds should go.”