Al. court sides with Riley in budget dispute

By PHILLIP RAWLS
Associated Press Writer

Published: July 3, 2008

MONTGOMERY, Ala. (AP) _ The Alabama Supreme Court filled a $63 million hole in the state General Fund budget Thursday by siding with Gov. Bob Riley in a dispute over use of funds won in a court case.

Tuscaloosa businessman Stan Pate had sued the governor, contending Riley erred when he put the money from Exxon Mobil Corp. litigation into the state General Fund.

Montgomery County Circuit Judge William Shashy sided with Pate in April, holding that the $63 million should go into a state savings account called the Alabama Trust Fund.

Without dissent, however, the Supreme Court vacated Shashy’s decision and said Pate didn’t have legal standing to bring the suit.

“Pate’s claim of standing as a taxpayer must fail because the Trust Fund receives no tax revenue; it is funded only from royalties from the production of oil and gas under offshore leases,” Justice Tom Woodall wrote.

At issue was part of the $121.5 million that the state government received from Exxon Mobil in litigation over natural gas wells the company drilled in state-owned waters along the Alabama coast.

Nearly half of the amount was compensatory damages for royalties that weren’t paid by the oil company, and the remainder was a penalty. Riley put $58.2 million in compensatory damages into the Alabama Trust Fund, but he put $63.3 million from the penalty into the General Fund to help balance next year’s budget during an economic slowdown.

Pate’s attorneys argued that the state constitution required Riley to put the entire amount into the trust fund to be saved for future generations.

The state attorney general’s office argued on Riley’s behalf that his action was correct.

Shashy ruled against Riley as the Legislature was trying to wrap up work on the General Fund budget for next year.

The Alabama Trust Fund has $3.2 billion derived from natural gas wells drilled in state-owned waters. The trust fund is invested and the earnings are used to support the General Fund budget.

Pate has been a frequent critic of Riley since he first ran for governor in 2002. Pate was out of his office Thursday and could not be reached immediately for comment.