State should make Exxon pay

Published 1:36 am Wednesday, January 23, 2008

By Staff
If something is not done, the recent decision by the Alabama Supreme Court siding with Exxon and reversing an Alabama jury's multi-billion-dollar verdict will have devastating consequences on the people of Alabama. Only the court's chief justice sided with the people in the case against Exxon that was brought because Exxon was not paying the full royalties they owed for oil and gas they purchased from Alabama wells in the Gulf of Mexico.
In 2003, after a lengthy trial, an Alabama jury said Exxon owed the state $102 million in additional royalties, plus interest, for gas Exxon had pumped from Mobile Bay.
The jury also imposed punitive damages of almost $12 billion, which the trail court judge reduced to $3.5 billion. Then, the Supreme Court reversed even that.
The taxes Exxon pays - or should have paid - go to the General fund, which funds agencies like Medicaid, Public Safety and Corrections, and countless other agencies of state government that touch the lives of Alabamians every day. This court's decision will have a devastating impact on funding for nursing home care, health care and prescription drugs for thousands of Alabamians, as well as additional state troopers and other steps to keep our state safe.
The crux of the case against Exxon was that they were manipulating their costs of producing oil and gas from Alabama reserves with questionable expenses. Behavior like that is wrong.
Alabama is blessed with wonderful natural resources, but we must require powerful corporations to pay a fair price if they are going to take advantage of our natural resources - like our oil and gas. If they are going to be utilized, the state must benefit from their use.
I will be urging both houses of the Legislature to look at changing the oil and gas severance tax from a value-based system to a volume-based system. That way Exxon will have to pay the same way you do - based on what they pump.
You, the people of Alabama, pay your fair share of taxes, whether it is income from taxes, sales taxes, property taxes or gasoline taxes you pay each time you fill up your tanks with gasoline that currently costs way too much. You pay Exxon more than $3 a gallon, and they pay little or nothing in taxes, while they report record-setting profits. You struggle to make ends meet while Exxon paid its former CEO $51.5 million a year - more than $6,000 per hour.
I am against any tax increases on the hardworking people of Alabama. To keep this promise in light of this year's projected shortfalls in our state budgets, it is clear to me that Exxon must pay more. How much is fair for Exxon? That question should be answered by your representatives in the Legislature. But by the end of this session we will know what Exxon's fair share is. And more important, Exxon will know.
I believe this is a fight worth fighting. Please contact your local legislators and ask them to join me in seeing that Alabama is treated fairly.
Jim Folsom Jr. is lieutenant governor of the state of Alabama.