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Committee OKs ending TVA funds for dry counties

By M.J. Ellington (334)262-1104

MONTGOMERY — A state House committee approved a bill Wednesday to increase the amount of money counties served by TVA receive in lieu of taxes. But not before a debate in which opponents accused the measure's backers of setting up "slush funds."

By a 12-2 vote, the House County and Municipal Affairs Committee approved Rep. Jeff McLaughlin's bill, which would give counties in the Tennessee Valley Authority's service area a greater share of the money the utility pays the state in lieu of taxes.

As a federal agency, TVA doesn't pay taxes to state and local governments.

Currently, about $4.7 million, or 5 percent, of the TVA revenue goes annually to 12 non-TVA counties that do not allow alcoholic beverage sales. TVA counties share 78 percent of the revenue, or $70 million per year. The state keeps the rest.

1978 compromise

A 1978 compromise between TVA-area lawmakers, legislators representing dry counties and the late Gov. George C. Wallace set up the TVA revenue distribution formula. Before then, all TVA in-lieu-of-tax revenue went to the state's General Fund.

"There is no reasonable relationship between paying the light bill and funding services in a dry county," said McLaughlin, D-Guntersville.

But Rep. Richard Laird, D-Roanoke, accused TVA-area lawmakers wanting the money
for their own private slush funds.

That drew a sharp response from the committee's chairman, Rep. Bill Dukes, D-Decatur.

"I resent you calling this a slush fund," Dukes said. "I tried to stay out of this as long as I could as chairman of this committee, but when somebody accuses me of creating a slush fund, I had to speak up."

Dukes said a formula determines the distribution of the TVA revenue that goes to Morgan County and the fund is above board.

Laird, whose district includes three dry, non-TVA counties, asked the committee not to approve the measure. He said that when the Legislature increased the TVA counties' revenue share in 2006, he did not expect the TVA counties to come back this year asking for more.

Sonny Brasfield of the Association of County Commissions of Alabama said his organization voted to oppose the bill unless lawmakers find an alternate revenue source for the dry counties.

And officials representing three dry counties said a revenue decrease would lead to cuts in services.

Drop of $50,000

McLaughlin said the first year would see a drop of about $50,000 to the average dry county.

"Why should the Tennessee Valley continue to pay because these counties choose not to have liquor sales?" McLaughlin asked. "The subsidy is one the Tennessee Valley chooses not to pay anymore."

McLaughlin's bill would phase in a 5-percent increase in funds to TVA-served counties while phasing out funding to the dry counties by the same amount in 1 percent increments over 5 years. The phase-out would give dry counties time to find other revenue sources, he said.

Rep. Jeremy Oden's district includes Cullman and Morgan counties, which would gain from the bill, and Blount County, which would lose revenue.

He voted to approve the bill. Oden, R-Eva, said he supports the bill because most of his constituents pay TVA for power.

The bill now goes to the full House for consideration.

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