June 13, 2010 / 1:47 PM / 9 years ago

States press BP for compensation from spill: report

Tonia Lipscomb of Rockford, Alabama (front) sits and cries while onlookers take pictures as oil from the BP oil spill washes ashore in Gulf Shores, Alabama June 12, 2010. REUTERS/ Lyle W. Ratliff

CHICAGO (Reuters) - States along the Gulf of Mexico are increasing demands for financial compensation from BP Plc as a massive oil spill continues to spread along their shorelines, slamming the tourism and fishing industries, The Wall Street Journal reported on Saturday.

State officials say they are feeling the effects, both environmentally and financially, and that they need much more than what BP is offering to recover lost wages and taxes.

Florida Attorney General Bill McCollum sent a letter to BP on Thursday requesting that the company deposit $2.5 billion into an escrow account to cover potential losses, the Journal reported. The spreading spill likely represents “a staggering blow” to the state’s economy and already has “seriously” hurt local tourism and fishing, McCollum wrote.

BP said late Thursday it would give an additional $25 million each to Florida, Alabama and Mississippi to help with recovery efforts. It made identical grants to the three states in early May, in addition to a combined $55 million grant in mid-May for tourism marketing efforts.

Joe Morton, Alabama’s education superintendent, told The Wall Street Journal that he plans to deliver a sizable bill to BP in the coming weeks to cover lost income and sales-tax receipts that contribute 90 percent of the state’s $5 billion annual budget for schools. Like most state governments, Alabama’s has been reeling from the impact of the recession on its revenue.

“We’re already down to the bone” in terms of funding, Morton told the newspaper. The state cut its education budget by 7.5 percent this year, to $5.3 billion.

Meanwhile, efforts to contain the spill and clean up the oil continued on Saturday.

BP has been capturing some of the leaking oil since installing a containment system last week, though the well will not be sealed until August, when two relief wells now being drilled are due to be completed.

Writing by Matthew Lewis, Chicago newsroom; Editing by Eric Beech

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