When Alabama legislators reconvene Aug. 3 in a truncated special session, they will be tasked with resolving the state budget crisis. Before them lay several choices: tax increases, cuts to government services, competing gambling proposals and otherwise robbing Peter (the Education Trust Fund and the recent BP oil spill settlement) to pay Paul (the tapped-out General Fund).
The state’s General Fund is facing a projected shortfall of about $200 million for the 2016 fiscal year budget beginning Oct. 1. In the regular session, lawmakers balked at Gov. Robert Bentley’s proposals — which included tax hikes — to raise $541 million in additional revenue. They instead approved slashing funding for various state agencies, a plan that Bentley promptly vetoed.
Gambling also emerged as a potential budget fix. Sen. Del Marsh, R-Anniston, surprised many when he introduced a bill calling for a statewide vote in September to allow for expanded gambling in Alabama, citing an Auburn University at Montgomery study showing that a state lottery and Class III gambling (slot machines, poker, blackjack, etc.) at the state’s four dog-racing tracks could generate some $400 million annually for the state. Marsh’s proposal never came to a vote in the regular session, and research by The Alabama Baptist proved the study he based his legislation on did not give a complete picture of the state’s situation related to the expansion of gambling (see story in the May 21 issue).
The Poarch Band of Creek Indians (PCI) has offered to cover the state’s budget shortfall in exchange for exclusive gambling rights, an offer that the governor has the authority to negotiate but so far has rebuffed. The tribe currently operates three casinos in the state that offer slot machine-style bingo gambling. The legality of these facilities remains in question, and Attorney General Luther Strange has requested no decisions be made related to the PCI gambling request until the pending case has been settled.
Special session
But the Alabama constitution requires a balanced budget, so after the failure to set a budget in the regular legislative session, lawmakers expected a special session to be called in August. What legislators didn’t expect was for the governor to issue a proclamation July 10 calling them back into session July 13. Legislators arrived in Montgomery as ordered but met only about 15 minutes before recessing the special session until Aug. 3, saying that committees needed more time to come up with their own plans for fixing the budget.
The governor’s special session call specifically excluded consideration of gambling proposals. However, Marsh has reintroduced his gambling bill which, despite the governor’s mandate, could be brought up for discussion with two-thirds majority vote in both houses. To counter his proposal, PCI is airing television commercials promoting the proposed compact and bailout plan.
Bentley wants the House and Senate to consider only his trimmed-down package of revenue increases — about $301 million worth this time — including:
- Additional taxes on tobacco
- Increasing business privilege tax on larger businesses
- Eliminating taxpayers’ ability to deduct their federal social security tax payment from state income taxes or, as an alternative, new taxes on soft drinks
- Shifting money from the Education Trust Fund to the General Fund and eliminating certain earmarks
- Allocating a portion of the state’s BP Deepwater Horizon oil spill settlement to the General Fund (about $1 billion paid out in installments of about $55.5 million per year).
Also listed in the governor’s agenda for the special session is a proposed $50 million bond issue to build a new hotel and conference center at Gulf State Park.
During the three-week recess, legislators have undoubtedly been getting an earful from teachers upset about raiding the Education Trust Fund and business and government leaders furious about diverting more than half of the oil spill settlement away from the Gulf Coast and into Montgomery’s coffers. They also have likely heard from government agency heads fearful of slashed budgets, citizens wanting cost-cutting measures and smaller government, constituents who are vehemently for or against gambling and devout anti-taxers.
Possible exaggeration
But out of all the voices those with pro-gambling interests in the state have Alabama Citizens Action Program Executive Director Joe Godfrey concerned.
It has been reported in news outlets that pro-gambling people and businesses are possibly exaggerating the depth of the funding crisis in the state in order to gain support for expanding gambling, Godfrey said. There also will likely be a major campaign to fight new taxes, but that is hypocritical because gambling is a tax, he added.
‘Tax on the poor’
“Gambling is a tax on the poor. The casinos and lottery proponents will actually target the low-income areas of our state promising that people can gamble their way out of poverty. That is a lie,” Godfrey said. “And if our state becomes dependent on gambling as a revenue stream, then it will start encouraging its own citizens to gamble instead of working hard, saving and investing in goods and services that will actually grow our state economy.”
The Alabama Baptist has researched studies that prove using gambling as a foundation for a state’s economic stability is bad business. To read more, visit www.thealabamabaptist.org and search “gambling.”
And while Sen. Rusty Glover, R-Semmes, agreed, “there’s not a lot of enthusiasm for taxes,” he also is opposed to expanding gambling in the state. Still, he thinks the allocation of BP oil spill settlement funds will spark more controversy than the gambling proposals.
“That’s pretty much the issue that’s going to slow things down tremendously,” Glover said, noting that Mobile and Baldwin legislators have been meeting with local officials and drafting legislation to direct more of the settlement money to the Gulf Coast. “We’re pushing very hard for that.”
Since Alabama law provides that the Legislature may meet in special session for up to 12 days during a 30-day calendar period, lawmakers will have only nine days left to convene between Aug. 3 and the last possible legislative day, Aug. 11. Considering the incendiary nature of most of the proposals on the table for fixing the budget, a second special session is likely.
__________________________________________________
Budget crisis timeline
Sept. 18, 2012
Alabama Legislature faces a General Fund shortfall of $150 million and voters go to the polls to approve borrowing $437 million from the Alabama Trust Fund for three fiscal years — 2013, 2014 and 2015 — rather than raise taxes or cut government expenses and services.
June 15, 2015
2016 fiscal year General Fund budget is expected to have about $200 million less revenue than the current (2015) fiscal year. During the Legislature’s 2015 regular session, Gov. Robert Bentley and legislators cannot agree on a budget. His plan would raise taxes on items like tobacco products and rental cars; the Senate and House plan would cut funding for state agencies and/or focus on expanding gambling in the state. The regular legislative session ends in a budget stalemate.
July 2, 2015
Gov. Robert Bentley announces BP oil spill settlement funds of $2.3 billion coming to Alabama; wants to use $1 billion of it (paid in installments over 18 years) to help prop up the General Fund.
July 10, 2015
Gov. Bentley calls Legislature into special session (beginning July 13) to consider his package of legislation designed to raise revenue by $301 million.
July 13, 2015
Legislature meets for about 15 minutes and calls a recess; Sen. Del Marsh, R-Anniston, reintroduces proposal to expand gambling to Class III (slot machines, poker, etc.) at the state’s four dog-racing tracks.
July 14, 2015
Poarch Band of Creek Indians launches TV ad imploring state leaders to accept a proffered compact in which the tribe would bail out the General Fund in exchange for exclusive gambling rights statewide.
Aug. 3, 2015
Special session to resume.
Aug. 11, 2015
Final day of special session, as required by law, with the possibility of one more special session before the end of the fiscal year.
Oct. 1, 2015
First day of the 2016 fiscal year budget.
____________________________________________
To find your state senator’s or representative’s contact information, visit www.legislature.state.al.us.
Share with others: