The start of a second special legislative session Sept. 8 gives Alabama lawmakers one more chance to pass a budget before the new fiscal year begins Oct. 1.
“The start of Fiscal Year 2016 is quickly approaching, and there is still no General Fund budget in place for state agencies to operate,” Gov. Robert Bentley said in a Sept. 1 press release. “There is still time remaining to pass a budget that does not drastically cut state services which will impact Alabamians. I look forward to working with lawmakers over the next few weeks to bring about real change in the way we fund state government moving forward.”
Bentley called the second special session to focus on the budget, specifically budget reforms and increases in growth revenue for the General Fund budget, according to a press release issued by the governor’s office Sept. 3.
The governor called for legislators to reform the budget process by transferring use tax revenue from the Education Trust Fund (ETF) to the General Fund, un-earmarking certain state taxes and amending the ETF Rolling Reserve Act. The Rolling Reserve Act, passed in 2011, caps the amount of money that can be allocated to education in a given year and requires that available funds above the cap be placed in reserve as a guard against proration during weak economic periods.
Bentley also called for legislators to increase revenue by amending the Business Privilege Tax, increasing the cigarette tax, amending the individual income tax deduction for FICA and by passing “any other revenue measures that provide revenue for the General Fund.”
The “any other revenue measures” option is a deviation from Bentley’s “no gambling bills” outline for the first special session.
Bentley said he has met with House and Senate members to “discuss options and ideas that would prevent devastating cuts to state services.”
The General Fund budget has been the focus of intense debate and scrutiny since early 2015. In February, Bentley proposed a $700 million tax increase he said was needed to address a shortfall of $700 million in the budget. In an earlier interview with The Alabama Baptist, Bentley said the current budget crisis has been years in the making.
Intense debate
“One of the problems we’ve dealt with for years is the way we budget in the state. Alabama is 1 of only 2 states that has two budgets like we do. The education budget does well when the economy picks up and begins to prosper. However, the General Fund is made up of about 32 small taxes that never really grow. Because of that, we are having a problem right now,” he said.
According to the Alabama Department of Finance website, the Alabama State General Fund gets revenue from more than 40 sources, including the insurance company premium tax, interest on the Alabama Trust Fund and state deposits, cigarette tax, ad valorem tax and Alabama Alcoholic Beverage Control Board profits. Revenues in the General Fund are projected to fall $250 million or more short of the current spending level in the next fiscal year. Bentley has said the state also needs an additional $155 million for Medicaid and the Department of Corrections.
Bentley said the state government has done “everything we could possibly do to make government more efficient,” but the cuts are not enough.
“We need to raise more revenue. It’s hard for a conservative republican to say this, but the only way to raise revenue is through fair taxes,” Bentley said. “I want us to solve this the right way.”
Bentley’s original plan included approximately $541 million in new revenue, including an increase in the state sales tax on auto sales and an increase in cigarette and tobacco taxes.
Legislators were cold to Bentley’s proposals, however, and the 2015 legislative session ended in June without a General Fund budget.
The first special session ended the same way. Proposals to borrow money from ETF and to expand gambling in the state were discussed, but neither idea got any traction. In the closing days of the regular session, the Legislature did pass a $1.6 billion budget that called for an 11 percent reduction in funding for state agencies, but the governor vetoed that plan. The House voted to override the veto, but the Senate had already adjourned and could not override it.
Sen. Clyde Chambliss, R-Prattville, said his constituents are in favor of adequate funding.
“They are telling me overwhelmingly to fix the budget even if it takes a little pain on my part.”
In an Aug. 26 interview with radio host Dan Morris, Chambliss proposed his Plan 2018, which he called an effort to stabilize the budget. His plan includes adding taxes to cigarettes and sodas and removing taxes on raw meat, fruits and vegetables. Another key component of Chambliss’ plan would divert some revenue from ETF to the General Fund to provide a steady source of revenue to the General Fund. Chambliss said rural hospitals are in jeopardy and the state will have fewer troopers on the road if state agencies are not adequately funded. Medicaid needs to be addressed as well, he said.
Sen. Del Marsh, R-Anniston, proposed an expansion of gambling in the state as a way of raising revenue but those proposals never came up for a vote. Marsh has said he won’t propose any type of gambling bill in the second special session.
Two other legislators have said they will introduce lottery bills. Sen. Paul Sanford, R-Huntsville, is proposing a statewide referendum on the lottery. Alabama House minority leader Craig Ford, D-Gadsden, said he would “immediately introduce an education lottery” in the second special session.
In a statement posted to Facebook, Ford said the lottery would not impact the current budget crisis but would provide long-term revenue to avoid future budget crises. Ford said the state could see revenue from his proposal by 2017.
In an interview with radio host Dale Jackson on Aug. 28, the governor said House members have been working on a budget that “would probably be a workable budget.” He also said he did not expect a government shutdown.
However, the governor made it clear that without additional revenue, cuts are inevitable, and they will be painful to the citizens of Alabama.
‘We’ve done quick fixes’
“Cuts mean closing down parks. It means taking troopers off the road. It means less immunizations. It means less inspection of your restaurants. It means hospitals across the state are going to close, especially the rural hospitals, if Medicaid is not funded,” Bentley said. “We’ve done quick fixes for 12 years. It’s time we get some backbone and try to fix this problem and quit having to do that.” (TAB)
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