Lawmakers strive for agreement on budget shortfall

Alabama State House
Photo Credit: AL House Republicans

Alabama legislators return to Montgomery on Monday looking for something that eluded them for the last several months: Agreement.

The new fiscal year is less than two months away and legislators have yet to settle on a way to handle a projected $200 million shortfall in the general fund budget. Lawmakers on Monday will resume a special session after taking a three-week break to try to hammer out a consensus.

Gov Robert Bentley is asking lawmakers to approve $302 million in taxes to avoid deep cuts to state services. Senate President Pro Tem Del Marsh said senators were not “warm” to the idea of large tax increases. Republican senators, he said, are proposing their own plan that includes $275 million in revenue.

“The bottom line is we have a plan that will work,” Marsh, R-Anniston, said.

The proposals include an adjustment to the business privilege tax, a shift of use in tax money from the state’s separate education budget, agreed upon Medicaid tax on pharmacies and other healthcare providers to help fund the state’s Medicaid program.

Marsh would not disclose all of the proposals until they were reviewed by House members.

“We’re just to the point that we have to get a budget done that we believe is workable,” House Speaker Mike Hubbard, R-Auburn, said. Hubbard said House Republicans this week looked at a menu of options to get more money to the general fund.

Bentley has proposed a pared-down tax package after failing to persuade lawmakers to approve more than $500 million in taxes in the regular session. However, some of the governor’s ideas appear to again be getting the cold shoulder from lawmakers.

The largest money maker of the governor’s proposals is to end the ability of taxpayers to claim a state income tax deduction for federal Social Security taxes paid. The change would raise $182 million. Alabama is only one of four states that allow the deduction and it would only affect people who itemize their tax deductions. The governor has also suggested a possible soft drink tax if lawmakers do not want to change the deduction.

Legislative leaders said they saw little support for either of those.

“It clearly doesn’t have the votes in the Senate so I think that one was taken off. The soft drink tax is off the table,” Hubbard said

Bentley has said he will call lawmakers back into a second special session if lawmakers fail to find an acceptable solution.

Marsh has introduced gambling legislation to create multiple casinos and a state lottery. The Senate leader said he would like to see that debated this session if there is time after the budget votes.

Funding cuts, or even level funding, could jeopardize the state’s ongoing efforts at Medicaid and prison reform.

State Health Officer Don Williamson said the state’s Medicaid program needs an increase to continue the work of shifting Medicaid to a managed care system, something Medicaid officials hope will save money in the long run.

“Basically level funding ends the three years of work of transformation,” Williamson said.

Corrections Commissioner Jeff Dunn said level funding would delay building improvements designed to boost prison safety and a 5 percent funding cut would raise crowding to well over twice prison capacity.

“The department would be forced to close prisons and move those displaced inmates into already significantly overcrowded facilities,” Dunn said.

Republished with permission of the Associated Press.


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