Alabama Senate approves General Fund budget, prison funding boost
The Alabama Senate on Tuesday passed a $2 billion FY19 General Fund budget. Senators voted 26 to 2 for the budget that appropriates funds for functions of government, debt service, and capital outlay for fiscal year ending September 30, 2019. Answering Gov. Kay Ivey‘s January request, the budget allocates a $3.2 million increase to the Alabama Law Enforcement Agency (ALEA) to fund a new class of 30 state troopers. It also provides an $8 million increase for the Department of Mental Health, as well a a $4.7 million increase for the Alabama Department of Economic and Community Affairs (ADECA). “This budget protects the taxpayers of Alabama, while ensuring that the core functions of state government are adequately funded,” said Montrose-Republican and the bill’s sponsor, State Senator Trip Pittman, Chairman of the Senate Finance and Taxation Budget Committee. “We have prioritized targeted increases for state troopers, prisons, and the Department of Public Health, and level-funded nearly every other state department and agency.” The spending plan also sends an additional $51 million to the Alabama Department of Corrections (ADOC). The allocation of funds follow U.S. District Judge Myron Thompson ruling last year to a federal lawsuit, which declared Alabama’s prison system has failed to provide mental health care to the state’s prison population and is in violation of the Eighth Amendment’s prohibition on cruel and unusual punishment. “Given the severity and urgency of the need for mental-health care explained in this opinion, the proposed relief must be both immediate and long term,”U.S. District Judge Myron Thompson wrote in his 302-page decision. Anniston-Republican and Senate Pro Tem Del Marsh said it’s a good budget that lives within Alabama’s fiscal means without raising taxes. “This is a good general fund budget, we were able to fully fund state agencies, hire new state troopers, provide much needed money to address mental health in our prisons, and pay back debt to the Alabama Trust Fund,” said Marsh. “Although the past few budgets have been lean, through conservative fiscal practices and living within our means we have been able to come out of those years and pass a robust budget without having ever raised new taxes on hard working Alabamians.” The bill now moves to the state House of Representatives for consideration.
Alabama Senate committee OKs state employee pay raise
Thousands of state workers could see pay raises in their futures under a the 2019 General Fund budget a legislative committee approved Wednesday. The Senate Finance and Taxation General Fund Committee approved SB178, which would go into effect Oct. 1, that gives Alabama’s 33,000 state employees a 3 percent cost-of-living increase — the first across-the board increase since 2008. The proposed budget also Provides a total increase of $80 million to the Alabama Department of Corrections (ADOC) to help improve staffing and the treatment of mental health in the state’s prison system; Adds $53.8 million to the Alabama Medicaid Agency; Provides funds to hire roughly 30 new state troopers. The spending bill, introduced by Montrose-Republican, State Sen. Trip Pittman now moves to the Senate floor.
Tripp Pittman introduces Kay Ivey’s General Fund budget in Ala. Senate
On Tuesday, Montrose-Republican and Finance and Taxation General Fund Chairman, State Sen. Trip Pittman introduced Governor Kay Ivey’s proposed General Fund budget in the Senate. SB178, otherwise known as the proposed budget, appropriates funds for functions of government, debt service, and capital outlay for fiscal year ending September 30, 2019. According to the Governor’s office, the it does so “sensibly” and “funds state government with prudence and care.” Ivey applauded Pittman’s introduction of the budget. “I am pleased to learn that my budget was introduced today by Senator Pittman,” Ivey said. “My proposed budget is a strong, manageable budget, and is highlighted by the bright spot of a lower than expected Medicaid appropriation. Improving Medicaid delivery and controlling costs is central to my budget; that is why I instructed Commissioner Stephanie Azar in October 2017, to begin working on implementing work requirements and increased copays for Medicaid recipients. That process has been ongoing, and I look forward to future implementation of those policies.” Recent changes by the Trump Administration, have enabled states, like Alabama, to seek Medicaid work requirements. After instructing Commissioner Azar to implement work requirements and increased copays for applicable Medicaid recipients, the governor notified Pittman of the new policies shortly thereafter. The governor’s instructions are aimed at continuing to increase efficiency and decrease costs related to Medicaid, all in an effort to be good stewards of taxpayer dollars. “Since my meeting with Governor Ivey in October, we have been working hard to prepare for this change and ensure our recipients will continue to receive an adequate level of care,” said Commissioner Azar. “Last week, during my testimony to the General Fund Budget Committee, I illustrated how the work requirements and the copay increases will benefit the Alabama Medicaid Agency. Thanks to the improved economy and continued efforts to seek efficiency and decrease cost in the program, Medicaid is requesting less money than expected. We are certainly moving in the right direction to take care of the Alabamians that depend on our services.” The General Fund Budget is expected to start making its way through the legislative process, beginning in the Senate Committee on Finance and Taxation General Fund this week.
Antebellum slave tax has lingering effect in Alabama politics, finances
In the late spring or early summer of 1822, a man named Bolling Hall made a list of all his property before taking it to the Autauga County assessor and paying his taxes. On the left side of a piece of parchment, Hall listed hundreds of acres of land he’d acquired since leaving Georgia four years before. He would pay between $2 and $8 an acre on it. He listed a gold watch, as well as a coach, which he valued at $250. The state would collect about $2.50 on it. And in the top right-hand corner, Hall listed “15 negroes under 10 years” and “30 negroes over 10 years.” By law, Hall would have paid 25 cents for every slave younger than 10, and a dollar for those older than 10 — $33.75 for the human beings whose unrequited toil allowed him to buy coaches and gold watches. Alabama tax assessments that year — and for more than four decades after — would include nameless columns of slaves whose existence was critical to the operations of state government. Alabama’s compact with the institution was, for whites, very profitable, and nowhere more than in the state’s slave tax. “It holds the land tax to very low levels because most of the revenue comes from the slave tax,” said J. Mills Thornton, a retired University of Michigan professor and historian of the South. “The result is that small farmers pay virtually no direct taxes.” As slavery twisted politics and society in Alabama and throughout the South, it also warped the state’s finances. For decades, the slave tax was a major pillar of the state’s tax system. Historians estimate that at least through the mid-1850s, the tax on the wealth created by the men, women, and children suffering exploitation — and often, physical and sexual assaults — was the single biggest revenue source for state government. Like slavery, the slave tax would leave a permanent wound on the state. When slavery died, so did the tax. Reconstruction-era efforts to replace the lost revenue with increased property taxes — the only major source left — sparked an angry reaction. Legislators rushed to introduce tax restrictions after Reconstruction without making serious efforts to find other sources of revenue. That set in place decades-long policies that, to this day, make it difficult and sometimes impossible for Alabama to generate enough revenue to pay for its state services. The $1.8 billion General Fund, which pays for most non-education services in the state, should grow no more than $25 million in 2018; the state’s Medicaid agency alone has requested a $44 million increase for the year. “The slave tax in a weird way was a stabilizer,” said Susan Pace Hamill, a University of Alabama professor and expert on state taxation. “It was a bad stabilizer — the whole system of slavery was a bad stabilizer. A shameful stabilizer.” Taxes on slaves weren’t limited to Alabama. In a 2003 article, Boston University School of Law professor Kevin Outterson wrote that the slave tax brought in anywhere from 30 percent of public revenues to, in South Carolina, 60 percent. The federal government levied slave taxes from 1798 to 1802, and again from 1813 to 1817, both times to pay for war. “From colonial times to the Civil War, American governments derived more revenues from slave taxes than any other source,” Outterson wrote. The slave tax went away after the Civil War, but the services it paid for did not. During Reconstruction, Republicans tried to make up the difference with property taxes — the only major source of revenue left — which embittered a population that had grown used to slaveholders paying most taxes. “The history is complicated, but we can say with some certainty that that probably hurt small landowners more than big landowners, and fueled their resentment,” Hamill said. When Democrats recovered control of the Legislature in 1874, they called a constitutional convention. That convention created a document that began the slow disenfranchisement of black voters. But it also put caps on property taxes. “An eminent statesman has said, ‘the power to tax is the power to destroy,’” said Leroy Pope Walker, a Confederate general who served as president of the convention. “Governments should provide against possibilities, as possibilities often become facts.” But the Bourbon Democrats who ruled Alabama for decades — and imposed even more stringent property tax caps in the still-operative 1901 Constitution — never considered the possibility of taxes that might try to replace the lost slave tax. For the most part, officials have avoided the issue. An income tax approved in 1933 enshrined tax rates in the Constitution; the state income tax rates still reflect Great Depression-era values. In the 1970s, the George Wallace administration advanced the “lid bills,” which further restricted the property taxes in the state. Those revenue shortfalls are one of the lasting legacies of slavery: A state government that struggles to pay its bills. “Racial policy is an obvious wound that festers,” Thornton said. “Tax policy is much less so, but it is one of the festering wounds of slavery.” Republished with permission of the Associated Press.
Robert Bentley releases proposed constitutional amendment for Alabama lottery
Gov. Robert Bentley Friday released a proposed amendment to the Alabama Constitution that would allow voters in November to decide whether the state should have a state lottery. The three-page proposal designates proceeds from the lottery to first be applied to cover the operational expenses of the lottery and paying prizes. Remaining proceeds would then be deposited in the state’s general fund budget. Bentley estimates the lottery would generate roughly $225 million a year. On Aug. 15 the Alabama Legislature will meet in a special session, called by Bentley last week, to consider the lottery proposal. “We must once and for all solve problems that have held our state back for decades,” Bentley said last week. “The time has come for us to find a permanent solution …. This solution will provide funding that we can count on for year after year without ever having to raise your taxes or put one more band-aid on our state’s money problems.” Three-fifths of the members of both the Alabama Senate and the House would have to approve the amendment, which would then be subject to a statewide referendum. In order for the proposal to make it on the general election ballot Nov. 8, the Legislature would need to approve Bentley’s proposal no later than Aug. 24.
Phil Williams: It’s time for fundamental budget reform
A few nights ago I watched in tense disbelief as a man jumped from an airplane at 25,000 feet without a parachute! As an Army Paratrooper, I never exited a plane without both a main chute and a reserve. This man jumped from almost five miles high into a net without either. It was an incredible feat of skill and daring with no chance of a do-over. The jumper had to get it right the first time. Let me use that as an analogy to discuss the coming special session of the Alabama Legislature: we need to come in the door of the Statehouse and stick the landing. Let’s nail the net the first time. Our state is one of only three in the nation that bears the self-imposed load of having two budgets (Education and General). Every year we find ourselves in the throes of an annual political Kabuki dance called budget negotiations that usually involve the tense discussions of surplus funds in the Education budget versus shortfalls in the General Fund. By law, nearly all of the growth revenues that go up with a good economy benefit only the Education budget, while generally flat revenues go to the General Fund. Too often, the General Fund is like Oliver Twist, an orphan child forced to beg for more or go hungry. Yet, I recognize the valid concern that if the budgets were combined, the two runaway expenditures in the General Fund (Medicaid and Corrections) could eat education alive. It does not need to be this way. Each budget is vital to our state’s interests. Public education is the backbone of our economy and a vital link between Alabamians being free of dependency on the state and able to thrive in the workforce. Likewise, the General Fund supports vital services like State Troopers, Mental Health, Medicaid, Prisons, the National Guard, and thousands of state employees. Neither budget can survive in a state that does not care for both. I recently met with the leadership of both the House and the Senate to propose what I simply call “the Two-Step Plan”. This plan combines fiscal reform with the potential for increased revenues gained by a lottery. And the entire plan engages the people of this great state by giving them the final say in the form of a vote. To be clear, I have never been a fan of lotteries. I don’t think it is wise stewardship to see games of chance as an all-encompassing solution to our budget woes. But if a solid lottery bill came before me that was tightly governed, expressly disallowed the expansion of casino gaming, benefited the General Fund, and was voted on by the people, then I would not work against it. I am a fiscal hawk, and firmly believe that we must fix the broken manner in which revenues are distributed within our multi-budget structure. The Two-Step plan proposes to pass separate but linked pieces of legislation. The first is a version of what was proposed by my colleague Senator Paul Sanford during the 2015 Regular Session that establishes one fund into which all revenues are deposited. From that fund the revenues would be allocated to the two budgets, 76% to the Education Trust Fund and 24% to the General Fund. The second bill would be a lottery whose revenues are collected and deposited into the same fund and divided in a like manner. Each of the two bills must first pass the Legislature, and then both must also pass a majority vote of the people. If one bill fails, they both fail. Those who want fiscal reform must engage the lottery issue, and those who advocate for a lottery must accept long-term budget reform. In the end, the people of this State will decide the ultimate outcome. Budget analysts have indicated that enactment of the Two-Step Plan could see a net increase of over $200 million to the General Fund and almost $100 million to the Education Trust Fund. At that point, discussions of moving revenues between the budgets would be unnecessary. Likewise, any concerns that purists have of a future consolidation of the two budgets would also be over. As the Chair of the Senate Committee on Fiscal Responsibility, I believe that this plan is very doable. It allows everyone to have a say in the process, achieves true budget reform, and ends the lottery debate forever. If this budget plan fails at the polls, then the people will have spoken, and we will return to austerity measures and face the inevitable debate of future taxes. This proposal is bold, audacious, and its time has come. The special session is upon us. Let’s stick the landing! ••• Phil Williams represents Etowah, Cherokee, Dekalb and St. Clair counties in the Alabama Senate. Follow him on Twitter for the latest legislative updates: @SenPhilWilliams.
Lawmakers vote to override Robert Bentley veto, enact General Fund budget
Rebuking Gov. Robert Bentley‘s veto for the first time in 2016, Alabama lawmakers voted Tuesday to enact the General Fund budget the governor previously rejected over Medicaid funding. Bentley vetoed the budget last month for being $85 million short of the money needed to maintain services and reimbursement rates in the state’s Medicaid program, warning lawmakers the state would not be able to provide basic medical services to children and the elderly without the additional funding. “As one of the lowest state-funded Medicaid agencies in the country, the Alabama Medicaid Agency focuses services to those most in needed: our low-income children, pregnant women, elderly and people with disabilities,” Bentley wrote in his veto message to lawmakers. “Without additional resources, we simply cannot fulfill our constitutionally and statutorily mandated duties.” Lawmakers ignored Bentley’s strong words overriding his gubernatorial veto with a majority vote — the Senate, 22-10, followed by the House, 71-24. Bentley, however, wasn’t the only one with harsh criticism over the approved budget. Kimble Forrister, executive director of Arise Citizens’ Policy Project – a nonprofit advocacy group for low-income Alabamians – said General Fund budget would force “devastating Medicaid cuts that could force many hospitals to close and lead many pediatricians to leave the state.” “We can’t build a stronger Alabama by taking a sledgehammer to the foundation of our state’s health care system. But that’s just what this inadequate General Fund budget would do,” said Forrister in a statement after Tuesday’s override votes. Bentley has hinted he may call lawmakers back for a special session to tackle the Medicaid shortfall.
Alabama ranked 3rd most federally dependent state
With the tax deadline less than a month away, the personal finance website WalletHub followed up on its report on the States with the Highest & Lowest Tax Rates with an in-depth analysis of 2016’s Most & Least Federally Dependent States to determine how dependent states with the lowest tax rates are compared with those paying the highest. The results? For a state that pride’s itself on conservative, small-government values Alabama and Uncle Sam are a lot closer than many Alabamians would imagine. According to the analysis, Alabama ranked as the 3rd most federally dependent state in the nation, relying heavily on Uncle Sam to support the state’s finances. Federal Dependency of Alabama (1=Most, 25=Avg.): 3rd: Return on Taxes Paid to the Federal Government 9th: Federal Funding as a Percentage of State Revenue 9th: Share of Federal Jobs While not the results many would expect from a Red State — one that voted Republican in the 2012 presidential election — with an average dependency ranking of 17.13, WalletHub found Red States are altogether more reliant on federal funding than Blue States, which ranked 33.23 on average. The revelation of federal dependence where bold, efficient stewardship was once thought to preside, begs the question: Are Alabamians being taxed appropriately? With an $85 Medicaid shortfall in the General Fund budget and a special session on the horizon, it’s a question the Alabama Legislature will soon face. As for how neighboring states fared, Alabama was in good company — Mississippi ranked the most federally dependent state in the nation, Louisiana 4th and Tennessee 5th. Here’s how Alabama compares to the rest of the country: Source: WalletHub In order to identify which states most and least depend on federal support, WalletHub’s analysts compared the 50 states across across across two key dimensions, namely “State Residents Dependency” and “State Government Dependency” looking at 2013-2014 data collected from the Internal Revenue Service, U.S. Census Bureau, USAspending.gov, Bureau of Labor Statistics and Governing.com.
Robert Bentley announces plans to veto General Fund budget
Gov. Robert Bentley has released a statement announcing his plans to veto the recently passed General Fund budget, which fails to adequately fund the state’s Medicaid program. “The General Fund Budget is unacceptable because it lacks adequate funding for essential government services,” Bentley said in the Thursday statement. “The proposed appropriation falls short of what the Medicaid Agency will require to provide services for the over one million Alabamians, most of them children, covered by Medicaid.” Bentley also noted that the current budget will render Medicaid reform measures passed in 2013 “unsustainable.” “The state has already made great progress to remodel and streamline the Medicaid model to a regional managed-care system,” Bentley remarked. “That progress will be lost without adequate funding from the General Fund.” In the statement, Bentley also mentioned his concerns about funding for the Alabama Department of Corrections, which he says is necessary to “address the prison crisis long-term.” “We have made strong reforms in the prison system; however, insufficient funding hinders the department’s efforts for further reform,” Bentley said. “We have witnessed the dangerous conditions inside our state-operated prisons, and the Alabama Legislature must prioritize prison system safety with adequate appropriations.” Bentley further chastised lawmakers for using “millions” in one-time BP settlement money to pay for “recurring expenses,” a move the governor claims is “fiscally irresponsible and shortsighted.” “Because of these concerns, I will veto the General Fund Budget and send it back to the Legislature on April 5th when they return,” Bentley said in closing. “I am committed to working with the Legislature to address our General Fund budget challenges.” Unlike other states, which require a two-thirds vote to overturn a veto, Alabama only requires a simple majority in both houses to override the governor’s veto. Because of that, the Republican majority in the state legislature will easily be able to undo Bentley’s action.
Alabama legislative week in review: March 21 – March 25, 2016
Legislators briefly passed through Montgomery this week with an eye toward their spring break, which began Thursday and won’t have them back in the statehouse until April 5. Despite only two legislative action days this week, both bodies took up high-profile legislation. Tuesday, the 17th day of the legislative session, got under way with the Alabama House of Representatives clearing the long-contested bill to provide a path to visitation rights for grandparents. HB334 from Rep. Mike Jones (R-Andalusia) passed with an affirmative vote from 97 lawmakers, though debate came over the fact that the bill may circumvent the will of fit parents to make decisions regarding the welfare of their children. Over in the Senate, lawmakers passed SB260 from Sen. Clay Scofield (R-Guntersville). The bill would bar the state from taking money from the state’s park system to prop up the General Fund. The practice is a legitimate concern, as lawmakers have taken $15 million from state park coffers over the past five years to deposit into the General Fund. The Senate also cleared HB34 from Rep. Mac McCutcheon (R-Capshaw). The bill, which was carried by Sen. Greg Reed (R-Jasper), provides tax breaks for state ports in an effort to remain competitive among states with similar incentives. Supporters say the move will attract large businesses and bring jobs to the state. The Senate continued on its roll Wednesday with the passage of SB205 from Sen. Paul Sanford (R-Huntsville), which would prohibit the location of abortion clinics within 2,000 feet of a school and bar the Alabama Department of Public Health from reissuing licenses to any clinic in violation of the new law. The Senate also approved a General Fund budget, which lacks sufficient funding for Medicaid, despite a veto threat from Gov. Robert Bentley. The Senate’s session came to a halt when it stalled a vote on Bentley’s landmark prison transformation bill. In committee hearings this week, the Mobile delegation declined a bill along party lines that would allow county residents to vote on whether or not to raise the local minimum wage to $10.10 an hour. A house committee approved a bill that will put to a vote the notion that a person is a person from the time of fertilization, effectively outlawing abortion in the state. A Senate committee took up a bill that would decriminalize possession of the epilepsy-relieving drug cannabidiol (CBD), but did not vote on the measure. It will likely come up for discussion again when legislators return from spring break April 5.
State park funds secure with passage of Clay Scofield legislation
On Tuesday, the Alabama Senate passed SB260 from Sen. Clay Scofield (R-Guntersville), which is a constitutional amendment barring the legislature from using Alabama Department of Conservation funds. The legislation will ensure that all money earned through external sources, like entrance fees, merchandise sales, hunting and fishing licenses and golf course fees, will stay with the department. Over the last five years, $15 million has been transferred from state parks to the General Fund – in all, $30 million has been transferred from the department to fund other agencies. A move last year to take roughly $3 million from the department caused multiple parks to close, causing an uproar among the populace. “State parks have little incentive to provide great service to the public if the money earned is taken away each year by the Legislature,” Scofield said in a press release. “My proposal will allow the state parks to make plans for long-term improvements, since they will now have a predictable cash flow and can attract more visitors to Alabama. ” However, the bill specifies that if the State Parks Revolving Fund reaches more than $50 million in a fiscal year, the sales and use and cigarette tax money reserved for the system will be reduced in the following year. The money saved from doing so would be directed to the state’s General Fund. “Currently, state parks in Alabama are mostly self-funded through the services they provide to the public. Unfortunately, over the past five years the Legislature has raided the Department of Conservation and transferred money to the General Fund for other purposes,” Scofield said in the release. “State parks are important to Alabamians and the parks should be able to keep the money they earn.” After its passage in the Senate, the bill will be taken up by a Senate committee before it’s considered by the full House.
Mike Hubbard expects special session over Medicaid funding
Though the House of Representatives ended its week on a low note, as Democrats filibustered plans to bring forth a General Fund void of adequate Medicaid funding Thursday, House Speaker Mike Hubbard (R-Auburn) was enthusiastic. “I think it was a productive week,” Hubbard said. Hubbard celebrated the House’s passage of a slew of bills, as well as committee work to move the General Fund onto the House floor Tuesday, but was fatalistic in his assessment of how the General Fund will play out. According to Hubbard, Medicaid has long been syphoning an enormous portion of the state’s General Fund allocations to the detriment of other departments. He noted that most House Republicans don’t have the appetite to continue providing the increases the program has become accustomed to. “The money to appropriate is there,” Hubbard said. “The problem is that Medicaid wants all of it and then some.” Hubbard noted that he expects Gov. Robert Bentley to call a special session if the General Fund fails to fully fund Medicaid, but said it would be a mistake to call legislators back immediately after the close of the regular session. He added that it might be prudent to see how the November General Election plays out, as changes to healthcare may be on the horizon. Along with the prison system, Medicaid takes up roughly 62 percent of the General Fund budget. The only way to fund it at the desired amount, Hubbard said, would be to cut about $85 million from other departments’ budgets – Medicaid will receive an additional $15 million this year, but still faces a shortfall of roughly $100 million. “We’re not going to fund Medicaid at the expense of educating our kids,” Hubbard said. During the session, Rep. John Knight (D-Montgomery) mentioned that the state should look into raising more revenue, likely through tax hikes. However, Hubbard noted that moves to increase revenue from last year’s cigarette tax increase was difficult to pass and doesn’t believe House members would be willing to fight it out again this year. Though he believes the Democrats will filibuster the budget when it comes to the floor next week, Hubbard still thinks bringing it now is a good idea as lawmakers are still angling for passage before spring break.
