The Regular Session of the Alabama Legislature got underway last month, and by most standards, the first few weeks were fairly tame. Thus far, most of the attention in both the House and Senate has been on trying to deal with the fact that the state is broke. The inability to fund the state’s budgets will continue to be the main topic of conversation in both chambers. From all accounts, the prospects for a very rough session seem high.
Those in the GOP leadership – in both the House and Senate – are proposing drastic budget cuts in the state operating budget. An alternative to the budget proposed by Gov. Robert Bentley will cut General Fund spending for non-education agencies next year even more than the Governor proposed. Some say the cuts will be as high as 29% instead of the 25% reported earlier. All in leadership positions continue to say there will be no tax increases, and therein lies the real problem.
One proposal, that being to use education money to bail out the General Fund, simply won’t work and is dead in the water. While it’s hard to project how the extremely severe and most serious General Fund problems will be solved, it’s certain that the state’s Education Trust Fund, the main source of state tax dollars for public schools and colleges, won’t be used to bail out Medicaid, prisons, courts and other non-education areas.
I don’t believe anybody who understands state government, and specifically financial matters, really believes the Legislature can cut state agencies by 29% and not cripple the operations of government. General Fund revenues available to spend in the 2013 fiscal year, which starts October 1st, are forecast to be almost $400 million short. And as mentioned in the Capitol Observations Section, more than $300 million in windfalls supporting the General Fund won’t be available this year. Those in authority have to know that certain agencies can’t be cut drastically and certainly not by 29%. That means other agencies would have to be cut more than the proposed 29% which would literally shut them down.
It’s estimated by the Legislative Fiscal Office that a spending cap imposed by a new law, creating what is referred to as a rolling recession, will cut spending for education by $152 million, which would be 2.7 %, next year. It’s projected that revenues for the Education Trust fund will exceed the cap by $190 million, which under the new law, would repay part of the $437 million borrowed by then Gov. Bob Riley for the Education Trust Fund in fiscal 2009. And as we mentioned, that $437 million must be repaid by fiscal 2015.
If the General Fund budget is cut by 29%, or even the previously mentioned 25%, the people of Alabama will be badly hurt. There is absolutely no way that the Legislature can expect the proposed budget to fund the necessary services that Alabama citizens are entitled to with this level of cuts. It may be an understatement to say that it’s not a good time for the “faint of heart” to be in leadership roles in state government. It will take a courageous stand by those in power to say to the people of Alabama that more revenues are needed for both the Education and General Fund budgets. We have ignored that solution for far too long. There have been reports of a total reorganization of state government, and while that would be a good thing, it’s not the final word on our state’s financial problems. A reorganization would likely help a in certain areas, but it would not significantly reduce the costs of running the state. Neither would it have any immediate effect on the current fiscal crisis.
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