Budgetless Alabama Begins Special Session

by | August 3, 2015

By Mary Sell

Groups of state lawmakers have been meeting to weigh their options, including looking at new taxes, cuts and transfers of money from the Education Trust Fund to the General Fund.

Starting Monday, Alabama's 139 lawmakers return to the capital city in a special legislative session to plug a more than $200 million hole in the General Fund budget. Their $1.6 billion budget proposal was rejected by Gov. Robert Bentley in early June because the cuts to state government were too deep.

"To be honest with you, we don't know any more than we did 30 days ago," said Rep. Lynn Greer, R-Rogersville, of the House General Fund committee. "To pass legislation, you have to have votes, and we just don't have them right now."

Here are a few things to know about the special session.

9 days to work

Lawmakers have nine days to pass any new revenue bills or other changes and pass a budget for the fiscal year that starts Oct. 1. Bentley called lawmakers back to Montgomery on July 13 and officially began the special session, which can only last 30 calendar days.

If they don't get it done, a second special session will have to be called.

"All I can say is I hope so," said Rep. Ken Johnson, R-Moulton, when asked if nine days is enough. He's the vice chairman of the General Fund committee.

Bentley's plan

Bentley is suggesting a $1.9 billion General Fund budget and four tax increases that would generate about $302 million annually. He's also suggesting moving the state's Use Tax from the Education Trust Fund to the General Fund.

Another proposal: Use the $1 billion from the recently announced BP oil spill settlement to pay off debts in the General Fund. The principal agreement was announced early last month.

Senate plan

"We have a plan," Senate President Pro Tem Del Marsh, R-Anniston, said Thursday after meeting with the Republican Caucus. "It's a plan that brings $275 million to the General Fund."

He wouldn't discuss all the details, but he said it includes the Use Tax transfer and Bentley's proposal to increase the Business Privilege Tax on large corporations.

Sen. Arthur Orr, R-Decatur, said a priority is to get the General Fund's "big four" -- Medicaid and the departments of corrections, mental health and human resources -- level-funded. That would take more than $100 million in new or re-allocated dollars.

Sparing other agencies cuts will depend on more additional revenue. But Orr said he doesn't think the Senate will get to the $302 million Bentley wants.

Medicaid tax

Another tax revenue option now being discussed in the Statehouse is Medicaid-related. It's a provider tax that would be paid by nursing homes and pharmacies. It's worth about $10 million, Marsh said, and would be used to draw down federal match dollars for Medicaid, the General Fund's biggest expense.

Marsh said the plan will be discussed in more detail Monday. He said it's being shared with House leadership but could be different than what's suggested in that chamber.

House plan

Johnson said Friday there would still be conversations over the weekend among leaders about what options have the most support.

"To tell you everything is finalized -- I don't think so," Johnson said.

Speaker of the House Mike Hubbard, R-Auburn, last month said House members were considering a few of Bentley's proposals.

Rep. Ed Henry, R-Hartselle, said he doesn't see much agreement between the House and Senate.

"There is not a consensus," Henry said last week. "The House leadership is trying to convince House members that there is. But when I talk to senators, there isn't."

Taxes vs. cuts

One of the stumbling blocks is opposition to new taxes.

"I am still very anti-tax," said Henry, who is on the education budget committee. "I'm looking at this business privilege tax, trying to determine if it really is a break for a majority of small businesses, or is it a trick."

He said he may vote for that one, but that's about it.

"A number of members are willing to fight these tax proposals," Henry said.

Others said they don't want tax increases, but they need to be able to fund state government.

"I just don't see how we can cut," Greer said. "Taxpayers are like me: They don't want to raise taxes, but they don't want to see all these agencies cut."

Senate General Fund committee member Tim Melson, R-Florence, said lawmakers don't want tax increases on individuals.

Mystery proposal?

Henry said there is another plan in the works.

"There is an alternative plan to what the governor and House leadership is proposing at this point," he said. "And it benefits the people of Alabama while protecting them from taxes and the increased size of government."

He declined to give more details but said it didn't include major cuts to agencies. He said the legislation will be filed Tuesday or Wednesday.

Use Tax talks

Lawmakers appear to be in favor of Bentley's Use Tax transfer, but the question remains how to replace at least some of the money it would take from the education fund. Last fiscal year, the tax generated about $220 million for the Education Trust Fund.

"That's the conversation right now: 'How do you backfill and how much?' " said Orr, the Senate General Fund budget committee chairman.

Bentley's suggestion is to replace that money in the Education Trust Fund by eliminating Alabamians' state income tax deduction for Social Security taxes. That'd be worth about $182 million. But some oppose it because it would mean people pay more taxes.

Orr said other options are being discussed.

"There are other ways to get there. That's the conversation du jour," he said.

Education officials last week asked lawmakers to not take from the education budget.

"I'm OK with transferring the Use Tax as long as there is a mechanism in place to backfill it," Melson said.

Democrats' take

Lance Latham, a spokesman for House Minority Leader Craig Ford, D-Gadsden, said the caucus hasn't voted on an exact position going into the special session. But if there isn't Medicaid expansion under the Affordable Care Act, something that they've pushed for years, or a statewide lottery, Democrats are not in favor of tax increases.

Gambling, other bills

Marsh, the Senate president pro tem, has filed a proposed constitutional amendment to create a state lottery and multiple casinos.

If lawmakers approve the measure, it would have to be voted on by Alabamians, and that couldn't happen in time to help the 2016 budget. Bentley and Hubbard have said the legislation shouldn't be dealt with in the special session.

Marsh has said he'll try to get it passed, but not at the expense of the budget bills.

A few non-budget-related bills have been filed by senators, including one to protect historic landmarks and monuments from changes and one that would end the issuance of marriage licenses by probate judges.

Some lawmakers also have filed county-specific bills, but none so far impact the Tennessee Valley.

The Senate meets at 4 p.m. Monday. The House meets at 5 p.m.

(c)2015 The Decatur Daily (Decatur, Ala.)