The biggest news and political story of this year may be a continuation of last year’s major issue, and it also surrounds the Alabama Legislature. The state's General Fund woes will again be front and center.
As the quadrennium began in 2015, state officials were told that in order to simply level-fund the woefully funded General Fund, the legislature would have to come up with between $200-300 million. Everyone agreed that the shortfall was a problem. Gov. Robert Bentley began his second term proposing $541 million in new taxes as a solution. His proposals were repeatedly rebuked by the legislature. That battle and wrangling over the budget lasted most of the year. It wound through the four-month session and three legislative special sessions.
The final 2015 legislative solution was to raise limited revenue by increasing the cigarette tax by 25 cents per pack, which will bring in about $70 million in new revenue. They also shifted $80 million in use tax money from the Education Trust Fund to the General Fund. Therefore, they essentially kicked the proverbial can down the road once again.
As the 2016 legislative session begins next week, the chronic problems are looming in the anemic General Fund. In the Senate, the Finance Committee chairs have changed hats so to speak. They have swapped posts. Sen. Arthur Orr of Decatur, who previously chaired the General Fund Finance Committee, will head the Education Finance panel, and Sen. Trip Pittman of Baldwin will leave Chairman of Education to be head of the General Fund writing committee. A good swap for Orr.
Sen. Pittman will join hands with Rep. Steve Clouse, who chairs the House General Fund Committee. Clouse and Pittman have unenviable tasks. Clouse is already predicting two percent cuts across the board, including the sacred cows of Medicaid, courts and prisons.
Resistance to taxes is still prevalent in both chambers and Senate President Del Marsh of Anniston, who sponsored a casino/lottery bill last year, said he would not come with that proposal again this year. However, a clean lottery bill could be discussed. If it clears the legislature it must be approved by the people in an election. Alabama and Utah are the only two states that derive no revenue from gambling. The casino/lottery proposal would raise $330 million for the state. A pure lottery would generate about $225 million.
There may be a move to unearmark some of Alabama’s taxes as the session looms. Alabama currently earmarks more than four fifths of its tax revenue for specific purposes. This idea perpetually raises its head in times of budget crisis. Indeed legislation has been pre-filed to transfer a greater portion of wine and liquor revenues and profits to the General Fund.
This unearmarking has been unsuccessful in the past. The best historical example was a classic battle between Gov. George Wallace and Alabama Education Associations icon Dr. Paul Hubbert. Wallace went on television with two jars of pennies – one full and overflowing, symbolic of the Education Fund, and one half full, representing the General Fund. Wallace said he simply wanted to borrow a few of the pennies from Education and put into the half empty glass jar. Hubbert thwarted Wallace’s plan. However, Hubbert is gone and so is the power of the AEA. It died with Hubbert.
This legislative body has shown a keen interest in and indeed the propensity to raid the Special Education Trust Fund Budget. With the death of the AEA there is nobody to guard the Education dollars hen house. Therefore, the legislature sees robbing the Education Fund to pay for the General Fund as an easy solution.
During the heyday of flush Education funding, higher education benefited tremendously from the power of Hubbert’s AEA, “A rising tide sails all ships.” It may be time for higher education to step up to the plate and thwart the raid on their education dollars.
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