Similar to the way realtors say, “it is location, location, location,” with Alabama government it is the General Fund, General Fund, General Fund. Several legislators optimistically predicted that they would have the budgets out by the middle of the session.
In budget hearings, General Fund agencies requested $250 million more than the current $1.7 billion in this year’s budget, and as is usually the case, there has been no revenue growth. Last year Gov. Robert Bentley offered a $540 million tax increase package for the General Fund. Lawmakers systematically rebuked his proposal. It took three sessions for the legislature to finally pass a budget. However, it failed to address long term budget needs.
The 800-pound gorilla in the room is Medicaid. It is a money-eating monster, which eats up all the General Fund money. Almost 20% of all Alabamians are on Medicaid. It provides healthcare for nearly one million low-income Alabamians, most of them children. The problem is that if you cut state funding to Medicaid, you lose a gigantic amount of matching federal dollars. For example, if you cut state Medicaid funding by $100 million, which the legislature is proposing, it will result in a loss of $1 billion in federal funds.
The legislature balanced the General Fund budget last year by transferring $80 million from Education dollars, which may be unconstitutional. Governor Bentley is proposing the same remedy this year. However, he would like to see $180 million taken away from funds earmarked by the Alabama Constitution for Education.
The idea of balancing the budget with Education’s money has received a cool reception from the legislative leadership. After the governor’s State of the State address on February 2, Senate President Pro Tem Del Marsh (R-Anniston) said, “I would be surprised to see those dollars come from education.”
In his annual speech to the legislature, Governor Bentley offered a myriad of proposals without any thoughts or ideas on how to pay for them. In issuing his platitudes he especially noted some proposals to help improve healthcare access. However, a potential expansion of Medicaid was conspicuously missing. Despite recommendations from his own task force to implement Medicaid expansion, it was never mentioned in his hour-long speech to the legislature.
This is a sore subject with Democrats in the House and Senate. Democrats make up about 30% of the legislature. They are adamant about expanding Medicaid. They argue that the state is losing out on billions of federal dollars from Washington. They have a vocal ally in Dr. David Bronner, who vehemently says it is foolish to not take advantage of this federal windfall.
Bentley is hanging his hat on the implementation of Regional Care Organizations (RCOs). RCOs would shift from a fee-for-service model to one that allocates money based on health care outcomes. Bentley hopes this move will encourage more preventative care and less hospital use, hopefully slowing the growth of costs in the program.
Speaking of Bentley, at a time when the General Fund is broke, he chose to give all his Cabinet members huge raises. Four Cabinet members alone were given raises of $73,400 per year, thus increasing their salaries from $91,000 to $164,400. By the way, regular state employees have not seen a raise in eight years and have actually lost take-home pay with increased costs of their health insurance. This did not sit well with the legislature. They immediately cut the governor’s office budget by $330,000.
The legislature has not only rendered Bentley irrelevant in the budgetary process, but they have begun to treat him with disdain as well. This latest rebuke make it appear as though they consider him a petulant child.
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