MONTGOMERY, Ala. — Following the brief first day of the special session of the Alabama Legislature, Senator Paul Bussman (R-Cullman) held a press conference where he called for sweeping changes to the way the state budgets and spends $11 billion in state revenue annually, proposing combining Alabama’s two budgets, un-earmarking all revenue, and placing spending caps on Medicaid and Corrections, the two largest items in the General Fund budget.
For decades, Alabama has constructed two separate budgets, the larger education budget which funds schools and other educational endeavors, and the general fund budget which funds Medicaid, corrections, the Department of Human Resources (DHR), and public safety.
Within each of those budgets are hundreds of earmarks which require certain revenue streams to go toward particular programs. With the vast majority of Alabama’s tax revenues already earmarked, it is difficult for the state to prioritize spending in years where there are shortfalls.
For Fiscal Year 2016, Alabama faces a $250+ million shortfall in the general fund, while the education fund has a surplus of approximately the same amount.
“It’s time to rip off the Band-Aid and stop budgeting from crisis-to-crisis,” said Sen. Bussman in the press conference. “We are looking at a $290 million shortfall in the General Fund, which is a paltry 2.6% of total state revenue. Having separate budgets and around 85% of revenue earmarked is holding us back from permanently fixing the problem.”
Alabama is one of only three states that maintains separate budgets. It also has the highest percentage in the country of earmarked revenue, with only approximately 15% of total state revenue available to be budgeted at the discretion of the legislature. Part of Bussman’s plan involves restructuring the Education Trust Fund’s Rolling Reserve Act to ensure the law’s stabilization fund is not overfunded at the expense of immediate educational needs.
Bussman’s proposed spending caps on programs currently funded through the General Fund would limit Medicaid to 15% of all available revenue and Corrections to 4.5%. They currently are at 14.9% and 4.3% respectively. Additionally, the proposal will establish ten legislative subcommittees with specific agencies and budget areas for regular review. Each subcommittee would be tasked with detailed study to better identify budget priorities, which would be reported back to the respective General Fund committees in each chamber.
“The money is there. Now it’s our job to get rid of the shell games, make the tough decisions, and institute real budget reform,” concluded Sen. Bussman.
A bill similar to Bussman’s plan introduced by Gerald Dial (R-Lineville) in May was a proposed constitutional amendment and would have removed all earmarks, unified the two budgets, and given lawmakers more leeway in constructing a budget that would fulfill all of the government’s duties without the need to raise taxes. With Alabama’s regular session ending without a budget at all, the proposal was indefinitely postponed.