MONTGOMERY, Ala. — The Alabama State legislature began day three of its Special Session Tuesday to fill the $250 million hole in the state’s General Fund and pass a constitutionally required balanced budget.
Here are some of the highlights of the dramatic day’s activities at the State House:
Taxes out, Medicaid cut in after House committee meeting
The House Ways and Means-General Fund committee defeated an effort to raise cigarette taxes 8-7, with Republicans and Democrats on both sides of the vote. Leadership proceeded to call off any increase of taxes coming through the House, instead the committee approved a bill to cut $156 million in Medicaid funding.
Dr. Don Williamson, who oversees the state’s implementation of the federal program as State Health Officer, says that the decrease in funding effectively cuts Medicaid by a third.
At this point, it appears the House will pass level-funded budget much like it did during the regular session; one that relies solely on cuts to balance. However, there is a high probability the budget meets the same fate as its predecessor, which earned a veto from Governor Bentley.
The clash over gambling continues
Senator Dick Brewbaker (R-Montgomery) chastised his party on the Senate floor for becoming the new “Party of Gambling.”
Brewbaker said that what he’s sees as an unholy alliance between gambling interests and the Republican Party in Alabama may cause him to jump ship and become an independent.
“When the best we can do is victimize people (by approving gambling)…” said the Montgomery Senator. “We are talking about a voluntary, unlimited tax that statistically we know …that we know the lower end of the income scale provides most of the money.”
Brewbaker accused gambling supporters, including fellow Republican and state Senate leader Del Marsh, of holding the state hostage in order to legalize gambling and create a lottery.
After accusing Brewbaker of not willing to be part of the solution, Marsh took the floor and said, “If we decide there has to be some backfill (to the education budget) then we need to see what those choices are…I personally am not going to apologize if my chance, whether it be it this session or the next session, after the budgets are passed and if gaming is one of the options that come forward — and it’s the only one I can see that goes to a vote of the people of this state — that to me that should be an option before you raise [people’s] taxes.”
The Senate Tourism and Marketing Committee ultimately approved the bill on a 6-2 vote.
A tale of two budgets: the Education Trust Fund and the General Fund
The House Ways and Means-Education committee approved several bills that attempt to rectify the issues in its sister budget: the General Fund.
The first bill adjusts the education Rolling Reserve Act to allow a one-time payment of up to $50 million to the General Fund for the 2016 Fiscal Year budget which takes effect October 1st.
The second, introduced by Rep. Bill Poole (R-Tuscaloosa), would move an estimated $225 million in annual revenue from the Use Tax from the Education Trust Fund to the General Fund, along with about $187 million in spending obligations. This reallocation would provide a net gain of approximately $38 million for the General Fund.
Lawmakers have supported shifting the Use Tax to the General Fund because it is a growing revenue source. Bentley and Poole also proposed ways to offset most of the net loss to the ETF to preserve funding for education.
Moving the Use Tax is seen by budget reformers as a way to prevent recurring shortfalls in the General Fund, which relies tax sources that don’t grow over time.
The Use Tax is a sales tax paid on items bought in other states for use in Alabama.
The other approved bills include one that eliminates a provision allowing some people to be exempt from having state income tax withheld from their paychecks, one that changes some definitions to tax certain companies that don’t have a physical presence in Alabama but that do business in the state, and one that would specifically outlaw the use of devices that delete sales records from cash registers, reducing sales tax revenues to the state.
Receiving a favorable report, the five bills will now head to the House floor.
