The Wire

  • New tunnel, premium RV section at Talladega Superspeedway on schedule despite weather

    Excerpt:

    Construction of a new oversized vehicle tunnel and premium RV infield parking section at Talladega Superspeedway is still on schedule to be completed in time for the April NASCAR race, despite large amounts of rainfall and unusual groundwater conditions underneath the track.

    Track Chairman Grant Lynch, during a news conference Wednesday at the track, said he’s amazed the general contractor, Taylor Corporation of Oxford, has been able to keep the project on schedule.

    “The amount of water they have pumped out of that and the extra engineering they did from the original design, basically to keep that tunnel from floating up out of the earth, was remarkable,” Lynch said.

  • Alabama workers built 1.6M engines in 2018 to add auto horsepower

    Excerpt:

    Alabama’s auto workers built nearly 1.6 million engines last year, as the state industry continues to carve out a place in global markets with innovative, high-performance parts, systems and finished vehicles.

    Last year also saw major new developments in engine manufacturing among the state’s key players, and more advanced infrastructure is on the way in the coming year.

    Hyundai expects to complete a key addition to its engine operations in Montgomery during the first half of 2019, while Honda continues to reap the benefits of a cutting-edge Alabama engine line installed several years ago.

  • Groundbreaking on Alabama’s newest aerospace plant made possible through key partnerships

    Excerpt:

    Political and business leaders gathered for a groundbreaking at Alabama’s newest aerospace plant gave credit to the formation of the many key partnerships that made it possible.

    Governor Kay Ivey and several other federal, state and local officials attended the event which celebrated the construction of rocket engine builder Blue Origin’s facility in Huntsville.

3 years ago

Expansion Evasion: Alabama’s Near Miss

(W.Miller/YHN)

In the waning weeks of 2014, a handful of Republican governors—fresh off the heels of their re-elections—began flirting with the idea of embracing Medicaid expansion under the Affordable Care Act. Alabama’s own Republican governor admitted that he was “looking at” expansion, despite having kept a safe distance from the issue in his first term. While eleven Republican-led states ultimately did expand, several Republican governors—including Alabama’s—had their impulses impeded with help from their states’ own Republican-controlled legislatures.

On April 5, 2015, the Governor Robert Bentley announced the formation of the Alabama Healthcare Improvement Task Force—tasked, presumably, with a predetermined recommendation for him to expand Medicaid. Days later, an effort arose in the Alabama Senate to curb the momentum. It came in the form of a Senate Joint Resolution introduced by Senator Trip Pittman (R-Daphne) and co-sponsored by twenty of his Senate colleagues. The two-page resolution made a succinct case against expansion and concluded with these words:

    Whereas, the Legislature has no intention of allocating funds to support Medicaid expansion; Be it resolved…that we express our intention that the State of Alabama not expand Medicaid above its current eligibility levels.

In a way, these senators were “prophets in their own land,” bucking their party’s governor and other state figureheads attempting to exert pressure, and enduring a two-day tongue-lashing from Democrats on the Senator floor as punishment for the resolution’s passage. Pittman, who at the time served as Budget Chairman for the Education Trust Fund, recognized the fiscal dangers associated with expansion, especially given the near unsustainability of the state’s current Medicaid costs. He, along with many of his colleagues, also feared the very real possibility that Congress would eventually renege on its irresistible offer.

Eventually, talk of expansion dissipated—so much so, that the governor now seems pleased with the outcome. He recently remarked:

    We want to make sure that the states that did not expand Medicaid, that we are taken care of properly. They [Members of Congress] are not for expanding Medicaid further; in fact, there will be a reduction over time. We will be rewarded because we did not expand Medicaid…in the long run, we are gonna be better off for the way we handled it in the beginning.

As I have written about in greater detail here, Medicaid already accounts for one of Alabama’s most onerous financial obligations. At same time, it is one of the state-administered programs over which the state has the least amount of control and flexibility. Alabama’s share of Medicaid spending has now reached nearly $2 billion a year (for an Alabama total of $6.3 billion, including federal funds) and has increased by an average of 9.5% annually over the last decade. Not only would Medicaid expansion have driven up these costs, but it would have done so while the federal government simultaneously siphoned even more of the state’s already-nominal control over the program.

Today, after six failed years in existence and under the control of a Republican president and Republican majorities in both houses of Congress, the Affordable Care Act is on life support. Conservatives in the House of Representatives are fighting to see that Medicaid expansion is not only closed, but that payments to expansion states cease altogether. With Alabama’s estimated expansion price tag at (at least) $700 million, where would that have left the state financially? Would Alabama have been able to support the expansion population without jeopardizing funding for the lowest- income beneficiaries who were already enrolled? What about the able-bodied individuals who dropped out of the private market because they’d become newly eligible for Medicaid?

The foresight of the Alabama Senate should rouse Alabama’s congressional delegation to lead the fight for an end to Medicaid expansion, more state authority over Medicaid, and ultimately, a better method of healthcare delivery for low-income families. Those representing red states that acquiesced to the short-term political gains of expansion won’t have that freedom, but will instead be forced to defend the cost-prohibitive measure, and by extension the Affordable Care Act, likely to their long-term political detriment.


Katherine G. Robertson is a former counsel to then-Senator Jeff Sessions (R-AL) and currently serves as Chief Counsel to the Attorney General of Alabama. The opinions expressed in this commentary are her own.

1
4 years ago

The lottery is a means to an end, and that end is a bigger Alabama government (opinion)

Alabama Capitol (Photo: Flickr, sunsurfr)
Alabama Capitol (Photo: Flickr, sunsurfr)
Alabama Capitol (Photo: Flickr, sunsurfr)

The people want to vote!”–the most oft-repeated catchphrase of the lottery debate. Even politicians who declare themselves personally opposed to a state-run lottery try to justify their support of it because “the people want to vote.” But politicians know full well that they have not been honest with the people when it comes to a lottery–that this debate isn’t over whether or not they should be able to buy scratch-offs in Alabama. No, for politicians and for bureaucrats, the lottery is merely a means to an end–and that end is bigger government. If the people only knew what was really going on in Montgomery, they would staunchly oppose giving politicians more of their money to spend.

Despite the fact that Alabama’s government spends more money every single year, to most politicians and bureaucrats, nothing in state government has been or will ever be “fully funded.” Around the State House, these men and women flippantly and unapologetically discuss getting their hands on more of the people’s money–never mind that most Alabamians can’t afford to give away more. This year, the state spent $29 billion of the people’s state and federal tax dollars only for state leaders to then tell the people that Alabama faces a dire budget “crisis” over a request to spend $85 million more–a mere 0.29% of what has already been spent (and, if it were vital, then it could have been found). These now-annual “crises” are self-imposed by politicians who are constantly looking to pilfer more of the people’s money because they’ve given up on dealing with our state’s spending problem at its roots. To put it simply, the spenders have a want, but they’ve done a good job convincing the people that it’s a need.

Attempting to reason with his colleagues on Friday, one senator reminded them that government will always find a way to spend every single penny that it takes in. And having more money to spend in the short term will continue to cover up the unsustainable fiscal trajectory that the state finds itself on. The government’s insatiable spending addiction will not be satiated with lottery revenue–it will be stimulated. Critical policy proposals that would help place our state on stable financial footing for the long term will not see the light of day. As a result, it won’t be long before our politicians realize that lottery revenue can’t support their spending problem. Where will they look for money next?

Not only will the lottery-fueled growth in government almost instantly have to be sustained by other forms of revenue (i.e., more of the people’s tax dollars), but the cost of a state lottery will show up in other ways. For the state to net the governor’s $225 million estimate (more on that here), the people--every Alabamian eighteen years of age or older–would have to spend $182 a year on lottery tickets. According to Salil Mehta, a renowned academic statistician and Ivy League professor, probability calculations indicate that an estimated 350,000 Alabamians would lose $200,000 of their lifetime savings as a result of a state lottery. Keep in mind, this is in a state with the 48th lowest median household income in the country. A state in which 19% of the people live in poverty and 25% receive government assistance. Who will be better off if the government is permitted to aggressively coax individuals with limited resources into wasting their money on the false hope of getting rich quick? Other states’ lotteries do exactly this–it is not speculation. What could additional government spending possibly offer the people to justify that level of malevolence?

(And, just in case you’re thinking it, taking from those who rely on state benefits is not a clever way to recoup costs, but will leave them with even less income and further diminished means of escaping poverty.)

The people should not be fooled into thinking that the debate going on in Montgomery is over an innocuous game of chance or their freedom to play it–it’s about conning them into handing over more of their money without asking too many questions. Make no mistake, the lottery is a tax–a hidden tax, disguised as entertainment, and supplied through a state-run monopoly–and it will almost assuredly lead to more taxes as politicians are further enabled to avoid the kinds of tough decisions that they were elected to make.


Katherine Green Robertson is Vice President of the Alabama Policy Institute (API). API is an independent, nonpartisan, nonprofit research and educational organization dedicated to the preservation of free markets, limited government, and strong families. If you would like to speak with the author, please e-mail communications@alabamapolicy.org or call (205) 870-9900.

For more on API, please visit www.AlabamaPolicy.org and follow on Twitter @AlabamaPolicy.

1
4 years ago

With the lottery, politicians are trying to trick Alabamians into paying for more government (opinion)

Lottery tickets (Photo: Flickr)
Lottery tickets (Photo: Flickr)
Lottery tickets (Photo: Flickr)

By Katherine Robertson and Caleb Crosby

There are a number of policies, particularly those that stimulate economic growth, that are proven solutions to poverty. Just as easily identifiable are policies that exacerbate poverty. Sometimes these policies have good intentions of serving the poor, but then the Law of Unintended Consequences strikes. Other times, policies are promoted and adopted with blatant disregard to their harmful impact by the very politicians who hold themselves out as champions of the poor. One such example comes to mind given the ongoing conversation surrounding a statewide lottery.

During the last legislative session, one Democratic legislator took to the microphone to deliver a searing indictment of Alabama’s system of taxation, invoking the word “regressive” repeatedly. What might have been a thoughtful debate on tax policy became, unfortunately, a farcical monologue. One moment the legislator was lambasting Republicans for the “regressive” tax increases that they were imposing on the downtrodden, including the “regressive” cigarette tax, which would “regressively” affect Alabama’s poorest citizens. The next moment (in fact, in the same breath) the legislator was haranguing Republicans for not supporting a statewide lottery, although the legislator peculiarly gave the term “regressive” a respite during this discussion. The incongruity of the two arguments–one against regressive taxation, one for regressive taxation–was apparently lost on the legislator.

Research clearly shows that lotteries take the most from the least–from the poor. This has been proven by national-level data, as well as by data from Southern states with lotteries such as Georgia and North Carolina. In Georgia, residents in the ten poorest counties spent 44% more on lottery tickets than residents in the ten wealthiest counties, yet the former received 36% less in the education dollars provided by the lottery. In North Carolina, poverty rates in counties with high lottery-ticket sales were, on average, 42% higher than the rest of the state.

Central to conservative philosophy is personal responsibility. Does opposition to a lottery undermine this by implying that people can’t be responsible? Giving individuals more direct access to a lottery (they can already buy tickets across state lines) does not sync with the ideals of personal responsibility when relying on get-rich-quick marketing pitches that devalue hard work. Consider, for example, the state-lottery slogans “Game-Changing, Life-Changing Fun” (Tennessee) and “Give Your Dream a Chance” (New Jersey).

Further, the proposal in question is a state-run lottery, the success of which depends on the participation of the poor and vulnerable. It is the state itself, incentivized by having more money to spend (or waste), that will market the false hope of a huge jackpot to the hopeless. A study from Duke University in the ’90s confirmed that lottery advertising is most aggressive in poor neighborhoods. It has even been suggested that some states time their lotto advertising with the monthly distribution of government benefits.

Exploiting the poor to pay for government would be a step backwards, economically and morally, in reducing Alabama’s poverty rates. A state-run lottery relies on the poor to feed government and attempts to justify it by promising–promising–that the proceeds will create government programs to serve the poor. But look at what’s happening in Illinois: lottery players, who are overwhelmingly poor, lined the state’s pockets, yet that didn’t solve the state’s abysmal fiscal situation. And, to make matters worse, Illinois can’t even afford to pay the winners of its lottery. The state making good on its promises–talk about slim odds!

Rather than tricking individuals into paying for more government, Alabama should prioritize policies that bring about real hope, not the false hope of striking it rich. Real hope, as Arthur Brooks wonderfully articulates in his new book, The Conservative Heart, “empowers people. It tells them that a happy life of meaningful work is within their reach–and that they personally can build it. This is the American Dream. This is the restless optimism that built our nation. This is the hope of generations of immigrants who came to America in search of a better life. This is the hope that animates the conservative heart.”

Indeed, this should be the hope that animates Alabama.

Katherine Green Robertson is Vice President and Caleb Crosby is President and CEO of the Alabama Policy Institute (API). API is an independent, nonpartisan, nonprofit research and educational organization dedicated to the preservation of free markets, limited government, and strong families. If you would like to speak with the authors, please e-mail communications@alabamapolicy.org or call (205) 870-9900.

1
4 years ago

The omnipotent federal government is devouring Alabama’s sovereignty (opinion)

United States Capitol (Photo: Eric B. Walker)
United States Capitol (Photo: Eric B. Walker)
United States Capitol (Photo: Eric B. Walker)

On Friday, the omnipotent U.S. Department of Education threatened to pull federal funding from public school districts that refuse to fall in line over transgender bathrooms. Many school districts will submit, knowing that they cannot afford to jeopardize their federal cash flow. Setting aside for a moment the broader social debate over the directive, it remains a glaring illustration of just how far federalism has fallen from the days of the Founders. While federal overreach has become commonplace, so has the voluntary surrender of the states’ constitutional authority over matters—something that is rarely acknowledged or discussed as states clamor for more and more federal dollars.

Alabama landed at number three this year in a report ranking the federal dependency of the states. Largely blamed on the state’s poverty rates, Alabama’s dependency on the federal government has reached dangerously high levels. According to the PEW Charitable Trusts, Alabama’s share of federal funds accounts for roughly 30% of the state’s gross domestic product, ten points higher than the national average. Estimates derived from Alabama’s Executive Budget Document and the comptroller’s 2014 Comprehensive Annual Financial Report show that the state received $8.5 billion in federal dollars in 2014. Only ten years prior, Alabama received $5.6 billion. That means that our state is 50% more dependent on the federal government than it was in 2004. These dollars are dedicated to an array of services, the largest of which are Medicaid, education, and human services.

From No Child Left Behind to the Affordable Care Act, thousands of laws have been passed by Congress to lure states into ceding their authority in exchange for federal funding. In addition to the concern that federal funds will deplete over time, Alabamians should be troubled by the fact that the state has given up meaningful control—typically, with little to no debate—over many of its own agencies and programs via the severe mandates and regulations that come with accepting federal dollars.

In his book, Saving Congress from Itself, former U.S. Senator James L. Buckley summarizes the problem: “Those governing our towns and states are no longer in control of a large proportion of the government activities that affect our lives.” “In too many respects,” Buckley notes, “our state officials now serve as administrators of programs designed in Washington by civil servants who are beyond our reach, immune to the discipline of the ballot box, and the least informed about our particular conditions and needs.”

With Alabama’s own funding challenges to deal with, state agency heads and appropriators have little regard for the nation’s fiscal condition and often take a short-sighted approach to accepting federal dollars. In Montgomery, the common refrain is that we ought to take as much “free” federal money as we can get, never mind the mandates that come with it. In the short term, this “free” money means free political points; in other words, politicians can reap the rewards of the spending without making tough budgetary decisions or facing any real opposition. States officials take federal money for things they know taxpayers either cannot or will not pay for. Congress counts on exactly this mentality to push its own agenda down to the states.

Sometimes, the federal government will merely “change the rules” after states have become reliant on the money. As the nonpartisan Congressional Budget Office explains, “States and localities may be too deeply invested in particular activities to be able simply to forego federal dollars when new conditions are placed on existing programs and their associated funding streams.” Listening to debate in the State House, it is clear that Alabama is not well-situated to forfeit many federal dollars. As such, a substantial amount of state policymaking will continue to occur in Washington, far removed from what will best serve Alabamians.

Will we continue to carelessly sell our sovereignty—and, with it, our values—to the federal government? Or will we begin to take seriously Chief Justice John Robert’s admonishment when he said, writing for the majority of the Supreme Court: “In the typical case, we look to States to defend their prerogatives by adopting ‘the simple expedient of not yielding’ to federal blandishments when they do not want to embrace the federal policies as their own. The States are separate and independent sovereigns. Sometimes they have to act like it.”


Katherine Green Robertson is Vice President of the Alabama Policy Institute (API). API is an independent, nonpartisan, nonprofit research and education organization dedicated to the preservation of free markets, limited government, and strong families. If you would like to speak with the author, please e-mail communications@alabamapolicy.org or call (205) 870-9900.

1
4 years ago

‘Gender bias’ cries from Bentley’s alleged mistress are a desperate diversion (opinion)

Governor Robert Bentley (photo: Flickr of Governor Robert Bentley, March 21, 2016)
Governor Robert Bentley (photo: Flickr of Governor Robert Bentley, March 21, 2016)
Governor Robert Bentley (photo: Flickr of Governor Robert Bentley, March 21, 2016)

Alabama is, once again, making national news for all the wrong reasons. In the modern political era, our state has seen two governors face criminal convictions, one of whom remains in prison. Now, our governor has been caught on tape confirming year-long rumors that he was unfaithful to his wife of fifty years. One headline read, “Alabama’s ‘family values’ governor mired in sex scandal.” The Office of the Governor of Alabama has become a laughingstock to the rest of the country.

As yesterday’s events unfolded, I was struck with acute disappointment. But that disappointment gave way to anger when I read the statement released by the governor’s alleged mistress yesterday evening. She said: “There is no way that man [former law enforcement chief Spencer Collier] would have said what he did . . . about another man. He only said what he said about my professional abilities because I am a woman. His comments were clear, demonstrated gender bias.” She concludes, “Unfortunately, there are still some people who are set on hindering the ability of women to work in the political arena.”

As a woman working in the political arena, I found myself speechless.

Gender bias is defined by the Cambridge English Dictionary as the “unfair difference in the way women and men are treated” and by the Oxford Dictionary as “an inclination of prejudice against one gender.” Gender bias has been blamed—with varying degrees of veracity— for Hillary Clinton’s “shrillness,” the wage gap between men and women, and the reason why there are so few female CEOs.

Is there gender bias in Montgomery? In some cases, but Mrs. Mason cannot claim it. Where true bias exists, people are treated in a certain way (usually negative) due to some preconceived notion about them, whether based on their age, appearance, or ethnicity—not based in reason.

Knowing the evidence that was now available to the public, Mrs. Mason did not deny anything, but in a desperate diversion, tried to claim that her gender was to blame for her present predicament.

Her statements are a disservice to women in politics, especially in Alabama politics where women face undeniable challenges. Currently, only 15% of Alabama’s state-level elected officials are women. Though the environment for women in the State House has come a long way, it can be a seedy place, and it remains, in some quarters, a ‘good ol’ boys’ club.’ The affair culture requires professional women to carefully navigate their friendliness, their feminism, their tone, and, of course, their appearance. By making a false claim of gender bias in a world where gender bias does exist, Mrs. Mason has diluted this reality.

In his statements, Spencer Collier described the unprecedented influence that Mrs. Mason wielded over the governor. He never once said that she was unqualified for her senior-level role, nor did he question her professional abilities. Sadly, whatever went on between Mrs. Mason and the governor has made her professional abilities all but irrelevant. It will be impossible for the public to know what amount of her success should be attributed to her intellect versus her amorous relationship with the governor. A stereotype that still exists—that women can shortcut their way to the top—has been reinforced, a further setback to other women of influence in Montgomery.

The state’s political science programs are filled with young women, as are our law schools. My alma mater, the University of Alabama School of Law, boasts a 54% female enrollment. Anytime I’m invited to speak to these groups, I tell them how badly Alabama needs more bright young women involved in state-level politics. But what kind of experience can they expect, should they take my advice? What message has this episode sent to the dozens of adorable middle-school girls who line the halls to page for their hometown representative or the college-aged female interns shadowing lawmakers?

We should be setting the bar high for these young women, reminding them that with strong character, hard work, and professionalism anything is possible. Above all, we should demonstrate the willingness to take responsibility for our actions.

The statement released yesterday will not be soon forgotten by women who have actually struggled with inequitable treatment in their professions. Rather than expressing remorse, which the public would likely sympathize with, Mrs. Mason chose to cry wolf and play the gender card. As a result, whatever gender bias previously existed in Montgomery has just been dialed up a notch.

1
5 years ago

Alabamians should not accept the inevitability of big government (opinion)

United States Capitol (Photo: Eric B. Walker)
United States Capitol (Photo: Eric B. Walker)
United States Capitol (Photo: Eric B. Walker)

The New Year always comes brimming with new goals, possibilities, and expectations. This year, for many, those expectations are closely tied to the 2016 presidential election.

Conservatives had a tumultuous year. The U.S. Supreme Court ruled with unbridled power and without regard to long-settled precedent. The free exercise of religion continued to be hollowed out by politicians and judges across the country. Planned Parenthood’s gruesome treatment of unborn babies was exposed, yet went largely uncensured as the group held onto taxpayer funding. The president’s use of executive action on matters quite beyond the mainstream reached new heights. Even in Alabama, the Republican governor abandoned some of his most prominent conservative campaign promises.

Conservatives feel betrayed by politicians at every level of government. As a result, many have pulled back on their civic involvement. Even some conservative politicians have begun to capitulate and have given up on pursuing an aggressive agenda. Still, they hold on to a glimmer of hope that a dramatic change at the top can get the country going in a better direction.

Perhaps more than in any other time in American history, the past decade has revealed a national epidemic of either ignorance or apathy to the fact that our government is, as Ronald Reagan put it, “beholden to the people.” Exploiting this, government has grown at an alarming rate and has progressively saturated every aspect of our lives. It has gotten so big, so impenetrable, that any rebuke that does come from the general public is easily ignored and hardly threatening.

William F. Buckley Jr., writing in 1963, could have easily been describing 2015 when he said:

“I am fascinated, and concerned, by the increasing submissiveness of the American people. In the course of a single year, a genuinely outraged majority cooled off without doing anything about a challenge to three of the very deepest human commitments, the commitment to one’s God, the commitment to one’s freedom, and the commitment to one’s country. . . . What happened was not the result of a rational dialogue, but the result of a national lassitude.”

That lassitude, or apathy, is bred by a disbelief in the ability to change anything.

While many of us are highly engaged in the ongoing process of choosing our next president, how different would our government be if we were even half as engaged in non-election years? Presidential candidates use issue-based polling as guidance for their positions because they know they cannot win if they stray too far outside the lines of public opinion. What if those in office felt the same way–that ignoring the desires of the public would come with real consequences?

When we (consciously or not) continue to accept big government’s inevitability, we cannot help but elevate presidential elections to the status of our once-every-four-years chance to “right the ship” of our nation. This leads us to pass up numerous opportunities that we have to directly influence government at the local and state level–to really change things from the bottom up, not just the top down, as the Founding Fathers envisioned.

As we enter this new year full of nervous anticipation in the political arena, we should certainly do what we can to ensure the election of the best possible president. Still, the most compelling candidate would admit the limitations of the office, rather than promise us the world. First, many of the presidency’s limitations come from the Constitution and, if properly adhered to, would result in a return of power to the states. Second, no president (or government) can guarantee the preservation of our democracy and ideals without the strength of non-government frameworks–the family, the community, and the church.

In his book God and Government, the late Chuck Colson reminds us that “the answer to the big government illusion is found in small voluntary associations,” or “little platoons,” as Edmund Burke called them. Colson gives numerous examples of families and churches working in the lives of their neighbors, serving the needy, and visiting prisoners. When we do these things, he notes, “in a very real sense, we’re helping to maintain the distinctive character of our society–to preserve America’s richest heritage. We are strengthening the ‘little platoons’ that foster virtue and are the bedrock of America’s freedom.”


Katherine Green Robertson is Vice President of the Alabama Policy Institute (API). API is an independent, nonpartisan, nonprofit research and education organization dedicated to the preservation of free markets, limited government, and strong families. If you would like to speak with the author, please e-mail communications@alabamapolicy.org or call (205) 870-9900.

1
5 years ago

In spite of misinformation campaign, AL lawmakers are trying to save state employees’ retirement

An RSA tower in Mobile at night (Flickr user Steve Driskell)
An RSA tower in Mobile at night (Flickr user Steve Driskell)
An RSA tower in Mobile at night (Flickr user Steve Driskell)

By: Katherine Green Robertson, Dr. John S. Jahera, and Dr. James R. Barth

On November 9, a newspaper in North Alabama published an editorial suggesting that any legislative interest in our state’s public pension system would inevitably spell “disaster” for retirees. The editorial also claims that legislators may be plotting to “shore up” the General Fund through the “cash cow” of Alabama’s public pension system.

In reality, a handful of Alabama legislators are undertaking the mammoth task of ensuring that our state can fulfill the obligations owed to current and future public retirees. This is no small task, as Alabama’s public pensions are underfunded by at least $15.2 billion. To put this number into perspective, every household in Alabama would need to contribute $8,274 to fully fund the system.

To the casual observer, an unfunded pension liability is about as abstract a concept as the national debt. Many taxpayers may wonder why it even matters–will the bill ever really come due?

Politicians in both cases often get away with doing nothing, because they know they won’t be around when the bill does come due to future generations. And every year these problems aren’t dealt with, they worsen.

Alabama’s public pensions, unlike most private sector pensions, are based on a defined benefit formula. This means that state employees pay into their retirement accounts, as do their state employers, and the Retirement Systems of Alabama (RSA) invests that money with a guaranteed return of 8%. Whether or not the investments actually return 8% matters little to state employees, who will receive the same contractual benefit no matter what.

How is this possible? Because the Alabama Legislature–led by the same individuals now being wrongfully accused of trying to raid the pension system–has been faithfully paying a large sum of taxpayer dollars to RSA each year to cover its shortfalls. This year alone, legislators sent RSA nearly $1 billion.

And they didn’t have to.

The state is not legally required to pay the “annual required contribution” (known as the ARC), yet the legislature has never failed to make that payment–even when it has been painful to do so, as it was this year. The ARC is the yearly amount needed to fund current and future retirement benefits and liabilities. Why has the legislature made this payment? To keep the system solvent for our public retirees. Legislators in states like Illinois, New Jersey, and Pennsylvania chose not to fund the ARC, obligating taxpayers to further subsidize these drastically underfunded pensions.

What Alabama’s legislators have begun to realize, however, is that it’s getting harder and harder to make that substantial annual payment to RSA, especially with no end in sight (it’s expected to increase by 3.4% this year).

The legislature’s pension study committee, led by Senator Arthur Orr and Representative Lynn Greer, is taking this concern seriously. The reforms the committee is contemplating will have no impact on the benefits of any current retiree or state employee; however, these changes would aid in protecting the retirement these individuals have already earned. To do so, the rise of our unfunded liability (which has increased by an astounding 625% since 2003) must be halted.

The defined benefit plan exposes the State of Alabama (the employer) to the maximum risk of future funding shortfalls. As long as we continue to add new employees to this plan, we risk going even deeper into pension debt. To avoid this situation, the legislative study committee is looking at pension options for future employees that would reduce the state’s long-term risk of pension underfunding and allow Alabama to pay down its current pension debt. It’s a painstaking task, but one that could have a sizeable and lasting payoff for state employees and taxpayers alike.

Over the years, a number of state leaders have tried but failed to accomplish pension reform for many of the same reasons that congressmen have given up on fighting debt limit increases. For instance, there’s a great deal of misinformation surrounding the debate that heavily clouds the merits and necessity of reform. Some will argue the $15 billion pension debt isn’t even problematic. The general public is largely apathetic to the plight of state employees, who have better retirement benefits than many Alabamians, and state employees are led to believe that reform efforts signal that someone is after their retirement.

In spite of these troubling realities, a few key legislators have decided to roll up their sleeves and attempt to deal with this critical issue. They should be applauded–by state employees, for working to safeguard their retirement funds; by their colleagues, for taking on a weighty assignment that nobody else wanted; and by taxpayers, who may not care much about public pensions, but have been and will continue to be called upon to “shore up” Alabama’s retirement system unless reforms are made.


Katherine Green Robertson serves as Vice President of the Alabama Policy Institute. Dr. James R. Barth is the Lowder Eminent Scholar of Finance and Dr. John S. Jahera is the Lowder Professor of Finance at Auburn University. To speak with the authors, please email communications@alabamapolicy.org or call (205) 870-9900.

1
5 years ago

Conservative, free market principles are the answer to Alabama’s poverty problem (opinion)

A man sits on his front porch in Selma, Alabama, (Photo: Joe Edmundite)
A man sits on his front porch in Selma, Alabama, (Photo: Joe Edmundite)
A man sits on his front porch in Selma, Alabama, (Photo: Joe Edmundite)

There is no shortage of ideological differences between conservatives and liberals or Republicans and Democrats, but perhaps the most divisive issue on the political spectrum is how to care for the poor. Admittedly, conservatives have done a fairly subpar job of connecting the dots between our principles and combatting poverty. While it is true that government’s bloated anti-poverty programs have not achieved the desired ends and levy a heavy cost on current and future taxpayers, the conversation should not end there.

This week, the Alabama Policy Institute is drawing awareness to conservative solutions to poverty in hopes of better communicating our perspectives and initiating more conversations around the dinner table on how we, as a state, should respond to poverty. As Alabama’s population is one of the ten poorest in the nation, poverty is an issue that–directly or indirectly–comes into play during every election, every budget hearing, and the meetings of every study committee or task force. Still, more of what goes on in Montgomery should be responsive to the drivers of poverty and proven solutions to it.

Since API’s founding in 1989, the organization has been dedicated to promoting the principles of free markets, limited government, and strong families. When we offer this tagline, we often fail to explain the “why”: that the cumulative effect of putting these principles into practice will yield the best results for our state and nation, including those living in poverty.

A free market economy allows for businesses to profit and hire, creating opportunities for individuals. A less invasive, limited government gets out of the way of growth and job creation by rolling back regulations and limits on competition and by reducing the tax burdens of individuals and businesses. And a strong family provides children with the best chance of receiving a good education, staying out of prison, and finding employment.

API’s prioritization of educational choice is driven by our desire to see Alabama’s most vulnerable school children escape the poverty trap. Studies from liberal and conservative academics across the country conclude that poverty hinders a child’s development and educational outcomes. For two and a half decades, API has pushed for expanded school choice in the state because of the inherent disparities that come when families cannot afford to choose a school that best fits their child’s needs.

We have also worked alongside state leaders to better understand and address the challenges in Alabama’s prison system. While in prison, an offender’s spouses and children suffer and are often left with even fewer resources and less stability in the home. When prisoners are released, they frequently lack employable skills and may be deemed ineligible for many jobs because of their criminal records. This is not meant to imply that individuals should be spared punishment for crimes to avoid such consequences, but the trends in these outcomes should be a consideration as we examine the cost-effectiveness of our system.

Our elected officials frequently tout the merits of expanding government entitlement programs-both in duration and eligibility. API opposes this when it is clear, as in most cases, that politicians and bureaucrats are ignoring the abysmal results of the programs, opting instead for feel-good talking points. Further, at times, addressing poverty is not even the sincere aim of maintaining or expanding these programs. Special interests and industries have become dependent upon money flowing through government grants and programs, and exert significant political influence to ensure that this continues.

We hope that the information generated this week will cause you to think more about how Alabama can use proven conservative policies to combat poverty; but, we also want to challenge you to participate directly in serving Alabama’s poor and vulnerable. We have provided links to model organizations on our website to give you some ideas for getting involved. If we agree that government is not the answer to poverty, we cannot then sit back and let the government serve the poor on our behalf.


Katherine Green Robertson is vice president for the Alabama Policy Institute. API is an independent non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the author, please email communications@alabamapolicy.org or call (205) 870-9900.

1
5 years ago

Three themes you should understand about Alabama’s recent Special Session

general fund education budget

It’s only been a few days since Governor Bentley signed the General Fund budget for fiscal year 2016 into law. We don’t yet know what the fallout, if any, will be from the cuts, taxes, and transfers that were made to make up the revenue shortfall. What we can identify at this juncture are at least three key themes of this nearly seven-month-long debate that shape the way the state spends your money.

Bifurcated Brawl

Particularly throughout the two special sessions, much ado was made about the Education Trust Fund’s health versus the General Fund’s maladies. Transferring the state’s use tax revenues from the Education Trust Fund to the General Fund, first proposed at the end of the regular session, ended up being a key piece of the final solution—although the exact amount was haggled over until the very last days of the session. The resolve of General Fund agency heads to receive level funding was matched only by the state’s education entities’ tenacious defense. The infighting among the two factions, at times, led many newly elected legislators to question why the state has two budgets in the first place.

As the public and private squabbling dragged on, it was hard to miss the irony that Alabama is one of the only states in the Union where members of one budget committee would be pitted against their counterparts in the other. Alabama’s bifurcated, two-sided budget system leads many to adopt a one-sided mentality. Looking at the services our government provides and determining how to fund the growing list of “top priorities” at an appropriate level is the responsibility of all legislators—not just those assigned to the budget committee with the problem.

Federal Fixation

Federal matching dollars were mentioned countless times during the budget debate. Whether in the context of Medicaid, public health, or education, cuts to these and other programs were forbidden by those who warned that Alabama would lose federal dollars in the process. A recent report comparing states’ dependence on the federal government listed Alabama as the fourth most reliant state on federal funds, behind New Mexico, Kentucky, and Mississippi. In Montgomery, far too often, federal dollars are viewed as free money and provide another alternative to restraint and reform.

A vast disconnect exists between the duties owed to state versus federal taxpayers (though they are the same group). The two provider tax increases that passed in the second special session are further evidence of this—a strategic maneuver to get more federal dollars through the door at “no cost” to state taxpayers. The free market American Enterprise Institute has called provider tax funding schemes “a distortionary but legal means by which a state can artificially inflate medical costs to extract additional Medicaid funding from the federal government.”

This chronic reliance on federal money is problematic, of course, given that Congress has a harder time passing budgets than the Alabama Legislature—and a government that’s $18 trillion in debt is a risky funding source to count on. With all of this uncertainty, Alabama lawmakers would be wise to wean the state off of these dollars, rather than grow this dependency to the detriment of our state sovereignty.

Echo Chambers

It is widely understood that when lawmakers arrive in Montgomery, they leave their constituents behind and are greeted by a bevy of lobbyists and state-agency representatives working tirelessly and aggressively for or against particular matters. This year, legislators were also subjected to not-so-veiled threats from the governor and, at times, painful arm-twisting by their leadership. All the while, those who wanted to raise taxes claimed that they were not hearing any opposition from their constituents. Those who wanted to slash government said their position had largely been met with silence at home. Still, seemingly exaggerated polling data was cited when convenient to show that “most Alabamians” support this or that. (Apparently, somewhere in the state, Alabamians were begging for their taxes to be raised.)

Maybe the theme most important for the general public to understand is that there are people speaking on your behalf that you may or may not agree with. All politicians are susceptible to follow the loudest voice, even when it conflicts with their instincts. If we sit back and let a few voices dominate important statewide debates in the name of “popular opinion,” we should not be surprised to find that the end result is not what we wanted. Montgomery is not Washington, D.C.—legislators are accessible and they expect to hear from you.

Now is the time to talk to them about their decision-making over the past seven months and what you hope to see them accomplish over the next three years. Pushing for serious reforms to contain our state spending might be a good place to start, lest the taxman returneth.


Katherine G. Robertson is the Vice President of the Alabama Policy Institute.

 

1
5 years ago

Robertson: The empty promise of ‘No New Taxes’ (Opinion and infographic)

 

Alabama Budget Crisis slider

Beginning early in the Regular Legislative Session, Democrats laughingly claimed that Republicans were stealing their agenda, namely on tax increases. Various Republicans from the top down who ran on promises of no new taxes are now exerting substantial energy to convince both their colleagues and the general public that state government cannot function without more of the taxpayers’ money.

Is the shortfall itself really causing this one-eighty or is there a deeper, philosophical problem? Perhaps some of those who promised not to raise taxes did so without giving much thought to the principles that underlie this position, resulting in their sudden change of course.

A promise of no new taxes is never issued on the campaign trail with the caveat of “unless revenues go down” or “unless we need to increase spending.” A principle-based pledge not to raise taxes is made with the understanding that revenues will fluctuate and that government won’t ever voluntarily spend less. It is based in a belief that government–like any family or business–must live within its means. Tax increases have always been considered a cardinal sin in conservative politics because they require taxpayers to bail out elected officials who either cannot or will not solve problems without more of your money.

Without a genuine, policy-based commitment not to raise taxes, politicians are easily persuaded that certain increases aren’t that bad. The “tax them, not me” mentality of outside influences kicks in, leading lawmakers to privately weigh which tax hikes will allow them to keep the most friends. Raising the cigarette and business privilege taxes, and eliminating the FICA deduction, are still on the table seemingly due to a mistaken belief that these are the least politically dangerous–never mind the costs to smokers, small business owners, and half of all tax filers (those who itemize deductions).

The “tax them, not me” mentality fails to recognize that tax increases deter reform and restraint; thus, more revenue will continue to be necessary and, next time, it will have to be found in other places. The necessity of efficiency in spending is lost when taxes are raised because, to quote Milton Friedman, “very few people spend other people’s money as carefully as they spend their own.”

Maybe voters in five Alabama localities had this in mind when they voted down tax increases this year. Some legislators claim to see no correlation between what’s going on at the local level and what’s being debated in Montgomery. Politicians who miss the message here do so at their own peril. Voters are far more likely to sympathize with the need for more revenue at the lowest tier of government, to benefit specific projects within their own neighborhoods and schools, than at the state or national level.

All of the justifications given in the statewide campaign to raise taxes–children losing access to pediatricians, closing state parks, limiting access to drivers’ license offices, and turning the lights off at armories–would only come to fruition if lawmakers refuse to prioritize their spending. These kinds of threats are very familiar, but usually come from the mouths of Democrats. One notable exception is the Republican-led attempt to raise taxes in 2003, else 4,000 teachers would be laid off, 5,000 inmates would be released, and access to jury trials would be limited. That ballot initiative was defeated by 67% of voters.

Former U.S. Senator Tom Coburn (R-OK) remarked to an audience last week, “You have to be courageous not to spend money . . . and we don’t have many people who have that courage.” Conservative Republicans in the Alabama Legislature have shown courage as they have stymied tax increases now for six months. They must continue to hold the line and generate support for alternatives like the 78/22 split that would close 75% of the shortfall without raising taxes. Where cuts are still needed, an additional dose of courage will be required for making tough choices on prioritization.

The significant achievements made under Republican leadership since 2010 are laudable, but could easily become a distant memory to taxpayers who gave their votes and their trust away for an empty promise of no new taxes.

Click the image below to see the Alabama Policy Institute’s solution to the General Fund budget shortfall:

API budget infographic

 

1
5 years ago

Robertson: It’s time to consider a sensible new solution to balance Alabama’s budget

general fund education budget
Special session No. 1 wound down in essentially the same posture as the regular session did. The governor still wants tax increases. House members tried to raise taxes, while senators opted to cut their way to the $200 million needed to close the General Fund shortfall.

It’s clear that what has been offered so far does not satisfy the majority. To gain a consensus in the second special session, the Legislature needs a plan that is tolerable to more of the State House’s warring factions and that can better bring the House and Senate together.

That plan may be one that was quietly filed early in the regular session by Sen. Paul Sanford, R-Huntsville. The proposal would nearly close the General Fund shortfall without raising taxes by sharing growth revenue between the state’s two main funds. At the end of each month, this new fund would distribute recurring revenues at a proportion of 78 percent to 22 percent between the Education Trust Fund and the General Fund.

At first glance, it may almost seem simplistic, but the proposal is good policy and achieves much of what legislators claim they want to see in a budget solution.

The General Fund needs around $200 million to balance the budget. Increasing costs of Medicaid and prisons, coupled with the flat or decreasing sources of revenue assigned to this fund, ensure that it will struggle year after year. In fact, in the short time since the regular session concluded, General Fund revenues are already projected to be $17 million less than expected.

The Sanford proposal would ensure that, from now on, the General Fund receives a slightly larger share of all recurring revenues. This seems fair in light of the public’s reaction to House-proposed Medicaid cuts and Senate-proposed cuts to courts and law enforcement.

According to the Legislative Fiscal Office, the 78/22 proposal would send roughly $150 million to the General Fund for FY2016. That means that $50 million in cuts would need to be found, rather than $200 million, significantly reducing the negative impact to General Fund agencies.

The proposal tackles the underlying distribution problems that impair the General Fund, but will still require the Legislature to stay focused on controlling the costs of Medicaid and prisons. The plan is part of a long-term solution, but not the cure-all.

The same public education proponents who shut down the use tax transfer will probably react similarly to this proposal, but it is worth their consideration for two reasons. First, the 78/22 split proposal is estimated to take roughly $75 million less from the ETF than the proposed $225 million use tax transfer.

The Legislative Fiscal Office estimates that the ETF’s recurring revenue for FY2016 would go from $6.249 billion to $6.096–a decrease of only 2.44%. This decrease does not take into account a few revenue measures that were adopted during the special session to benefit the ETF. Further, the proposal would not disrupt the ETF budget that was enacted in June.

Second, for many legislators, the current shortfall has underscored the validity of consolidating the state’s two budgets. For education interests concerned about consolidation, the 78/22 proposal is far less risky, as it specifies the percentage of revenues that the ETF should receive.

The state’s receipts would not become a free-for-all, as is feared with consolidation, and education would remain the state’s top priority by a large margin. The bill also preserves the conservative Rolling Reserve Act, with the cap for FY16 reduced by the amount distributed to the General Fund.

Alabamians would surely applaud a sensible solution to the General Fund problem after being threatened with $500 million in tax increases, closed state parks or a collapsed Medicaid system. While taxpayers certainly recognize the importance of funding public education, they are also interested in adequately funding law enforcement, the courts and the district attorneys’ offices.

Given that there are plenty of appropriations from each fund for non-essential services, it is reasonable to expect the Legislature to find a way to provide these essential services without more of the taxpayers’ hard-earned money.

Sen. Sanford’s proposal is a sensible solution to the current situation. Pushing this proposal would require some courage, but it will be far easier to defend than most of the alternatives we’ve seen thus far.


Katherine Robertson is vice president for the Alabama Policy Institute. API is an independent non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the author, please email communications@alabamapolicy.org or call (205) 870-9900.

1
5 years ago

Robertson: The Alabama Legislature can still finish strong, refuse to raise taxes

Alabama Senate Chamber (File photo)

Alabama Senate Chamber (File photo)
Alabama Senate Chamber (File photo)

The Alabama Legislature caught its share of grief after adjourning from the regular session without passing a budget. The alleged infighting between the House and Senate and the bickering over how to solve the shortfall dominated the headlines in early June as the session wrapped up. Yet, nearly eight weeks later, it’s easier to examine the full body of work and praise a great deal of what has been accomplished. Heading into next week’s special session, Republicans should focus on preserving their record over the last five years and finishing strong.

A brief reminder of how this session began: the Governor sent over a budget that relied almost entirely on tax increases to close the General Fund shortfall. Rather than being able to make a few tweaks here and there, legislators opposed to tax increases were forced back to the drawing board with far fewer resources, particularly staff, to aide in their research and decision-making. It was hardly surprising that they chose to close the gap with cuts, as the base of the Republican supermajority rightfully refused tax increases that would, by and large, ask the people to hand over more of their hard-earned money to fund Medicaid and prisons.

While the budget quandary remains unsolved, the legislature tackled several complex policy matters that will have a positive long-term impact on the General Fund. For instance, managed care reforms to Medicaid that passed in 2013 were duplicated for long-term care services in hopes of slowing perpetual increases in Medicaid spending. The Senate also declared its opposition to Medicaid expansion, recognizing that the state’s required obligations through expansion would ultimately add a 10% increase to state funds spent on Medicaid (not including unknown administrative costs).

In another act of legislating for the long-term, the comprehensive prison reform bill was signed into law. Corrections spending accounts for 4.3% of all state spending and a whopping 21.4% of General Fund expenditures. Along with Medicaid, this spending has increased by 25% over the last 20 years with no signs of slowing. Aspects of the prison reform law do require additional front-end funds; but, over time, this investment should help to level out corrections spending as the strains of overcrowding are eased.

On the last day of the session, a bill was passed to reform judicial public pensions. Public pensions are an oft-overlooked aspect of state spending, but this year alone, the state put almost one billion dollars–nearly five times the amount of the shortfall–into the pension system. The estimates for 2016 are no better. The Judicial Retirement Fund currently has the worst funding percentage of the state’s three pension systems, and the reform passed this session addresses the state’s liability in this regard. It will result in immediate cost-savings with an even greater savings impact expected over time.

Despite some flirting with the Governor’s proposed tax increases, most were dead on arrival, as was gambling. Instead, new legislative study committees were established on issues such as tax, structural pension reform, and proposed privatization of the state’s ABC Board. This indicates an ongoing willingness to deal with fundamental problems in Alabama’s state government, rather than abdicating this duty and opting for budget gimmicks and quick fixes.

Republicans should take pride in these accomplishments and refuse to agree to proposals that would taint their record. There is no denying the pressures that they face from various positions of leadership, powerful special interests, and bleak budget spreadsheets. Still, legislators are sent to Montgomery to make tough calls. This group campaigned on a commitment to govern with the best interests of the people in mind–not to make their decisions on weekly polls or chances at personal gain.

Senator Sessions made headlines in Alabama this week with some remarks he hoped would embolden Republicans. He opined, “We don’t need to be timid. We need to do the right thing. We need to do the bold thing. The government can’t do everything for us. Our values are good values…and we need to define those values. We believe in limited government and lower taxes.”

When legislators return on August 3rd, they will be given another opportunity to take the Senator’s advice and finish strong. Based on the grit of those legislators we work with behind the scenes, I, for one, still have faith that they will.


Katherine G. Robertson is the Vice President of the Alabama Policy Institute, a 501(c)(3) non-partisan, non-profit research and education organization dedicated to influencing public policy in the interest of the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.

1
5 years ago

Robertson: For the first time in my life, I fear my freedom may be at stake (Opinion)

Flickr/Tim Cummins
Flickr User Tim Cummins
Flickr User Tim Cummins

Raised to love my country and our flag, and because it’s reserved for time with my family, the Fourth of July is a day that I look forward to from the very first signs of summer.  For me, at least, I sense that this year will be somewhat bittersweet. When we celebrate America’s independence, we necessarily celebrate freedom–unprecedented and unmatched by any other nation. For the first time in my life, I fear that my own freedom might actually be at stake.

As the left tirelessly labels as hateful anyone expressing the slightest disappointment over the Court’s ruling on marriage, any objective constitutional scholar has to admit that this decision goes well beyond the simple act of requiring that marriage licenses be issued to any couple who seeks them. Rather, it tips the scales of justice against one of our nation’s foremost freedoms: the free exercise of religion.

As you have likely read and heard numerous times over the weekend, the Court has designated the right to marry as one that is “fundamental.”  Assigning this status to same-sex marriage places it on equal footing with the free exercise of religion, a freedom enumerated in the First Amendment. Such a designation for same-sex marriage has vast implications, of course, for anyone with a religious objection to it.  Precedent dictates that government action may limit a fundamental right if the action promotes a compelling or overriding state interest. Sadly, the Court made no effort in last week’s decision to assure the protection of religious liberty in the face of this new state interest in same-sex marriage.

The majority writes, “[m]any who deem same-sex marriage to be wrong reach that conclusion based on decent and honorable religious or philosophical premises, and neither they nor their beliefs are disparaged here. But (emphasis mine) when that sincere, personal opposition becomes enacted law and public policy, the necessary consequence is to put the imprimatur of the State itself on an exclusion that soon demeans or stigmatizes those whose own liberty is then denied.”  In other words, if exercising your First Amendment rights, including that of religion, is interpreted as demeaning the fundamental right to a same-sex marriage, then your religious right will be deemed inferior.

To this end, Justice Alito did not mince words: “[The decision] will be used to vilify Americans who are unwilling to assent to the new orthodoxy. In the courts of its opinion, the majority compares traditional marriage laws to laws that denied equal treatment for African-Americans and women. The implications of this analogy will be exploited by those who are determined to stamp out every vestige of dissent.” Justice Thomas similarly opined, “[i]t appears all but inevitable that the two [rights] will come into conflict, particularly as individuals and churches are confronted with demands to participate in and endorse [same-sex marriages]. The majority appears unmoved by that inevitably.”

This new, very real threat to our previously taken-for-granted freedoms will have one of two effects on those who revere the First Amendment.  Some may decide that the current is just too strong, the left’s talking points too convincing, and that a strict adherence to the Constitution or our own religious beliefs is no longer feasible. On the other hand, and hopefully more likely, others will awaken from complacency. They will choose to be more intentional about whom they allow to influence their stances, more confident in their convictions, and more thoughtful in how they go about expressing them.

As renowned  legal scholar, Judge Robert Bork, wrote in 1993, “[i]n our current culture wars, perhaps the most important of the virtues for conservatives is fortitude–the courage to take stands that are not immediately popular, the courage to ignore the opinion polls. Otherwise, we will never change the polls. That is what true conservatism means, or it means nothing.” This Independence Day, let’s reflect on the fortitude of the generations before us who fought for our freedoms and refuse to be the apathetic generation that lets them slip away.


Katherine Robertson is vice president for the Alabama Policy Institute (API), an independent non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families.

1
5 years ago

ObamaCare’s future is in the hands of the Supreme Court, here’s what you need to know

United States Supreme Court justices
United States Supreme Court justices
United States Supreme Court justices

Background

The future of the Affordable Care Act (ACA) is again in question as the U.S. Supreme Court is set to rule any day now on the case of King v Burwell. This time, the issue before the Court is not one of constitutionality; rather, it is one of congressional intent: did Congress intend to give the federal government authority under the ACA to extend tax-credit subsidies under a federal exchange.

The plaintiffs are challenging IRS rules used to establish a federal insurance exchange (or marketplaces) under the ACA. The plaintiffs allege that the federal government and the IRS do not have the authority to extend tax-credit subsidies under federal exchanges because the text of the ACA only provides for subsidies through an “exchange established by the State.”

The case hinges on whether Congress intended for the exchanges to be set up only by the states, or whether, under a more ambiguous reading, the law allows for the creation of federal exchanges to offset subsidies in states that refuse to create their own exchanges. The legislative history and record of Congressional debate indicate that Congress rejected the idea of a national exchange. In fact, attempts to create a national exchange were viewed as a deal-breaker in the Senate. When the concept was rejected, Congress shifted the burden to the states believing that they would not turn down federal funds and would set up exchanges. When 34 states (including Alabama) refused to set up exchanges, the Obama Administration, via an IRS rule, created a federal exchange to disburse subsidies.

Nullifying the IRS rule would have a significant impact nationally–6 million Americans receive subsidies through the federal exchange–which some speculate may cause the justices to shy away from such a decision. The liberal-leaning justices will likely try to focus the Court’s internal debate on this negative social outcome, while the conservative-leaning justices will likely point to the plain reading of the relevant ACA provision and the separation of powers issue presented by the IRS’s overreach.

Policy Considerations

A ruling against the Obama Administration could mean the unraveling of the ACA. HHS Secretary Sylvia Burwell acknowledged this possibility in a recent letter to a House Representative when she candidly admitted that “[w]e know of no administrative actions that could, and therefore we have no plans that would, undo the massive damage to our health care system that would be caused by an adverse decision.” During oral arguments, Justice Kennedy also conceded that to strike down the federal exchange would cause a “death spiral” for health insurance under Obamacare.

If subsidies through state-run exchanges are deemed illegal, the 34 states operating under a federal exchange will face significant pressure to implement their own exchanges and to expand Medicaid in order to keep the ACA afloat. Such a move could be disastrous given the enormous costs that plague many states with exchanges or expansion in place.

While ACA proponents will claim that millions will lose their insurance, more Americans would be helped as they are relieved from burdensome mandates. Premium subsidies would no longer be available to states without exchanges. Without available subsidies, individuals that bear a greater out-of-pocket expense under the ACA would become exempt from the individual mandate. Also, employers in these states would become exempt from the employer mandate since there would be no mechanism on the federal level to trigger the employer mandate penalty.

Conclusion

If the Court rules against the Obama Administration and states hold the line in their refusal to set up state-based exchanges, the ACA would be on the verge of collapse. Congress would then have two options: go back to the drawing board with lessons learned on the disastrous impacts of this burdensome law; or negotiate a “fix” in order to preserve the ACA. A ruling in favor of the plaintiffs in this case would give the Republican-run Congress its first real opportunity to deliver on campaign promises to “repeal and replace Obamacare.” It will be critical for congressional Republicans as well as Republican Governors to hold the line against bailing out the ACA and rallying behind a free market solution that will make healthcare more affordable.


The Alabama Policy Institute (API) is a 501(c)(3) non-partisan, non-profit research and education organization dedicated to influencing public policy in the interest of the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.

1
5 years ago

Alabama lawmakers should reform, cut, and prioritize spending (opinion)

House money tax
As the debate over Alabama’s General Fund budget shortfall continues, four schools of thought have emerged on how to solve this problem: a) tax increases, b) gambling revenue, c) unearmarking, d) and across-the-board cuts. Each one of these proposals has been deemed the obvious, simple solution to the problem, but none would actually be that straightforward. As proposed, three of the four would require the second, overlooked step of prioritizing spending–a difficult task in a currently fragmented Republican majority.

For example, if taxes are raised or gambling is expanded, where is this new revenue going to go? Assuming it goes to the General Fund, which programs or agencies will receive it? Will it be spread across the board equally or dedicated to certain services? Who will decide which functions of state government outrank the others? Except for the DOA idea of a lottery to fund Medicaid, none of these questions has a clear answer.

Unearmarking comes with the same uncertainty. To be clear, unearmarking does not generate any new money. The practice would merely give legislators more flexibility to move money around, but with the same financial obligations as before. In theory, this is a good thing as it would allow legislators to pick and choose, but will legislators suddenly be able to agree which programs should be cut and which should be funded? If the unearmarked money is not prioritized in a systematic way and no cost-saving reforms are adopted along with it, we may not end up any better off.

What about the House budget proposal that makes across-the-board cuts? That may well be where we end up at sine die, but should it be? It’s the neat and clean approach, but again, allows legislators to shirk the duty of prioritizing spending. Do all agencies and programs provide services to Alabamians that are of equal importance? Some of these agencies seem to have been neglected and set up to fail in the past only to be underfunded again this year, while others ask for more and more funding without a high degree of results-oriented accountability.

Several cost-saving options that would help alleviate the need for across-the-board cuts have been proposed by various Republicans this session. Surprisingly, most have been met with disinterest or outright opposition from their own caucus.

The current dissension in solving the budget shortfall is fueled, in part, by a lack of clearly defined priorities. There is a pressing need for leadership in the discipline of priority budgeting now, but more importantly, for the long-term. Going forward, the legislature (ideally, with help from the Executive Branch) should develop a set of fixed priorities and performance-based metrics for government agencies and offices. That way, whether there is a surplus or a shortfall in the future, there is some methodical basis on which legislators can make their spending decisions.

The ideal, yet far from simple, solution for this year would hit on a sweet spot of cost-saving reforms, targeted cuts, unearmarking certain monies, and permanently directing some growth revenue to the General Fund. An agreement of this kind could gain support if decision-making as to the specifics was based on a clear outline of what the state’s priorities should be and which services best achieve those priorities. The current supermajority has the votes to move the state beyond the status quo. Principled, conservative legislators need to rally their colleagues around such a plan that will protect Alabama taxpayers from bearing the burden of legislative discord and unclear priorities.


Katherine Robertson is the Vice President of the Alabama Policy Institute

1
5 years ago

Alabama should reject expanding government healthcare through Medicaid (opinion)

ObamaCare

In 2013, Arkansas’s then-Governor Mike Beebe (D) pushed a non-traditional Medicaid expansion program that gives low-income individuals subsidies to use toward private coverage, rather than enrolling them into Medicaid. This initiative was marketed as a “state-based” plan for reform and one that inserts flexibility and innovation into expansion as outlined under the Affordable Care Act (ACA).

While nearly all Republican governors took a firm stand against traditional expansion, some now perceive Arkansas’s model as a means to get their hands on federal money while distancing themselves from the ACA. Unfortunately, as Arkansas can now attest, Medicaid expansion remains a bad deal for states and cannot truthfully be sold as a fiscally prudent or free market idea.

When you get beyond the rhetoric, Arkansas’s expansion has been a disaster. There are (at least) five lessons from Arkansas that Alabama’s leaders should bear in mind as they consider expansion:

1. Describing expansion through waivers as state-based, flexible, or innovative is misleading. Arkansas’s model is a far cry from a block grant and the few concessions offered from Washington are mere window dressing. No state has been granted the work requirements that were promised ad nauseam by governors. No state has been able to assign any meaningful cost-sharing requirements to beneficiaries. And no state has successfully negotiated any eligibility threshold that is more limited than that of the ACA. Additionally, any state-initiated waiver agreed to by the federal government is time-limited, whereas expansion itself goes on forever.

2. Expansion provides a disincentive to work. The population of newly-eligible Medicaid recipients is largely made up of those who ought to be in the workforce and states can’t do anything to change that. Estimates for Alabama show that over 75% of the newly-eligible would be able-bodied adults with no dependents. Furthermore, states that have expanded Medicaid inevitably create a welfare cliff for these individuals. For those on the cusp of the 138% poverty threshold, earning only a few more dollars a year in income kicks them out of Medicaid and into the ACA’s exchange plans that subject them to potentially thousands of dollars more in out of pocket costs.

3. States that expand Medicaid allow thousands of non-disabled, childless adults into the program which puts at risk the Medicaid safety net for truly vulnerable patients and families. States like Arkansas and Alabama already struggle to serve their Medicaid populations. With expansion, the poor and disabled who truly need this healthcare–those who Medicaid was created to serve–will be competing with those who are able-bodied and without dependent children for the time and attention of the state’s limited number of providers.

4. Much like traditional expansion, the private option is driven neither by fiscal responsibility nor free markets. The Government Accountability Office reported that Arkansas’s private option expansion will cost nearly $1 billion more than traditional expansion. Following implementation, Arkansas’s spending was over budget every month for the whole first year until the federal reimbursement cap was raised. This affirms that the Obama administration will recklessly agree to spend whatever it takes to pressure states into expansion. Again, this is because the federal government-not the state-maintains the real control, and the strict parameters agreed to leave very little room for free market competition. Furthermore, there is zero cost-sharing required for enrollees below the poverty line. While the state is now implementing an optional cost-sharing program for some enrollees, the federal government will not allow non-payers to be disenrolled from the program.

5. Expansion imposes a substantial cost to the state, despite the federal government’s guarantee. Medicaid spending already consumes 35% of Alabama’s General Fund. Medicaid costs continue to increase year after year, inevitably siphoning resources away from other budget priorities (the same is true for federal budget priorities like defense spending). Expansion is not a solution to this problem. While the federal government agrees to pay 100% of the cost of expansion for the first few years, this reimbursement tapers off to 90% in 2020. The 10% price tag alone represents millions of dollars, but does not even include the added administrative costs that the state will immediately incur if Medicaid is expanded. To further complicate matters, Congress is already moving to cut the enhanced match for expansion so, in reality, the total cost to the state is immeasurable.

Medicaid expansion was bad for Arkansas and there is no reason to believe that Alabama’s experience would be any different. Alabama’s conservative legislators should learn from Arkansas’s mistake and commit to saving their state from a similar disaster.


Bryan King is a member of the Arkansas Senate and represents the 5th District. Katherine Robertson serves as Vice President for the Alabama Policy Institute, an independent non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the authors, please email info@alabamapolicy.org or call (205) 870-9900.

1
6 years ago

Six of Alabama’s seven congressmen back major pro-life legislation, president plans to veto

Pro Life

On Thursday, the U.S. House of Representatives will consider the Pain-Capable Unborn Child Protection Act. This bill would prohibit late-term abortions after 20 weeks based on scientific research suggesting that an unborn child can feel pain by this age, perhaps even earlier (an exception is included for instances of rape or incest). A previous version of the Act passed the House in 2013, but was not given a vote by then-Senate Majority Leader Harry Reid (D-NV). With a Republican majority in both houses of Congress, proponents of the bill should have reason to be optimistic. Currently, 13 states, including Alabama, have a similar law in place. All of Alabama’s Republican Representatives have signed on as co-sponsors.

This time of year, as some celebrate the anniversary of Roe v. Wade, others observed Sanctity of Life Sunday. Based on our Biblical values, we believe that all lives–including the unborn–matter and that abortion represents a failure to recognize the value and worth of every life.

There is a strong correlation between the idea of human dignity and the sanctity of life, but it is not always acknowledged in politics. The President spent some time addressing human dignity last night in his State of the Union address. He said, “I want future generations to know that we are a people who see our differences as a great gift, that we are a people who value the dignity and worth of every citizen–man and woman, young and old, black and white, Latino and Asian, immigrant and Native American, gay and straight, Americans with mental illness or physical disability.”

While the President did mention the young and old, his actions demonstrate that he did not intend to include the unborn in this list. The White House released a statement on Tuesday declaring that the President will likely veto the pro-life legislation that Congress will consider this week; this is despite the fact that polling continues to show that Americans favor the post-20-weeks abortion ban. In a November 2014 poll conducted by Quinnipiac University, 60% of voters nationwide said that they support the Act.

As we discussed last year during the push for pro-life legislation in Alabama, the pro-life platform is not a losing one. In addition to favorable public opinion polls, state-level action clearly indicates that it’s not just right-winged extremists who support legislation of this kind. Notably, the Democrat-controlled West Virginia legislature passed this bill last year; it was vetoed, but has already been reintroduced in the current session. It is highly possible that by year’s end, more states, including South Carolina, will be added to the 13 that already have a 20-weeks ban in place. Unfortunately, even on an issue that the majority of Americans seem to support, the President is posturing to quash these efforts.

While there is far from widespread agreement throughout the country on the general topic of abortion, this particular concept–banning abortions at the stage when an unborn child can feel pain–seems to strike a chord of reasonableness for many on both sides of the debate. Most of the Republicans who are now in office made campaign promises to defend life on the House or Senate floor, not just cast a half-hearted vote. They will soon be given an early opportunity to deliver on that promise.

Note: If you or someone you know is facing an unplanned or crisis pregnancy, please take advantage of the resources offered by our friends at Sav-A-Life. Sav-A-Life is a non-profit, comprehensive pregnancy care ministry with multiple locations throughout the State of Alabama. For more information, go to: savalife.org.


Katherine Robertson is vice president for the Alabama Policy Institute (API), an independent non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the author, please email katheriner@alabamapolicy.org or call (205) 870-9900.

1
6 years ago

GOP Senate Majority can roll back ObamaCare, block amnesty, reject radical judges (opinion)

United Stats Capitol
United Stats Capitol

On Tuesday, the GOP picked up seven seats in the U.S. Senate resulting in their first majority (52-46) since 2006. House Republicans expanded their majority by twelve seats, bringing their total to 246. The election results nationwide indicate the voters’ desire for a new direction. Now they’ll wait to see if Republicans can really offer more than the status quo under Harry Reid.  The Republicans’ agenda faces major roadblocks without the support of the White House, but there are at least three key implications of the new Senate majority that could force the Democrats’ hand.

  1. Rolling back the Affordable Care Act. The GOP has known all along that without the White House or a supermajority, full repeal of Obamacare would be impossible because of the president’s veto power. However, much ado has been made about what a simple majority can do in terms of rolling back the ACA. Budget reconciliation seems to be the most promising possibility. Reconciliation is a provision of the Congressional Budget Act allowing for expedited consideration of mandatory spending and tax legislation. The Democrats used the reconciliation process to pass aspects of the ACA because it is filibuster-proof and can be passed with only 51 votes. In theory, Republicans could now use the process to undo some of those same components. The Wall Street Journal suggests that a reconciliation bill could repeal Medicaid expansion, tax increases, and insurance premium and drug subsidies–all with just a simple majority. The reconciliation measure would still be subject to a veto, but the president would be left defending his healthcare law without the support of Congress and Republicans could prove to the public that they weren’t just talking the talk on repeal.
  2. Blocking Executive Action on Immigration. The White House has made clear that “before the end of the year” the president will “take action to use his executive authority to fix…aspects of our broken immigration system.” In other words, the president plans to grant executive amnesty to millions of illegal immigrants who would otherwise be deported. Senator Sessions (R-AL) tried to preempt the possibility through a failed procedural motion on the Senate floor in September, but with a Republican majority he believes that any executive order of this kind could easily be blocked. In fact, the House already passed legislation in August that would defund the president’s plan for granting amnesty. As the new Majority Leader, Senator Mitch McConnell (R-KY) will now control whether this bill receives a vote in the Senate.
  3. Rejecting Radical Nominees. Judicial nominations arguably have the most far-reaching impact of any other decision made by a president. Appointments to the federal judiciary are for life, and in the U.S. Supreme Court, one new justice can change the entire direction of the Court. Senate Republicans have already been successful in stopping some of the president’s most extreme nominees and are positioned now to reject any lame duck attempts to pack the courts before he leaves office. Once the president nominates an individual to an executive office or the judiciary, the nominee must be approved by the Senate Judiciary Committee. This powerful committee will now be chaired by Republican Senator Chuck Grassley of Iowa. As Ranking Member of the committee, Senator Grassley has led the Republican opposition to a number of the president’s nominees and has been a staunch critic of Attorney General Eric Holder, whose successor will also need Senate confirmation. The Committee can choose whether to report the nominee out to the full Senate for debate and a vote. Once a nominee is reported out, any senator can seek unanimous consent to vote on the nominee, as is the common practice, but it only takes one senator’s objection (or hold) to delay a vote. A cloture motion would then be necessary to proceed and would require 51 votes. Assuming Republicans are united against a particular nominee, there would be little Democrats could do to ensure his or her confirmation.

Of course, all of these possibilities will come to fruition only with strong Republican leadership in the Senate and a united front within their majority. Senate Republicans have a small window of time to deliver on the principles they espouse. While they don’t have the votes to overcome a filibuster or presidential veto, they will have every opportunity to put congressional Democrats and the president in a high-pressure situation that ought to result in a change of course. If it doesn’t, the Democrats should expect more losses in 2016.


Katherine Robertson is vice president for the Alabama Policy Institute (API). She can be reached at katheriner (at) alabamapolicy (dot) org.

1
6 years ago

More belt-tightening is needed in Alabama’s budgets (opinion)

Alabama State House (Photo: Creative Commons/Jay Williams)
Alabama State House (Photo: Creative Commons/Jay Williams)

(This is Part 2 of the Alabama Policy Institute’s 3-part “Budget Basics” series: exploring Alabama’s budget system, the current fiscal climate and related challenges, and the implications for taxpayers. Part 1 can be read here.)

The Alabama state budget process begins with the Alabama Department of Finance’s Executive State Budget Office (EBO), as required by Alabama law. The EBO puts together the Governor’s Executive Budget and presents it to the Legislature. The Legislature reviews the Governor’s budget and drafts its own, with assistance from the Legislative Fiscal Office (LFO). The two appropriations bills then go through the typical legislative process, starting with consideration by the relevant committees: the Senate Committee on Finance and Taxation- ETF, the Senate Committee on Finance and Taxation-GF, the House Ways and Means Education Committee, and the House Ways and Means General Fund Committee.

The Governor’s proposed FY2015 General Fund budget was not substantially altered as it made its way through the legislative process. The Governor recommended $1.82 billion and a $1.83 billion budget was enacted. On the other hand, the Senate reduced by $75 million the Governor’s $5.99 billion proposal for the ETF, while the House version decreased the appropriation by around $60 million (which was adopted). The main source of disagreement was the Governor’s inclusion of a 2% pay raise for K-12 educators at a cost of $68 million and a $72 million increase for education employee insurance. If both of these items had been adopted, the ETF’s statutory spending cap would have been exceeded by $92 million. The Legislature opted to focus resources on the education health insurance without providing for a pay raise, and exceeded the cap by a much smaller margin. On April 11, 2014, the Governor signed the FY15 budget, allocating $1.8 billion to the General Fund (up 5.1% from last year) and $5.9 billion to the Education Trust Fund (up 2.9% from last year).


Simply put, it has become more and more difficult to maintain level funding, much less increased funding, for all of the obligations of state government.


As previously mentioned, the Alabama Constitution requires a balanced budget. Proration is declared when revenues from income, sales and other taxes fall short of estimates and across-the-board cuts are implemented, or prorated.

Since 1980, the State has declared proration 11 times for the Education Trust Fund and eight times for the General Fund. In the last decade alone, the ETF went into proration six times and the GF three times. Notably, since the Republicans took power, the ETF has not gone into proration, because the 2011 adoption of the Education Rolling Reserve Act (ERRA) caps the appropriation limit. Proration was declared for the General Fund in 2012. Poor stock market conditions and tornado recovery funds were cited as contributing factors.

In some fiscal years, to avoid proration or to reduce its impact, money has been borrowed from the State rainy day accounts. The rainy day accounts, one for the ETF and one for the GF, are part of the Alabama Trust Fund. The Alabama Trust Fund was established in 1985 and is funded by the State’s oil and gas revenues. In 2008, the ETF and GF Rainy Day Accounts were set up within the Trust fund.

There are constitutional limits on how much money can be withdrawn in a particular fiscal year. Most recently, in 2009, the maximum withdrawal–$437 million–was made from the Education Rainy Day Account. The ETF must fully repay the remaining balance of $162 million by July 2015. In FY2010, $161 million was withdrawn from the General Fund Rainy Day Account. At present, there is no set schedule for repayment but it must be repaid by 2020. In September 2012, voters approved a constitutional amendment to withdraw $437 million from the Alabama Trust Fund over the course of three years to make up for General Fund shortages. When the Legislature reconvened in 2013, a bill sponsored by Sen. Taylor (R-Prattville) and former Rep. Love (R-Montgomery) was passed to require an automatic payback of this withdrawal by 2026.

The Alabama economy continues to experience stagnant economic growth. Simply put, it has become more and more difficult to maintain level funding, much less increased funding, for all of the obligations of state government. Republican-led efforts in the last quadrennium to pass legislation limiting ETF spending according to past growth, consolidating agencies or offices, streamlining a variety of operations, and ensuring the repayment of debts owed to the various savings funds are a solid step in the right direction.

As it currently stands, more ‘tightening of the belt’ will be required. Providing for more flexibility in the allocation of resources will be another necessary consideration.


Katherine Green Robertson is senior policy counsel for the Alabama Policy Institute (API), an independent non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the author, please call (205) 870-9900 or email her at katheriner(at)alabamapolicy.org.

1
6 years ago

Budget Basics: the facts about Alabama’s budget system

Alabama State Capitol
Alabama State Capitol

Many taxpayers are familiar with the federal budgeting system, thanks to incessant coverage of budget standoffs, government shutdowns, and increasing national debt. Yet many Alabamians remain completely unfamiliar with Alabama’s budget and the budgeting process. When the Legislature convenes in March, leadership will face the daunting task of balancing the FY2016 budget at a time when the long-term budget outlook is bleak.

It’s imperative that Alabama taxpayers understand how the process works, where the money goes, and what challenges the State is facing. The general public, particularly those in the private sector, commonly feel disconnected with or ambivalent toward budget debates at the state or federal level. Recent talk of tax increases will likely stir interest in this complex topic, so let’s start with the basics.

The most unique thing about Alabama’s budget is that it was split into the General Fund (GF) and the Education Trust Fund (ETF) when public education began in 1927.  Currently, only three states maintain two separate budgets.

The ETF primarily funds K-12 education and higher education and includes salaries and benefits for teachers, administrators, and support staff.  The ETF receives 52% of the State’s overall appropriations and is predominantly funded by revenues from state income and sales taxes.

The GF covers nearly everything else, such as the operation of the executive, legislative, and judicial branches of state government, public safety, and Medicaid. The GF is financed by tax revenue such as the ad valorem and insurance premium taxes; however, this fund receives only 15.9% of the State’s total appropriations per fiscal year. (Note: The 32% that doesn’t go into either of the two major funds will be discussed in a later installation.) In April 2014, the State enacted a budget for fiscal year 2015 of which $1.8 billion was allocated for the GF and $5.9 billion for the ETF.

Thirty-five percent of GF appropriations are directed to the State’s Medicaid obligations and twenty-two percent is directed to corrections. The proportion of the State budget devoted to these two commitments explains (at least in part) the ongoing attention given to Medicaid expansion and prison reform. According to the Legislative Fiscal Office, funding for Medicaid and corrections has increased from 34% of the GF in 1984 to 57% in 2014.  Estimates from The Heritage Foundation show that if Medicaid were expanded in Alabama, it would cost the State between $470 million to $693 million from 2014-2019. Furthermore, according to the Council of State Governments, Alabama would need $840 million just to build enough prison space to account for the current overcrowding.


Taxpayers will need a better understanding of Alabama’s budget and the current fiscal climate in order to actively engage policymakers in upcoming budgeting decisions that will have long-term consequences for the State.

Annually, the Legislature’s “paramount duty” is to approve the State’s budget for the upcoming fiscal year. Alabama’s Constitution requires that the State pass a balanced budget and an amendment adopted in 1933 requires the proration—or across the board cuts–of State funds when revenues received are less than the monies appropriated. This is similar to the 2013 sequestration, or automatic across-the-board spending cuts, at the federal level that captured headlines.  The State experienced proration fairly regularly during the last decade, due to steadily increasing expenditures combined with stagnant economic growth. (Editor’s note: the state has not, however, experienced proration since Republicans took the majority in the Legislature in 2010.)

Alabama’s budget is also distinctive because about 88% of Alabama’s tax revenue is earmarked, whereas the average state earmarks about 25%.  This means that 88% of revenues collected are already obligated to specific sources by statute or constitutional amendment, not the “bridge to nowhere” or “big dig” type earmarks that you hear about from Washington. This leaves roughly 12% of total state funds to be allocated for current needs. The Governor and some legislative leaders have recently expressed openness to removing some earmarks to provide greater flexibility and discretion in appropriating funds.

Taxpayers will need a better understanding of Alabama’s budget and the current fiscal climate in order to actively engage policymakers in upcoming budgeting decisions that will have long-term consequences for the State.  Parts 2 & 3 of our Budget Basics series will explore in more detail the heaviest obligations of our state budget, what challenges the Legislature will face next session, and which options for reform are on the table.


Katherine Green Robertson is senior policy counsel for the Alabama Policy Institute (API), an independent non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the author, please call (205) 870-9900 or email her at katheriner(at)alabamapolicy.org.

1
6 years ago

Will Hobby Lobby’s relief become taxpayers’ worry?

YH Hobby Lobby

It’s been a bad year for the Obama Administration at the U.S. Supreme Court. Just last week the Court released opinions striking down three of the President’s recess appointments and nullifying a law that prevented pro-life protests in certain spaces around abortion clinics. This week, the Court handed down its long-awaited decision in the Hobby Lobby case and ruled in favor of the company, 5-4.

In Sebelius v. Hobby Lobby, Inc., Hobby Lobby and two other closely held for-profit corporations joined in suing the government on the grounds that the contraceptive mandate of the Affordable Care Act required the owners to violate their religious beliefs in providing these products to their employees.

Hobby Lobby, et. al, were not seeking an exemption as to all forms of contraception, rather, just four types out of the 20 approved by the FDA. Notably, the government had already provided religion-based exemptions of this exact nature to certain non-profits, but argued that the exemption should not extend to for-profit corporations.

The plaintiff corporations sued under the Religious Freedom and Restoration Act (RFRA), which required the Court to determine whether or not the government’s contraceptive mandate “substantially burdened” an individual’s exercise of religion; if so, the mandate could only be allowed to stand if it were shown to be the least restrictive, or narrowest, means to further a “compelling governmental interest.”

With Justice Alito writing for the majority, the Court first concluded that RFRA applies to closely held corporations the same way that it applies to individuals. Because the Act was designed to protect a person’s free exercise rights, it should not discount the rights of an individual business owner solely because he chooses to incorporate as a for-profit entity.

The Court then turned to whether or not the contraceptive mandate substantially burdens the ownership’s exercise of religion. This was one of the easier questions at issue. The severe economic penalties that the plaintiff companies would incur (in the millions of dollars) if they limited their employees’ coverage, or ceased to provide it at all, led the Court to note, “[if] these consequences do not amount to a substantial burden, it is hard to see what would.”

Katherine Robertson, Alabama Policy Institute
Katherine Robertson, Alabama Policy Institute

The conservative majority has deemed as protected the right of closely-held companies to be exempt from this particular mandate of the ACA, yet goes on to suggest that the government might as well pay for the four types contraceptives that these employers object to.

The Court did not opine on whether offering all 20 kinds of contraceptives was indeed a legitimate and compelling interest for the government. However, it noted that if access to all FDA-approved methods was a government interest “of the highest order,” as the government suggested, then it should be willing to pay for the provision of the four types that were objectionable to religious employers.

The Court even referenced the exorbitant cost of the Affordable Care Act, saying that the government’s cost of covering the contraceptives at issue would be “minor when compared to the overall coast of the ACA… more than $1.3 trillion through the next decade.” With an available alternative that satisfies the government’s interest without trampling the religious liberty of an employer, the Court held that the least restrictive means test was not met and that RFRA had been violated.

Take a minute to consider the implications of this ruling. The conservative majority has deemed as protected the right of closely-held companies to be exempt from this particular mandate of the ACA, yet goes on to suggest that the government might as well pay for the four types contraceptives that these employers object to. It is bothersome enough that the Court declined to explore how the government could possibly have a compelling interest in requiring an employer to provide all 20 FDA-approved forms of birth control to its employees, but even worse, there is a high probability that this burden will now be passed onto the taxpayers.

While Hobby Lobby and the other plaintiffs can breathe a collective sigh of relief as they are freed from paying for this burdensome, excessive mandate, the individual taxpayers who share these religious objections are now holding their breath.


Katherine Green Robertson is senior policy counsel for the Alabama Policy Institute (API), an independent non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the author, please call (205) 870-9900 or email her at katheriner(at)alabamapolicy.org.

1
6 years ago

Robertson: Alabama’s school choice law halted by another politically-driven attack

SchoolChoice2

The Circuit Court for Montgomery County ruled on Wednesday that the state’s year-old school choice law, the Alabama Accountability Act, is unconstitutional and that the state is enjoined from taking any measures to further implement the law. This is the third lawsuit filed in an effort to halt the Act—the previous two were unsuccessful. While the court order is a hurdle to the immense progress toward educational choice in the state, proponents of the law and the families who have experienced the hope that it offers will fight this ruling through every available channel until it is overturned.

This politically-driven lawsuit, the second by the Alabama Education Association, alleged that the Act violates the Alabama Constitution by way of the procedure through which it was enacted and the means through which it is funded. The legal reasoning of the decision is shaky on a number of fronts, rendering the case fertile ground for an appeal.

This is the second suit to put forth several procedural violations as a foundation for having the law struck down. Similar arguments in a previous suit against the Act failed at the Alabama Supreme Court, where the Court held that it was not the function of the judiciary to require the Legislature to follow its own rules. Rather than alleging a violation of the legislative rules, the plaintiffs here claim that the passage of the Act violated the Alabama Constitution as to the single subject rule, the original purpose doctrine, and the three readings requirements. Alabama Supreme Court precedent shows a pattern of deference to the Legislature on issues of this nature, presuming compliance in instances where it is questioned.


The aim of the plaintiffs in this case was to permanently do away with the Alabama Accountability Act, by way of an assortment of questionable legal arguments, to ensure that Alabama preserves the status quo and remains stuck in a cycle of poor educational results.

The decision cites a constitutional prohibition of appropriating funds to a non-state entity “without a vote of two-thirds of all members elected to each house.” The drafters of the Accountability Act were well aware of lawsuits in several states filed by teachers unions offering a similar argument and thus, carefully crafted the legislation to negate the claim that government money was going straight to non-public schools by sending the refundable tax credit directly to the parents instead. Nevertheless, the Court found that the “intent” of the appropriation is for tax refunds to pay the tuition for students in failing schools to attend private schools; therefore, it should be considered the same as a direct appropriation to a private charitable and educational institution.

The Court further opined that donations to scholarship granting organizations (SGOs), which are entirely the prerogative of the individual taxpayer, are really just appropriations to these entities. In reality, every taxpayer in Alabama has the ability to choose whether or not to direct a portion of his or her tax dollars to an SGO. It is hard to understand how an individual who does so can seriously be viewed by a court as a mere pass-through entity of the state.

The decision also relies on Amendment 61 to the Alabama Constitution which requires that income tax revenue deposited into the ETF “be used for the payment of public school teacher salaries only.” The Court held that because Section 9 of the Act uses funds that otherwise would have been deposited into the ETF ($25 million per year), the Act is in conflict with this Amendment.  Strangely, it seems that this same argument could apply to any one of Alabama’s tax credits. Surely the Court does not mean to suggest that the Historic Structure tax credit is similarly unconstitutional?

The aim of the plaintiffs in this case was to permanently do away with the Alabama Accountability Act, by way of an assortment of questionable legal arguments, to ensure that Alabama preserves the status quo and remains stuck in a cycle of poor educational results.  The numerous technical arguments and the far reaching claims that taxpayer dollars were used impermissibly reflect an irrational desire to destroy a law that has given children stuck in failing schools first-time access to a higher quality education.

Shortly after the ruling, it was reported that a spokesperson for the AEA said that the organization was “pleased with the ruling” while House Minority Leader Craig Ford (D-Gadsden) called the ruling a “victory for children and educators.”  It is unclear exactly which children will perceive this order as a victory – certainly not the thousands whose parents have filled out scholarship applications for the upcoming school year hoping to give their children an immediate chance at a better education and ultimately, a brighter future.


 Katherine Green Robertson is senior policy counsel for the Alabama Policy Institute (API), an independent non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the author, please call (205) 870-9900 or email her at katheriner@alabamapolicy.org.

1
6 years ago

Robertson: Ala. should push back against the embrace of the welfare state

SNAP

Under the Obama Administration, “reforms” to federal assistance programs have simply increased the programs’ recipients and spending rather than implementing more oversight or accountability. Specifically, the Administration has taken proactive steps to recruit Americans into programs like the Supplemental Nutrition Assistance Program (SNAP) and water down eligibility requirements for the Temporary Assistance for Needy Families Program (TANF). Work requirements for recipients, previously tied to TANF eligibility since 1996, were rendered optional by the Department of Health and Human Services (HHS) for state enforcement in 2012.

These work requirements have now been waived by nearly every state in the union. Categorical eligibility has been shamelessly promoted by the USDA in an effort to increase SNAP participation by individuals who would not meet SNAP eligibility requirements standing alone, but are deemed automatically eligible given their participation in other assistance programs. And, of course, all of this expansion requires more taxpayer dollars year after year.

It is perplexing that the Executive Branch of a country that is $17 trillion in debt appears to want more Americans in a very expensive system that can lead to a lifetime of government dependency and with no pressure to work.


RELATED: STUDY: Welfare benefits in Alabama can be worth much more than a job


Still, the federal government’s is not the only pocketbook to be considered when it comes to welfare and food stamps. In FY2012, the State of Alabama spent roughly $80 million in state money on TANF and $40 million on SNAP. Of course, these numbers do not scratch the surface of what the state spends in total on entitlement programs each year.

While welfare caseloads expectedly increased during the recession, many states have sustained these increased numbers even six years later. As such, both traditionally conservative and liberal-leaning states have looked for opportunities to tighten eligibility requirements and put in place policies that they hope will get more individuals back into the work force. Currently, states have the greatest flexibility over the administration of TANF.

This session, we have seen Alabama’s Legislature consider several proposals to bring Alabama’s TANF programs in line with practical reforms of other states. SB115, by Senator Arthur Orr (R-Decatur) would require TANF applicants to apply for at least three positions of employment prior to their eligibility determination, in addition to the job search requirements already in place for able-bodied TANF recipients. Similar requirements for applicants have recently been considered by the legislatures of both Massachusetts and Maine in the past year, as a result of significant reductions in caseloads for states with the provision already in place.

Orr’s SB116 would ban the use of TANF debit funds for purchase of alcohol or tobacco and would prohibit their use in tattoo parlors, casinos, or adult entertainment establishments. This bill has been offered in two previous sessions and would help satisfy a federal requirement that states restrict the use of welfare benefits for certain purchases or risk losing some federal block grant money for TANF. Lastly, SB114 would criminally punish fraud in obtaining public assistance.

There is no indication that an about-face on growing our welfare system will come from Washington anytime soon. While the U.S. House managed to gain some concessions on food stamp reform in the 2014 farm bill, the final version fell far short of the comprehensive reforms or massive cuts that Republicans had set out to achieve. In many cases, the states have little say and are fully reliant on their representation in Washington to stand up to the constant expansion of these programs through relaxed eligibility requirements, lax oversight, and increased spending.

However, in instances where states are given greater flexibility, such as with TANF, Alabama should push back against the embrace of the welfare state by implementing proven reforms that promote accountability, work, and independence from government assistance while ensuring that these benefits are available to those in genuine need.


Katherine Green Robertson is senior policy counsel for the Alabama Policy Institute (API), an independent non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the author, please call (205) 870-9900 or email her at katheriner@alabamapolicy.org.

1
7 years ago

Food trucks hit speed bump at the Birmingham City Council

Food Trucks

When you hear the phrase “burdensome regulations,” what comes to mind? The U. S. EPA’s endless list of red-tape and hefty compliance costs? The thousands of pages of onerous regulations contained in the Affordable Care Act?

Especially in business, regulatory burdens are synonymous with federal agencies; yet, for small businesses and independent citizens, some of the most oppressive regulations originate at the local level.

This week, the Birmingham City Council passed an ordinance that establishes a general operating permit fee for food trucks, creates “food zones” where trucks can set up, requires that the trucks be parked at least 150 feet from existing restaurants, and limits the hours of truck operation from 6:00 a.m. to 6:00 p.m. with some exceptions.

The proposed regulations were first considered by the Council in 2012 after downtown restaurant owners complained that the trucks were taking their parking spots and their customers without paying the same taxes or bearing the high operating costs of a traditional restaurant.

The tension between traditional restaurants and food trucks is not unique to Birmingham as several major cities, including Washington, D.C., Atlanta, and Chicago, have publicly grappled with the issue. The regulations proved to be costly for some cities as food truck owners have pursued litigation, racking up high legal bills for the city and often ending in full repeal of the ordinances in question.

For instance, in 2012, Monrovia, CA was sued by a local food truck association over ordinances that restricted where the trucks could operate and park. The city ultimately repealed the regulations and settled with the association for $215,000. In June, a Chicago judge denied the city’s motion to dismiss a suit brought by three food truck owners over a regulation similar to Birmingham’s requiring food trucks to park at least 200 feet from any fixed business that serves food.

The debate has drawn enormous attention from groups across the country dedicated to the preservation of economic liberty, as the issue challenges free-market principles in their most basic form. The oft-heard argument from brick-and-mortar restaurant owners is that it’s the local government’s job to protect them from competition created by food truck vendors. These restaurant owners want to “level the playing field” through higher taxes and more stringent permits, as well as stricter operating regulations for food truck vendors.

But is this the rightful role of government? Is it even constitutional? Are we comfortable with a City Council choosing which method of doing business in the food industry is preferable?

In the free market, the consumer ultimately decides which businesses stay open and which ones close. If a hungry customer on the go in downtown Birmingham wants a gourmet meal, he may choose to get in line at a food truck. Another customer who wants to be served a three-course meal in a comfortable booth will opt for a brick-and-mortar restaurant. If there are enough customers eating in downtown Birmingham to support both, they will all stay in business. If not, business owners will adjust their menus, prices, or locations to stay in the market or they’ll close. When competition results in a reduction of market share, producers must adapt to the new market. Instead of adapting, existing fixed restaurants petitioned the city for restrictive regulations on their mobile competitors.

Birmingham has taken some great strides to revitalize the downtown area, improving its appeal to businesses and consumers alike. As Regions Field, Railroad Park, and downtown’s loft district draw new crowds to the area, they are greeted by the entrepreneurship of local breweries, food trucks, and even pop-up shops. In fact, a food truck event at Railroad Park earlier this fall brought in an estimated 10,000 attendees.

Locally owned businesses, both traditional and non-traditional, are driving Birmingham’s comeback. The City Council should get out of the way and let the free market continue to propel our city forward.


Katherine Green Robertson is senior policy counsel for the Alabama Policy Institute (API). API is an independent, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families. If you would like to speak with the author, please call (205) 870-9900 or email her at katheriner@alabamapolicy.org.

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