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Everything you need to know about Alabama’s new budget and what it means for you

Senate President Pro Tem Del Marsh, Governor Robert Bentley, and House Speaker Mike Hubbard
Senate President Pro Tem Del Marsh, Governor Robert Bentley, and House Speaker Mike Hubbard

MONTGOMERY, Ala. — After months of contentious debate, the Alabama Legislature on Wednesday passed a budget and sent it across the street for the governor to sign.

Here’s what you need to know:

1. The new General Fund includes some cuts

The final tally on the Fiscal Year 2016 General Fund is $1.75 billion, down from $1.83 billion in FY2015. The roughly $100 million decrease is not as large as it may seem, though. About half of that number is the result of the federal government picking up the tab for a children’s health insurance program that was previously funded by the state.

Medicaid, prisons, Mental Health, Human Resources and the court system were essentially untouched. Most other General Fund agencies will be trimmed by around 5 or 6 percent.

In an effort to limit the cuts made to areas lawmakers deemed to be essential services, they passed a 25-cent per pack tax increase on cigarettes, which will bring in an estimated $70 million annually. They also increased taxes on nursing homes by $400 per bed and on pharmacies by adding a new 15-cent tax per prescription. Both taxes were supported by groups representing the impacted industries. The two taxes will each raise $8 million in revenue for Medicaid.

2. Gov. Bentley did not get what he wanted, but appears willing to live with it

The governor’s initial call for $700 million in new revenue was cut by about two-thirds by the time the second Special Session rolled around. But although Bentley did not get anywhere near the amount of tax increases he wanted, he commended legislators who had the “courage” to back the $86 million in new taxes that did go through.

“We have made tremendous progress to fundamentally change the way our state budgets,” he said. “Tonight is an important step forward in that process. I commend House and Senate members, including Speaker Hubbard, Pro Tem Marsh and Budget Chairmen Clouse and Orr, for prioritizing people over politics. I also want to thank members of the House and Senate who courageously voted to increase revenue for the General Fund. I will carefully review the budget once it is received by my office, and I expect to sign it.”

3. Your life pretty much won’t be impacted at all

There does not appear to be any reason for parks to close, driver’s license offices to be shuttered, prisoners to be released, seniors services to be disrupted, or for any other dire prediction to actually come to fruition.

Even the executive branch agencies that will be expected to make relatively small cuts should not have much trouble carrying on business as usual after the trim.

4. The Republican-controlled Legislature may never be the same

The tax battle turned ugly in the last week, as the deadline to pass a budget loomed and legislative leaders battled it out with a bloc of hardline conservatives, particularly in the House. The final budget won passage easily, 23-9 in the Senate and 70-21 in the House, but tempers were flaring right up until adjournment.

A House member who supported the numerous tax increase proposals went to the mic on the House floor to harshly criticize his conservative colleagues for their unwillingness to compromise. Even after the gavel came down to end the session, heated discussions continued among members.

The first four years of Republican control in Montgomery (2010-2014) were largely defined by a close working relationship between House and Senate leadership and by overall consensus among GOP lawmakers. With rare exceptions, Republicans were pretty much singing from the same sheet of music.

That changed in a big way in 2015, and it could have huge implications for the GOP’s ability to govern moving forward. Republican leadership’s biggest challenge will be to keep their caucuses from permanently fracturing into the kind of establishment vs. conservatives in-fighting that dominates Congress. It may be too late.

5. The biggest winners and losers are…

Prison reform won.

The Alabama Legislature earlier this passed sweeping prison reform, culminating several years of work by a broad coalition seeking to ease overcrowding in the system while maintaining public safety. The reforms received praise nationally, including from The Heritage Foundation. After a period of uncertainty during which it was not clear if the reforms would get funded, the Legislature’s final budget included an allocation to implement the plan.

The Alabama Department of Environmental Management lost.

ADEM, basically Alabama’s state-level version of the Environmental Protection Agency (EPA), saw its budget slashed by 83 percent. The agency lost $1 million of its previous $1.2 million allocation. Ouch. They’ll be fine though. They still manage to get $154 million in earmarked funds.

6. Gambling interests are licking their chops

The vast majority of Alabama’s structural budgeting issues remain. Will Republicans use the window of time they’ve bought themselves with tax increases and incremental reforms to build consensus around major structural changes? It’s too early to tell.

What is definitely happening, though, is gambling interests who failed to gain traction this year are preparing for another push in 2016. They will be well funded and already have a group of legislators — albeit a relatively small one — who have bought into the possibility of increasing revenue by expanding gambling, rather than taking on the monumental task of reforms.

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