MONTGOMERY, Ala. — A surprise move in the Alabama Legislature Tuesday afternoon has seemingly left the state’s lawmakers with the choice to vote for either tax increases or a massive cut to Medicaid.
Alabama is one of only three states that budgets education separately from Medicaid, corrections, law enforcement, and other non-education programs. Coupled with the dubious distinction of having one of the most earmarked budgets in the country, the Yellowhammer State has found itself in the position of having a $350 million projected surplus in the Education Budget and a $250 million projected shortfall in the General Fund.
Governor Robert Bentley (R) proposed several tax increases, as well as measures moving certain revenue streams from Education to the General Fund, but has so far been unable to build a coalition with legislative leaders strong enough to support tax increases in the deeply conservative state.
The tension between the disparate factions was amplified Tuesday when a bill to increase the excise tax on packs of cigarettes—largely considered the most politically palatable of the tax increases being proposed—narrowly failed in committee.
After a tense recess during which the governor himself crossed the street from the Capitol building to whip votes, House Ways and Means-General Fund Committee chairman Steve Clouse (R-Ozark), proceeded to introduce an amendment to the budget cutting Medicaid by $156 million.
Because Alabama receives $2.32 in matching federal money for every Medicaid dollar it appropriates, the move would result in a total loss of nearly $550 million—approximately ten percent of total spending on the program.
Clouse said he believes Medicaid is the “foundation of healthcare in the state,” but, “evidently there’s a lot of legislators that still question Medicaid.”
“There’s a lot of citizens around this state that are still questioning Medicaid and what it does,” he continued. “And we’ve got a decision to make in this state.”
As the largest single program in the General Fund, Medicaid has grown rapidly in recent years to have the second largest appropriations in the state, after education.
The committee quickly approved the new legislation on a voice vote and adjourned.
Clouse’s move puts Republicans in an increasingly sticky situation: either vote to increase taxes, or vote to essentially hobble a program on which more than a million Alabamians depend.
But some lawmakers say this perception that there are only two ways out of the General Fund budget hole is based on a false premise.
“I am afraid it is an attempt to force us back into a special session to only focus on Medicaid, which you will see commercials of Hospitals closing and grandparents being kicked out of nursing homes,” said Representative Ed Henry. “Under that kind of pressure a majority of the legislature would raise your taxes.”
There is still time for the budget to be reformulated to avoid the showdown, but lawmakers seem to be struggling to reach consensus before the Special Session ends August 9th.
Other proposals on the table include establishing a state-run lottery and expanding table gaming, drastically restructuring the state’s budget by combining General Fund and Education, loosening the stranglehold of earmarks, or simply passing a budget relying on cuts.
The Legislature is constitutionally mandated to pass a budget before the next fiscal year begins October 1st.
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— Elizabeth BeShears (@LizEBeesh) January 21, 2015
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