By Brandon Moseley
Alabama Political Reporter
On Tuesday, Alabama voters voted in a resounding majority to plunder $437 million from the Alabama Trust Fund rather than face the stark fiscal crisis in the Alabama General Fund (which funds Medicaid, prisons, the court system, and most non-education related state government functions) today by either raising taxes or cutting the size of Alabama government to match the current revenues available to state government.
Alabama Governor Robert Bentley (R) promised the voters that the state would somehow pay that $437 million back to future generations once this current fiscal crisis is past. Senator Paul Sanford (R)ff from Huntsville joined Governor Bentley in calling for the state to pass legislation mandating that a future legislature replace the money.
Sen. Paul Sanfored said in a written statement, “As a fiscal conservative, I am compelled to find a way to pay back the Alabama Trust Fund to ensure the financial strength of Alabama for the next generation.” “I have two bills being drafted that offer both a short-term and a long-term payback option. These two measures are a solid starting point for the Legislature to build upon in guaranteeing that the Alabama Trust Fund is restored and enhanced.” Senator Sanford said in his written statement that one option is to stipulate that the Legislature use future BP oil spill settlement money allocated to the State of Alabama to pay back the two rainy day accounts. In 2008 when the economy first went bad, then Governor Riley drained the Rainy Day Reserve Accounts of almost $500 million to prop up the state’s bloated education budget to get through the crisis of the moment. Now that those funds are drained dry and the state is supposed to begin paying that account back, the legislature is (with approval of the voters) siphoning off another $437 million from Alabama’s beleaguered trust fund.
Sanford’s bill would use the settlement money will go to pay back the $437 million authorized by Tuesday’s vote. ”This piece of legislation also requires 10% of any remaining BP funds to be deposited into the Alabama Trust Fund before any other use in state government. Senator Sanford’s long-term payback option specifies that the remaining balance on the $437 million approved by Alabama voters on Tuesday be paid back on a 10-year amortization schedule at 5% interest starting in FY 2016.”
Sen. Bryan Taylor (R) from Prattville has already prefiled a bill that mandates that the money eventually be paid back but does not state how it would be paid back.
Sen. Sanford said, “Couple the above measures with real reform and restraint in State Government and Alabama will have a bright future.” Critics of the trust fund raid argue that the state is filling a $140 million a year budget gap with trust fund money for three years. After the three years are up, the state will have a $140 million budget gap to deal with, plus the lost interest income on the trust fund money, plus have to pay back the trust fund according to any trust fund payback plan the legislature passes.