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General Fund Chaos Could Dominate Legislative Week

Brandon Moseley

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By Brandon Moseley
Alabama Political Reporter

On Tuesday, May 26, the Alabama Legislature will reconvene with the General Fund budget still looming.  Last week the Alabama House of Representatives passed an austere General Fund budget with no revenue bills thus cuts the 2016 fiscal year General Fund general fund budget $204 million from 2015 levels. 

Senate Finance and Taxation Committee Chairman Arthur Orr (R-Decatur) has said that he hopes the committee will look at other options rather than just passing HB135 as passed by the House. Orr is not ruling out revenue bills.

Governor Robert Bentley (R) is still demanding $541 million in new taxes on insurance, banks, tobacco, car sales, car rentals, utilities, car leases, and cigarettes.  Gov. Bentley’s plan would also require more corporations doing business in Alabama to pay taxes and would strip individuals of their ability to submit tax exemption certificates to their employers.  Weakened versions of the Governor’s revenue bills are languishing in committee and most of the package will likely die this week for lack of action.

Speaker of the House Mike Hubbard (R) and Ways & Means General Fund Committee Steve Clouse (R-Ozark) had unveiled their own revenue package which included a mixture of $150 million in new taxes and a compact with the Poarch band of Creek Indians (PCI) giving the Indians a gaming monopoly in exchange for a $250 million one-time payment and taxes on the gaming at the Indian’s casinos in Wetumpka, Atmore, and Montgomery. The Indians have indicated that they would consider adding a North Alabama site as well. Sources suggest that could be a large site in Talladega County. The Hubbard plan would have also raised taxes on cigarettes, car sales, car rentals, car leases, lubricant oils, etc. The tax part of that package came out of committee in the House; but was never debated on the House floor.

Senate President Pro Tem Del Marsh (R-Anniston) told the Montgomery Advertiser’s  Brian Lyman that he will bring his own gambling plan to the Senate floor if he has sufficient votes. The controversial Marsh plan would: create a state lottery, urge the Governor to negotiate a compact with the Poarch Creeks, and allow casino gambling at the four dog tracks in Birmingham, Shorter, Mobile, and Greene County.  Marsh told Lyman, “I’m going to make some calls this weekend and talk to colleagues and see where they are.  If I feel like I’m close, I’m going to ask the Rules chairman to put it on the calendar.”  Marsh claims that his plan will produce a positive economic impact and create 11,000 jobs. The Marsh plan would require a constitutional amendment and a vote of the people, likely in a September referendum.

The legislature is also looking at reducing earmarks, raising fees, reforming Medicaid, and combining the education and general fund budgets.  Supporters of the combined budget idea point out that the $1.62 billion General Fund budget has an estimated $261 million shortfall while the $5.92 billion Education Trust Fund Budget is expected to bank $265 billion in to the Rainy Day Reserve Account. 

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Sen. Phil Williams (R-Rainbow City) who chairs the Senate Committee for Fiscal Responsibility wrote in an editorial with the Alabama Media Group, “I firmly believe that the budget woes we face this year can be fixed without raising taxes or relying upon gambling. But to do so we will have to make some repairs to the foundation of the Alabama budget process….Alabamians send approximately $8 billion in taxes to Montgomery every year and I cannot in good conscience ask them to send one dollar more to a foundationally broken system.”

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With time running out on this legislative session, it is becoming increasingly likely that the General Fund budget will be addressed in a summer special session.

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