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Kay Ivey Said Challenges Remain While Legislature Studies Budget Issues

By Brandon Moseley
Alabama Political Reporter        

On Monday, June 8, Alabama Lieutenant Governor Kay Ivey (R) commented on the recent legislative session in a statement on Facebook.  Lt. Gov. Ivey said that despite the many challenges progress was made, but that a special session will be need to deal with the State General Fund Budget (SGF).

Lt. Gov. Ivey said in a statement, “It was my honor to preside over my fifth Legislative Session which wrapped up last Thursday. Right out of the gate, Legislators were faced with many difficult challenges — the budgets, prisons, and Medicaid. Senator Cam Ward presented a comprehensive prison reform bill and Senator Greg Reed proposed another positive step forward to manage Medicaid in our State. Progress was made, but we still have challenges ahead. We are sure to return for a Special Session to deal with the General Fund Budget, but for now, the Alabama Senate is adjourned sine die.”

Figuring out how to deal with the budgets also concerned the Alabama House of Representatives.

Speaker of the House Mike Hubbard (R-Auburn) has created a commission to study the problem.

Speaker Mike Hubbard said in a statement on May 26, “Proud to announce the formation of the Speaker’s Commission on Earmarking and Budget Reform. Since Republican passage of the Proration Prevention Act, our first budget reform effort in 2011, devastating mid-year cuts have been eliminated. I’m confident that this commission will recommend similar commonsense solutions to Alabama’s budget challenges. The members of the Commission include: Representative Will Ainsworth, Representative Elaine Beech, Representative Terri Collins, Representative Steve Clouse, Representative Allen Farley, Representative Bill Poole, and Representative Rod Scott.”

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Representative Clouse (R-Ozark) is the Chairman of the House Ways and Means Committee General Fund; while Representative Bill Poole is the Chairman of the House Ways and Means Education Committee.

Another issue that is perplexing legislators is the growing costs of providing health care and pension benefits for state employees. To that end, the Alabama Legislature passed a joint resolution to establish a study committee on Alabama’s public pension system and public employee health insurance program (PEHIP).  This initiative was led by Senator Arthur Orr (R from Decatur) and Representative Jim Patterson (R-Meridianville).

The conservative Alabama Policy Institute (API) applauded the move in a statement:  “Underfunded pension systems are a major, yet hidden, driving force behind continued state budget shortfalls across the country. At a time when legislators are grappling with a $200 million budget shortfall, the State of Alabama is set to spend nearly $1 billion this year on public pensions. This is due, in part, to the high risks associated with a traditional defined benefit structure.”

API wrote that, “Structural pension reform is not a short-term budget fix, but for the long-term remains the single biggest reward for states attempting to solve the budget woes brought on by the recession and the extended economic recovery that followed…API applauds the leadership of Senator Orr and Representative Patterson and looks forward to working with the committee on this important issue.”

A growing number of legislators are calling for replacing the state’s pension fund (the Retirement Systems of Alabama, RSA) with a 401k system where the state does not guarantee returns or a specific benefit amount.  Sources tell the Alabama Political Reporter that without new hires coming in and paying the pension for those already drawing that the RSA will need significant monies to backstop the existing pension fund so that all of those current employees and retirees will get the benefits that they were promised.

Soaring healthcare costs due to Obamacare and an aging population of State retirees and workers has driven up the cost of providing healthcare benefits to both workers and retirees. Despite having the second largest ETF budget in state history, PEEHIP this year was only level funded leaving a gap of over $100 million. PEEHIP Board members narrowly voted to fill most of that shortfall by raiding the PEEHIP Trust Fund.

Kay Ivey is the first Republican woman to serve at Lt. Governor in Alabama. This is Lt. Gov. Ivey’s second term. There is some discussion that the very personable Lt. Governor might be a gubernatorial candidate in 2018.

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Brandon Moseley is a former reporter at the Alabama Political Reporter.

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