By Brandon Moseley
Alabama Political Reporter
Thursday, June 11, the Speaker’s Commission on Earmarking and Budget Reform met for the very first time on the last day of the 2015 regular Legislative session.
The Speaker of the House of Representatives, Mike Hubbard (R-Auburn), told the members of his commission that there are two different prongs that they need to work on:
“The first, is the short term fix to deal with the State General Fund before the Special Session that is tentatively set for August.”
“The second, is to continue looking at the long term, so that they will have more recommendations before the start of the next legislative session.”
“We need to go ahead and accelerate our plans for the special session. I have asked state Representative Mac McCutcheon (R-Capshaw) to serve as an ex officio member, and he has agreed. My charge to you is to think boldly, and don’t go into this with any preconceived ideas.”
Speaker Hubbard said, “The General fund needs to be the focus right now, but going ahead we need to work on bold reforms that can change the budgeting process for years ahead…I have asked Acting Finance Director Bill Newton and State Budget Officer Kelly Butler to be involved, and they agreed with that.”
The Director of the Legislative Fiscal Office, (LFO) Norris Green, then gave a lengthy presentation on earmarking and what can be done about it.
“Earmarking is used in more than one way around here…A lot of taxes are earmarked. Over 80 percent of taxes are earmarked for a specific agency or for a specific purpose. The State income tax is earmarked for education. The General Fund takes in about $3 billion. The Federal government dictates where some of that goes. Out of the $3 billion, a billion of that is Medicaid money. Hospitals, pharmacies, and other providers pay fees and taxes into Alabama Medicaid. It would be difficult to do get them to do that if it did not come back out to them in Medicaid reimbursements. Half a billion dollars is road and bridge money. Part of their money that used to be money they used for roads and bridges. They would like to get that back. A lot of the earmarked money are levies and fees paid by various profession to fund their boards. Could you get that? Yes. Would they pay for it is another question. Un-earmarking does not create new money. It does give you more flexibility. You need to find an agency that has more money than it needs.”
Speaker Hubbard said, “you will have to drill down to find if it exists.”
Director Green said, “I doubt you will find any sizable amounts of money out there.”
Rep. Hubbard said, “I have talked with (Senate President Pro Tem) Del Marsh. He is going to have a group of Senators who will be working on their own.”
Rep. Teri Collins (R-Decatur) asked if he would know how much money will be generated by SB216.
“The committee in discussion said that with SB216, agencies will raise some fees. They will still have to come to the legislative council with the request. 20 percent is the most anybody can raise a fee. Some of these boards and commissions are fine. They don’t need to raise fees.”
Speaker Hubbard asked, “Bill (Newton) is that something that you can work on?
Director Newton said, “We will have that information before the Special Session.”
Rep. Clouse said, “some agencies were “hamstrung” by what they could spend money on in their department, but legislation was passed to help with that.”
Director Green said, “this was designed to give them blanket flexibility to manage their agency better by moving money around.”
Clouse said, “That was one thing we were able to accomplish in this session.”
Rep. Allen Farley (R-McCalla) said, “Our constituents call us and come to us because they read stuff in the new paper or on social media…And if they read it in social media it has to be true…54 percent of our money is earmarked for education.”
Green said, “you are going to fund education whether you earmark for it or not.”
Technically, the State has one General Budget and one special appropriation for education. In states with less earmarks, they probably are spending a good chunk of their un-earmarked money for education.
Rep. Will Ainsworth (R-Guntersville) said, “We are the only State where income and sales tax go to the same fund…We put ourselves at a disadvantage from a growth standpoint.”
Green said, “and in down economic times they are the first to go down. They got us in trouble in the education budget in 2009.”
Ainsworth said that, “sales tax collections have gone down only twice since 1960. It dropped by ten percent in 2009.”
Speaker Hubbard said that, “Amazon is coming to the State doing deals show they know that something is going to happen on the internet sales tax collections: 75 percent of which is earmarked for the General Fund.”
Director Newton said, “I have two quick comments. All of this is public information, and we in the finance department are available to answer any question you might have.”
Afterwards, Speaker Mike Hubbard said on Facebook, “Alabama’s House of Representatives was in Montgomery yesterday to finish out the people’s work. We had a productive workday in preparation for the upcoming special session and we will be working hard over the summer to find a solution to our budget shortfall. I’m confident that by working together with the Alabama Senate and Governor Robert Bentley we will find a solution.
House Rules Committee Chairman Rep. Mac McCutcheon said in his own Facebook statement, “Yesterday, the Alabama House of Representatives held a legislative workday to prepare for the upcoming special session. We heard presentations from budget experts and held committee and taskforce meetings to put a plan in place for our work over the summer. I’m proud that 76 of 105 House Members showed up to do the people’s work and I’m confident that working together we will find a solution to our budget issues.”