By Brandon Moseley
Alabama Political Reporter
On Monday, September 14, the Alabama Senate approved a plan to move $100 million from the education trust fund (ETF) to the troubled State General Fund (SGF). Both the House and the Senate have already approved transferring use taxes from education to the General Fund. What the two houses disagree over is the size of the transfer. On Monday night, the Alabama House of Representatives voted to non-concur with the changes made to the transfer bill by the Senate, which increased a ~$37.5 million ETF raid into a $100 million ETF raid. A conference committee was appointed but the two sides were deadlocked so both houses adjourned around 9:30 pm Monday night.
State Representative Christopher John England (D-Tuscaloosa) said on Facebook, “It appears that the choice that is left is to either raise consumer taxes to somewhat level fund the General Fund Budget or to balance the budget by taking the required funds from the Education Trust Fund and the Rolling Reserve.”
Rep. England continued, “The Senate amended the use tax bill that the House passed and increased the 50 million dollar transfer from the ETF to the General Fund to 100 million but left all of the obligations in the ETF. The House non concurred and now the bills (the Use tax transfer and the Rolling Reserve amendment) are in conference committee to try and hammer out some sort of compromise. Right now, I don’t see that happening.”
House Bill 30, sponsored by House Ways & Means Education Committee Chairman Bill Poole (R-Tuscaloosa), changes the distribution of state use taxes currently collected and deposited into the Education Trust Fund and the State General Fund. The change in distribution will decrease /increase state use tax receipts to the Education Trust Fund and the State General Fund, beginning in fiscal year 2017 and thereafter, by $222,500,000 as requested by Alabama Governor Robert Bentley (R). But HB30 as written by Poole made that contingent on the passage of HB29 and that ~$175 million worth of, “State agencies and related programs currently funded in the Education Trust Fund and enumerated herein, to be funded from the State General Fund in amounts to be determined by the Legislature beginning with the fiscal year ending September 30, 2017. In the event that these agencies or related programs receive an appropriation from the Education Trust Fund after fiscal year 2016, then the amount appropriated to the agency or program shall be distributed from the use tax revenues to the Education Trust Fund for that fiscal year.” The Senate version decreased the number of agencies moving to the general fund and increased the money available to the SGF.
Alabama’s slowly improving economy means that sales tax collections and income tax collections are increasing. Because of the anemically slow grow that has not yet translated into higher property values and corresponding higher property tax collections or higher insurance premium taxes. In the vast majority of states, the legislature would prioritize their needs and the revenues that are coming in would go to where the biggest needs are; but this is Alabama and our budget doesn’t work anything like that.
The State takes in $19.7 billion a year. Nearly $7 billion of that is federal dollars which is earmarked as to where it can go. The state also has $billions of dollars in revenue that is earmarked to go to specific agencies.
On Thursday, Rep. Farley (R-McCalla) said that the state has billions of dollars tied up because of earmarks. Lots of that money is federal dollars but “We also have $3.991 billion in state earmarked bills.” “In the last special session the Governor proposed un-earmarking $397 million of that. With the help of the Speaker’s budget we increased that to $501 million.” That passed the House but was defeated in the Senate. Farley supports un-earmarking hundreds of millions of that so the legislature can go in and prioritize that money; but due to Senate opposition, which killed that bill in the first special session that is not part of the call in this session. “I can’t vote for any tax until we are serious about how we are using the revenue we already have.”
Gas tax dollars, for an example, are earmarked for the Alabama Department of Transportation (ALDOT). ALDOT gets nothing from the SGF.
After all of the federal money and the otherwise earmarked money, the State legislature actually only budgets about $7.87 billion; but of that $6.249 billion is earmarked in the fiscal year 2016 budget for education, leaving just ~$1.62 billion in revenues for the SGF. The state however has been spending $130 million to $260 million a year more than it takes in in continuing SGF revenues since 2008. The FY 2016 crisis is largely due to the fact that there is no raided Alabama Trust Fund money or Obama stimulus dollars left to prop up the SGF. The $550 million in past Alabama Trust Fund (ATF) raids as well as the ongoing siphoning of trust fund revenues to pay for Forever Wild to buy up more land have only led to less interest income from the ATF for the SGF. The BP oil settlement money is expected to start coming in at some point in 2016; but how much comes and when is still in doubt; and the legislature is planning to earmark that for the $600 million plus the State already owes (most of that for past Alabama Trust Fund.
The legislature meets again on Tuesday to try to reach some sort of a compromise. The Senate still has to decide whether or not concur with the House on $102 million a year in tax increases passed on Thursday.
Rep. England said, “House has adjourned until 2 PM tomorrow afternoon. The conference committee on the rolling reserve bill and the bill transferring the use tax from the ETF to the General Fund has not reached a compromise. They will continue their work tomorrow. Make no mistake about it, the success or failure of this committee will determine the outcome of this Special Session.”