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Rolling Reserve & Use Tax Bills Pass Committee, House, Senate

 

By Susan Britt
Alabama Political Reporter 

MONTGOMERY—Two bills dealing with the Education Trust Fund (ETF) passed out of Joint Conference Committee, as well as both the House and the Senate on Tuesday. 

Both bills were sponsored by Rep. Bill Poole (R-Tuscaloosa), chair of the House Ways and Means Education Committee.

Both bills originally addressed the State General Fund (SGF) shortage, but when they came out of the joint committee, only one remained addressing that issue. 

HB30 was originally set to move 100 percent of the Use Tax from the ETF to the SGF giving it a “growth tax.” It came out of committee with a split of 54 percent to General Fund with the remaining 36 percent remaining in the ETF.  For FY16 it is estimated to generate $80 million. The Use Tax is generated from items purchased outside of the State. 

HB29, its companion bill, was originally going to include a one-time transfer of $50 million from the Rolling Reserve (in the ETF), to the GF. That provision was removed in committee. It now focuses on modifying the Rolling Reserve, the PACT obligation, and establishes the ETF Advancement and Technology Fund.

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The Rolling Reserve, established in 2011, was designed to prevent future prorations. This bill would reduce the original cap from 20 to 7.5 percent, and re-amortizes the PACT obligations. 

Poole said that the cap, effective FY16, was adjusted based on levels needed during a recession historically. “Effective FY16 any monies intended to be deposited into the stabilization account from the FY15 receipts the first 2 percent would go to Stabilization, the balance into the Advancement and Technology Fund. It would constitute an additional 1 percent of any overage until 7.5 percent is reached.”

The conference report also re-amortized the PACT obligations to a “flatter and more consistent for purposes of stable budgeting.” It moves the responsibility of the liabilities to 55 percent applying to higher education and 45 percent in debt service. It also increases the cap equal to the PACT obligation in the year. 

Any dollars appropriated to the Advancement and Technology Fund has to go through an independent supplemental appropriations bill allowing the movement of funding to be viewed by the full legislature.

Both bills now move to the Governor’s office with confidence that they will be approved.

Susan Britt
Written By

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