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Ivey’s General Fund budget bill introduced in State Senate

Chip Brownlee

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By Chip Brownlee
Alabama Political Reporter

Gov. Kay Ivey’s proposed General Fund budget dropped in the Senate Tuesday.

The bill, which funds Alabama’s non-education agencies, is being carried by Sen. Trip Pittman, R-Montrose, who chairs the Senate Finance and Taxation General Fund Committee.

Ivey’s proposal would bring a 9.5 percent increase for the General Fund budget from $1.88 billion last year to $2 billion this year. The State Medicaid Agency, the largest recipient of General Fund appropriations, would see a $53.8 million increase or 7.6 percent.

Medicaid’s request this year is much smaller than previously anticipated — Ivey and Medicaid Commissioner Stephanie Azar have said — because fewer people are eligible for Medicaid this year thanks to a low unemployment rate and economic growth.

“The economy’s rebounding, and we did not expand Medicaid so the Medicaid rolls are constant, which is good. They’re not growing,” Pittman said. “We’re controlling the costs but the costs overall are not going to be diminishing.”

The same economic growth is also pumping more revenue into the General Fund and the Education Trust Fund, giving lawmakers more leeway in the budget process. A $90 million holdover from last year is also making the Legislature’s job to pass a General Fund budget easier this year.

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“Things look better than they have previously,” Pittman said in an interview Tuesday. “But we have to take into account the carry forward and the reversions, and we have to recognize that next year that money won’t be there. We have to be very prudent and cautious and not get carried away with recurring expenses that the next Legislature will have to deal with.”

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Lawmakers are expected to focus largely on budgets this year as they head into statewide elections with primaries scheduled for June and the general election scheduled for November. Every member of the Legislature will be up for re-election.

The easy budget year is a welcome relief for lawmakers who have in recent years struggled with large shortfalls and structural deficits. In 2015, after six months of gridlock, lawmakers approved $166 million in new taxes and moved $80 million from the more fiscally sound Education Trust Fund to rectify a $200 million shortfall in the General Fund budget.

In 2016, the Legislature overrode a veto from then-Gov. Robert Bentley who said their budget did not adequately fund Medicaid. His office said the agency needed $85 million more in revenue than what was appropriated. He later called a special session that ended in lawmakers dispensing BP money to fund Medicaid.

This year, no such tax hikes or transfers will be needed, and Ivey said her budget “sensibly” funds state agencies.

“My proposed budget is a strong, manageable budget, and is highlighted by the bright spot of a lower than expected Medicaid appropriation,” Ivey said.

Pittman said legislators are “cautiously optimistic” but realize that this year was made easier by holdover money that poured into the state coffers after a settlement with BP over the 2011 Deepwater Horizon oil spill.

“There’s going to be additional need for revenue next year. We will not have the one-time money,” Pittman said. “We have to be careful when we look at recurring costs. We have to recognize that we can’t do all things.”

A large recurring payment in this year’s budget would be Ivey’s proposed cost-of-living pay raise for state employees, who haven’t seen their salaries adjusted since 2009. Ivey’s budget calls for a 3 percent pay raise but some lawmakers have been pushing for more.

Pittman, a consistent budget hawk, said he would have preferred a bonus to a salary increase.

“That’s one time and we could reassess next year,” Pittman said. “But it’s been a long time since people in the General Fund have seen a pay raise. They’ve had merit raises but they haven’t had a cost-of-living adjustment. There is debate on that but I think that’s something that will pass.”

The bill will need to make its way through the Senate Finance and Taxation General Fund Committee. Once passed, both chambers of the Legislature will need to sign off before the budget is approved.

 

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