House and Senate General Fund Budget Chairs Say All Scenarios Are on Table

Speaking today to the Business Council of Alabama’s Governmental Affairs Committee, the chairmen of the House and Senate General Fund budget committees said all revenue and cost-cutting measures are on the table to help the Legislature deal with an ailing general government budget for next fiscal year.

“As usual it’s on life support more than it’s ever been,” said Rep. Steve Clouse, R-Ozark, chairman of the House Ways and Means General Fund Committee.

Clouse said the General Fund, which pays for most non-education government operations such as prisons and Medicaid, for the past four or five years has been living on money either borrowed or withdrawn from the state’s Oil and Gas Trust Fund.

Clouse said that not only is the Oil and Gas Trust Fund tapped out as a source of funding, the state must also repay borrowed amounts beginning next fiscal year, which starts Oct. 1.

Sen. Arthur Orr, R-Decatur, chairman of the Senate Finance and Taxation General Fund Committee, said all revenue sources including those that would affect business and the potential for state agency budget cuts will be debated by House and Senate members in the remainder of the 2015 regular legislative session.

Potential revenue sources include $541 million in higher taxes proposed by Governor Robert Bentley, a state lottery, a compact with Native American tribes to allow certain gaming, overhauling the entire tax code, state income tax exemptions and deductions. Then there’s the potential for state agency cuts of up to 30 percent, Orr said.

Bentley’s package includes higher fees on automobile sales and leases, and tobacco, and there are proposals to increase the insurance premium tax and install unitary combined reporting, all of which Orr said wouldn’t be considered in a vacuum of revenue measures only.

“First we continue to wring out any efficiencies in state government,” said Orr. “After that, budgets are on the table as we meet with agencies for their budget needs.”

Neither Orr nor Clouse could predict which, if any, revenue measures legislators might approve. Some of the measures mentioned would require a statewide vote.

Alabama operates with two budgets, the Special Education Trust Fund for schools which gets most of the growth money, and the General Fund whose revenue sources have been relatively static from year to year since the economy tanked in 2008.

Orr said budget writers are even considering unearmarking certain revenues to General Fund agencies such as the Alabama Department of Environmental Management, the Department of Corrections, and the Department of Transportation, but adopting that scenario could invite scrutiny by federal agencies.

Overriding the entire budget picture is the constitutional requirement against deficit spending, which requires budgets to match expected revenues.

The House and Senate are scheduled to work three days this week and return after the traditional spring break on April 7.

Clouse said the budgets should start receiving attention then. “I’d tentatively like to have bills up for possible hearings after the break,” Clouse said.

The BCA’s Tuesday morning briefings are held each week during the legislative session and feature legislative and administration officials who discuss topics of interest to Alabama’s business community.

-Dana Beyerle