House Education Budget Chair Says Alabama’s Progress Depends on Four Legs of Strength

House Ways and Means Education Chairman Rep. Bill Poole today said the next four legislative sessions could include modernization of Alabama’s budget process and its tax system.

Rep. Poole, R-Tuscaloosa, was introduced at today’s Business Council of Alabama Tuesday Briefing by Business Education Alliance President and Chairman Joe Morton, Ph.D.

The BEA was created to assist in providing the best education opportunities and skills training available for Alabama’s public-school students. “We work on research projects that identify things that improve education,” Dr. Morton said.

Rep. Poole chairs the House committee that produces the Education Trust Fund budget that relies on state income and sales taxes, which are a direct reflection of Alabama’s economy.

Rep. Poole said that while Alabama’s unemployment numbers are at a historic low and employment at a historic high, Alabama’s economy isn’t producing at the average level of competing Southeastern states.

“We have not reached pre- and post-recession levels of GDP,” he said.

Rep. Poole said he believes a successful economy depends on focusing on the right legislation, an adequate and modern infrastructure and health care, and a competitive tax structure.

“Those are four legs of the table to be competitive and a vibrant state economy,” he said.

“One of my challenges in my caucus is to ensure that everything we do ought to be viewed in focus of those four benchmarks,” he said. “Those four areas continue to be of critical importance.”

The House last week passed the 2018-19 Education Trust Fund budget and associated education employee pay raise and funding bills. The bills are in the Senate.

“It’s a very positive budget for the state because you have $216 million new discretionary dollars to invest in the education across the state of Alabama,” Rep. Poole said.

The $216 million covers education raises and BCA and BEA-supported early childhood learning and reading initiatives. “Investment in education is an investment in workforce development, an investment in the economy, and an investment in prosperity and competitiveness,” he said.

Rep. Poole provided thoughts about improving the way the Legislature approaches budgets for education and for general government, which are passed in the same legislative session, or in a special legislative session.

One concept is to create a two-year budget cycle where the Legislature alternates considering the ETF budget one year and the General Fund budget the next. “It would give all members the chance to focus on a budget,” Rep. Poole said.

Rep. Poole said Alabama’s budget picture includes both earmarked and federal funds, which are rarely discussed. “The Legislature never really factors that in,” he said.

(Alabama’s ETF next year budgets $6.6 billion and the General Fund $2.05 billion, but both budgets authorize a combined $30 billion in spending.)

Rep. Poole mentioned two interim legislative reports on Alabama’s budget process and suggestions for reform.

The first interim report from last year was followed by the release of the second interim report on budget reform in January.

The second report recommends: improving the budget process, using a portion of unspent budget amounts to establish reserve funds, reviewing tax credits, exemptions, deductions, and reviewing tax preferences and earmarked state revenues on an ongoing basis.

Turning to taxes, Rep. Poole said a growing issue for budgeting, especially for the ETF that relies on sales and income taxes, are the antiquated sales tax laws that did not anticipate the advent of on-line purchases and their ability to avoid sales taxes.

“How big a problem this is and how to deal with it is going to be the issue,” Rep. Poole said. “The sales tax model does not effectively contemplate online sales. We’re going to have to look at the future of the sales tax revenue stream … and have a competitive, fair tax structure.”

Rep. Poole said the Legislature’s opportunities for the remainder of this session include final passage of an adequate rural broadband bill that will energize rural business and education options. “Rural broadband is a critical issue for Alabama,” Rep. Poole said.

Tuesday briefings are held each week during regular legislative sessions.

The Feb. 27 Tuesday Briefing speaker is scheduled to be Steve Pelham, the chief of staff for Governor Kay Ivey.