House Education Budget Chairman Says ETF is in Better Shape than General Fund

House Ways and Means Education Budget Committee Chairman Rep. Bill Poole said today that the 2016 Education Trust Fund budget will be in better shape than the General Fund that a legislative budget chair says may face cuts next fiscal year. ”The ETF is looking strong, there were record sales in December,” Poole said.

Poole, R-Northport, spoke to the Business Council of Alabama’s Governmental Affairs Committee and discussed Governor Robert Bentley’s proposed $6 billion ETF for 2015-16 that will start its legislative path in the Senate. The separate General Fund will begin its journey in the House.

The boost in tax receipts means that the $437 million borrowed from the so-called Rainy Day Account can be totally repaid and the ETF could see a slight budget increase of $53 million, Poole said.

Poole said that a BCA-backed education initiative – career-technical, dual-enrollment scholarships – could see a 100 percent funding increase. The Legislature appropriated $5 million to career-tech, dual-enrollment scholarships this fiscal year and Poole said it’s likely to double in the budget for next year, which begins Oct. 1.

Dual-enrollment allows eligible high school students to take college courses while still in high school.

The BCA’s 2015 State Legislative Agenda promises to actively work to support proven education initiatives including the postsecondary dual-enrollment program.

Another BCA-backed education success story is voluntary pre-kindergarten for 4-year-olds. “Pre-K has been a budget priority line-item and you’ll see that continue,” Poole said.

Poole said Governor Bentley’s proposed 2015-16 ETF budget would move $185 million in earmarked programs and their appropriations to the ailing General Fund, an action that will elicit significant discussion as the budgets move through the legislative process.

“It’s not easy to unravel earmarking,” Poole said.

The ETF is funded largely with earmarked sales and income taxes that reflect economic growth and decline. The General Fund is funded by taxes and fees that have smaller growth potential.  

The Department of Revenue reported that this fiscal year’s net tax income was up $226 million, or 6.34 percent, through February compared with the previous fiscal year. Of that amount, $202 million was from income and sales taxes.

Contrast that with the condition of the General Fund as outlined two weeks ago by the chairs of the respective House and Senate committees.

At the March 17 Governmental Affairs Committee briefing, Rep. Steve Clouse, R-Ozark, and Sen. Arthur Orr, R-Decatur, said all revenue and cost-cutting measures are on the table to help the Legislature deal with next year’s general government budget.

Clouse is chairman of the House Ways and Means General Fund Committee and Orr is chairman of the Senate Finance and Taxation General Fund Committee.

Clouse said the General Fund 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.

Orr said that budget cuts of between 10 percent and 30 percent are possible.

The Legislature begins its ninth legislative day in session today.

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

Rep. Poole also sat down with Dana Beyerle and Leah Garner to answer a couple of question for the Business Council of Alabama’s Two Minute Tuesdays.