The chairman of the Senate Finance and Taxation Education Committee today told the Business Council of Alabama’s Governmental Affairs Committee that he wants the Alabama Trust Fund rainy day education account repaid as quickly as possible and he said a cigarette tax increase bears consideration to help state finances.
Sen. Trip Pittman, R-Montrose, said he’d like to see at least $100 million repaid to the ATF rainy day account next year, the amount Governor Robert Bentley recommended in his proposed Education Trust Fund budget for 2013-14.
Bentley also recommended a conditional repayment of $169 million if the money is available at the end of the fiscal year. The budget bill, HB 166 by Rep. Jay Love, R-Montgomery, was in the House Ways and Means Education Committee today.
“My priority is we repay the ATF,” Pittman said. “I was advocating the highest line item, $150 million. The governor submitted $100 million.”
Then-Governor Bob Riley five years ago began withdrawing from the $437 million ATF rainy day account to offset the effect of proration on education spending. The amount must be repaid by the end of the 2015 fiscal year. So far $14 million has been repaid, leaving a balance due of $423 million.
The ATF is a state savings account that receives royalty payments from offshore oil and gas exploration, payments that are invested. It contains rainy day accounts for the Education Trust Fund and the General Fund.
Pittman advocates repaying the ATF education rainy day as soon as possible.
“There’s a tremendous responsibility personally for that amendment plus my fiscal nature as a businessman (is to) make sure we repay the ATF prior to the end of the 2015 budget year,” Pittman said.
Pittman said he had hoped to have a budget surplus of $200 million this year to plow back into the Alabama Trust Fund but acknowledges the surplus probably won’t materialize.
Turning to the state’s economy in general, Pittman said, “The reality is the economic recession is turned into somewhat of a new normal. We’re not certain that we feel comfortable (that) the budget will have the overflow we need.”
Pittman addressed the need for more revenue for the General Fund budget that is used to operate state government such as Medicaid and state troopers.
THE FOLLOWING IS UPDATED: He said a tobacco tax proposal by Rep. Joe Hubbard, D-Montgomery, HB 177, bears consideration. It’s a constitutional amendment.
Hubbard’s proposed constitutional amendment would increase the state cigarette tax by $1 for a package of 20 cigarettes. Part of the proceeds would repay a separate $437 million that voters approved transferring from the Alabama Trust Fund last year to help the General Fund.
The legislature earlier this year passed a bill, which Bentley signed, to repay the $437 million by 2025. Hubbard’s proposed constitutional amendment would repay the amount with interest by 2022.