State Government

Budgets for FY 2018 fall short of real need

By Carol Gundlach, policy analyst

The Alabama Legislature last week passed 2018 state budgets that once again fall short of meeting critical needs. While lawmakers avoided a repeat of last year’s General Fund (GF) crisis, which required a special session to resolve, the new budgets highlight structural flaws that will continue to hinder public services in our state until leaders and voters approve fundamental tax reform.

Medicaid dodged a bullet this year in the GF. The barebones program that underpins our entire statewide health system squeezed by with so-called level funding – the same roughly $700 million in state funds as last year – plus the second and final $105 million installment of BP oil spill settlement funds. The lack of an increase deepens concerns about the scaled-back launch of regional care organizations (RCOs), already delayed to October 1. Level funding for other GF agencies such as Mental Health, Public Health and Corrections leaves them ill-prepared for contingencies like lawsuits and outbreaks of illness.

On the Education Trust Fund (ETF) side, the picture is only slightly better. The ETF passed by the Legislature on May 18 increased funding for K-12 education by $24 million, allowing for the hiring of about 150 new, and much-needed, teachers for grades 4-6. It also increased funding by $13.2 million for Alabama’s well-regarded, but not universally available, pre-kindergarten program.

Alabama is unusual among states in that we have two major state budgets. The Education Trust Fund (ETF) supports public schools, community colleges and universities, along with a handful of public/private entities like Tuskegee University. The ETF also funds some state agencies that provide education-related services. The General Fund budget (GF) funds the rest of state government.

Alabama is also unusual in the extent to which we “earmark” our taxes, designating the purposes for which certain taxes may be spent. Our constitution earmarks most “growth” taxes – those that increase when the economy is good – to the Education Trust Fund (ETF). Examples of growth taxes are income and sales taxes. Many taxes that don’t grow with the economy are earmarked to the GF and, as a result, the GF fails to grow as the economy and the need grows over time.

The consequences of Alabama’s flawed tax and budget system are clearly visible in the new budgets. Most glaring is the Legislature’s failure to fund the state’s Medicaid program adequately. For the past two years, infusions of $105 million from the BP oil spill settlement have helped prevent massive Medicaid cuts. But this two-year boost, agreed upon during last year’s General Fund negotiations, leaves the state facing a funding cliff for a program that insures more than one in five Alabamians – mostly children, seniors and people with disabilities.

The 2018 GF Medicaid allocation of $701.4 million is still $42.2 million short of the Governor’s already inadequate funding request. At this level, Medicaid will be able to keep providing basic services, but its ability to proceed with regional care organization (RCO) reforms that would emphasize preventive care may be at risk. Alabama would give up $747 million in promised federal funds if it fails to implement RCO reforms.

Of the other GF agencies, only trial courts and the badly stressed juvenile probation officers (JPO) program received small increases ($1.3 million for the courts and $1.8 million for JPOs). But in neither case did increased funding keep pace with the increased need.

In the ETF, higher education received a $4.6 million increase, but nearly every dollar of this went to Alabama’s National Guard scholarship program. Costs for this program have grown very rapidly over recent years, restricting the Legislature’s ability to provide increases for other purposes in higher education. The 2018 ETF also provided a $26.4 million increase to Veterans Affairs for scholarships for disabled veterans, their spouses and their children. Responding to concerns about the rapidly rising costs of these scholarship programs, the Legislature passed SB315 by Senator Gerald Dial (R-Lineville), tightening scholarship eligibility and benefits. Community colleges, which provide much of the workforce development in the state, were essentially level funded, as was the Department of Commerce’s workforce development program.

The Department of Mental Health received $3.5 million more from ETF than in 2017, but this was much less than the $10.5 needed to settle the anticipated lawsuit over mental health services for low-income children. For the first time, the stretched-thin juvenile probation officers program received a small ETF appropriation of $750,000 for truancy enforcement services.

A third way in which Alabama’s budget is unusual is that the ETF’s Rolling Reserve statute has imposed an artificial cap that restricts how much can be appropriated to education, even if additional revenue is available. Funds available above that cap can be given to K-12 schools and universities for one-time infrastructure and technology expenditures. SB307 by Senator Arthur Orr (R-Decatur), passed on May 19, makes $15 million available to universities from the Education Technology fund and $41.3 million for K-12 for technology, buses and other infrastructure needs.

Avoiding an emergency special session to fill a budget gap is a very low bar for legislative success. Even worse is Alabama’s habit of defining “level funding” as “same dollar amount.” A better practice is to calculate a “current services budget” that keeps up with inflation and population growth. Only a bold move on tax reform can stop the steady deterioration caused by inadequate budgets year after year.

2017 legislative update: Public transportation bill clears Alabama House committee

Arise's new approach to public transportation funding picked up momentum Wednesday as the House Transportation, Utilities and Infrastructure Committee approved HB 454, sponsored by Rep. Jack Williams, R-Vestavia Hills. The bill would create the Alabama Public Transportation Trust Fund as a repository for future state appropriations to expand public transit options in the state. The bill now awaits consideration by the full House.

Under HB 454, the Alabama Department of Economic and Community Affairs (ADECA) would administer the trust fund, including making and auditing project awards. The bill would require ADECA to adopt trust fund rules, conduct a public transportation needs assessment and make annual reports.
 
An amendment defines the composition of the trust fund’s advisory committee. The committee, which would include individuals recommended by Alabama Arise and other advocacy organizations, is designed to ensure that projects supported by the trust fund address the needs of rural areas, seniors, and people with disabilities.
 
Alabama is one of only five states that provide no state funding for public transportation. Every year, Alabama leaves millions of dollars in matching federal transportation funds on the table because we can’t put up the state portion. Arise considers HB 454 a sensible first step toward expanding public transportation options in Alabama.
 
By Jim Carnes, policy director. Posted April 19, 2017.

2017 legislative update: 'Ban the box' bill clears first hurdle, wins Alabama Senate committee approval

Alabama lawmakers took a first step Wednesday toward enacting a policy that would make it easier for people to re-enter the workforce after serving their time for a criminal offense. The Senate Judiciary Committee voted 6-2 for SB 200, which would create a “ban the box” policy for many state and local government jobs. The bill, sponsored by Sen. Quinton Ross, D-Montgomery, goes to the Senate.

Ross’ bill would remove the criminal history checkbox from applications for many jobs with state and local governments in Alabama. SB 200 would include exceptions for certain public jobs, including ones where federal or state law deems certain convictions to be automatic bars to employment. The bill also would not apply to private employers.

SB 200 would not require state or local government employers to hire any particular person, and it would not forbid them to ask about an applicant’s conviction history. Instead, the bill would delay that inquiry until after an applicant has received a conditional job offer.

“Ban the box” advocates say such policies give applicants a fairer chance to be considered on their merits rather than being instantly eliminated from the applicant pool. “Increasing employment opportunities for people with records will reduce recidivism and improve economic stability in our communities,” Section 1 of SB 200 states.

Alabama would be far from alone in adopting a “ban the box” policy for public jobs. Twenty-six states have some form of “ban the box” or “fair chance” policy as of April 2017, according to the National Employment Law Project. That list includes Southern states like Georgia, Kentucky, Louisiana and Tennessee. Many private employers – including Home Depot, Target and Walmart – have “banned the box” on their initial job applications as well.

By Chris Sanders, communications director. Posted April 12, 2017.

2017 legislative update: A victory for justice: Legislature votes to end judicial override in Alabama

UPDATE: Gov. Kay Ivey signed SB 16 into law on April 11, 2017, ending judicial override in all future capital cases in Alabama.

The age of judicial override in the United States is about to come to an end. The Alabama House voted 78-19 Tuesday to end the practice, which allows judges to override juries’ sentencing recommendations in death penalty cases. Alabama is the last state in the country to allow judicial override in capital cases.

SB 16, sponsored by Sen. Dick Brewbaker, R-Pike Road, now goes to Gov. Robert Bentley for his consideration. Bentley is “looking forward to signing this bill,” he said in a statement. The state Senate already passed the bill 30-1 in February.

“Judicial override is about to become a thing of the past, and Alabama’s justice system will be better as a result,” Arise Citizens’ Policy Project executive director Kimble Forrister said. “It’s time for our state to put the sentencing decisions in death penalty cases where they belong: in the jury’s hands. We’re happy to see such strong support in the House and Senate for ending this outdated practice, and we hope the governor will sign it into law quickly.”

Judicial override regularly has been used to impose death sentences in Alabama despite a jury’s sentencing recommendation of life in prison without the possibility of parole. Alabama judges used judicial override 112 times between 1978 and early 2016, according to the Equal Justice Initiative. In 101 (or 90.2 percent) of those instances, override was used to impose a death sentence despite a jury’s recommendation of life without parole. (Read Arise’s fact sheet to learn more about judicial override.)

Rep. Chris England, D-Tuscaloosa, the House sponsor of legislation to end judicial override, said the decision of whether to sentence someone convicted of a capital crime to death was a weighty moral question that should be entrusted to a jury of one’s peers rather than a judge. “A law degree does not make you more qualified to decide whether to sentence someone to life or death,” England said.

The House vote came after England agreed to amendments that made his judicial override bill (HB 32) match Brewbaker’s version. England then substituted SB 16 for his own bill, allowing the House to vote on the measure and send it directly to Bentley.

SB 16 explicitly states that it would not apply retroactively to defendants sentenced to death before the bill’s passage. It also would preserve current Alabama law allowing juries to recommend death if 10 of 12 jurors agree. England’s original bill would have required a unanimous jury vote to impose the death penalty, but he accepted the changes to win support for ending judicial override.

By Chris Sanders, communications director. Posted April 4, 2017.

2017 legislative update: Budgets that would do little to boost investments in education, health care advance in Alabama Legislature

Running in place was the emerging theme this week as Alabama lawmakers advanced state budgets that would provide little additional money for education, Medicaid, mental health care and other essential services. Both the Education Trust Fund (ETF) and General Fund (GF) budgets await further action when the Legislature returns from spring break on April 4.

The House voted 72-28 Tuesday to pass a GF budget that would lean heavily on one-time money to prevent deep cuts to Medicaid, mental health care, corrections and other vital services. The next day, the Senate’s education budget committee approved an ETF budget that would provide essentially flat funding for K-12 and universities. The Senate debated the budget Thursday, adopting several changes, but postponed a final vote on it until April. However, senators did pass a plan Thursday to allow the construction of several new men’s prisons in Alabama.

Federal health care changes could send state Medicaid, ALL Kids costs soaring

As in past years, Medicaid funding is a major concern for both legislators and advocates in the GF debate. A one-time infusion of $105 million from the state’s BP oil spill settlement will help prevent massive Medicaid cuts in both 2017 and 2018, but it is not a long-term funding solution for the program that insures more than one in five Alabamians – mostly children, seniors, and people with disabilities.

The House budget would allocate $701.4 million from the GF to Medicaid, $42.2 million short of Bentley’s request. The agency could keep providing basic services at that funding level but would have to “evaluate” its ability to proceed with regional care organization (RCO) reforms that would emphasize preventive care, Medicaid spokeswoman Robin Rawls told the Montgomery Advertiser last week. Alabama would give up $747 million in promised federal funds if it fails to complete RCO reforms by October 2017.

The House’s $1.84 billion GF budget would set aside $97 million as a buffer against potential major changes to federal health care programs like Medicaid and ALL Kids, but that still might not be enough to avoid a special session later this year. U.S. House leaders have proposed a per capita (or per-person) cap on federal Medicaid funding, which accounts for about 70 percent of Alabama Medicaid’s support. That change could force coverage cuts and leave the state on the hook for cost increases in the event of a sudden disease outbreak.

The future of ALL Kids is another major question mark. Congress must reauthorize the Children’s Health Insurance Program (CHIP), which supports ALL Kids in Alabama, by Sept. 30. The state didn’t have to put up any of its own money in 2016 or 2017 to support the ALL Kids program, which insures children whose low- and moderate-income families don’t qualify for Medicaid. But if Congress reverts to an earlier CHIP formula, Alabama once again would have to pay a share of ALL Kids’ cost. Medicaid and the Department of Public Health would need an additional $91 million to meet such a requirement.

Most state agencies would receive flat funding under the House budget, making it increasingly difficult for Alabama to meet changing needs in the face of growing costs and population increases. The Department of Public Health, for example, asked for a $4.6 million increase (not including ALL Kids funding) to help boost preparations for potential widespread epidemics like the Zika virus, or more localized epidemics like last years tuberculosis epidemic in Perry County. But the House’s 2018 GF budget would provide public health with exactly the same amount it received in 2017.

Other level-funded services would include mental health care, corrections and the Department of Human Resources, which oversees crucial services like child protection, child care and food assistance. Collectively, these three agencies had asked for an additional $125.8 million for 2018. The House budget also would not give state employees a raise, a point of deep contention throughout Tuesday’s debate.

Regular shortfalls for services like Medicaid, mental health care and child care are a common refrain. The GF relies on a hodgepodge of revenue sources, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Read The Alabama Tax & Budget Handbook for more on how this deficit came to be and how Alabama can end it.

Increases for pre-K, juvenile probation officers in otherwise relatively flat education budget

As with the GF, funding increases in Alabama’s education budget next year would be the exception, not the rule. The Senate’s education budget committee Wednesday approved a $6.42 billion ETF budget that would boost state education support by only 1.4 percent next year. The K-12 Foundation Program would see a $14.5 million increase, allowing schools to hire about 150 new teachers in grades 4-6. Operating budgets for two-year colleges and universities would receive flat funding.

The ETF’s small increase would not be spread evenly across all educational services. K-12 schools would receive just 0.36 percent more. But debt service, primarily for university construction projects, would increase by more than $10 million – a 42 percent jump in one year. State-funded college scholarships for many Alabama veterans and their families are projected to cost $26.5 million more in 2018 than in 2017 – a 40 percent increase. SB 315, sponsored by Sen. Gerald Dial, R-Lineville, would tighten eligibility requirements for those scholarships in an effort to reduce the state’s future obligations.

Sen. Vivian Figures, D-Mobile, was one of several senators concerned about growing debt service costs because, she said, it was not immediately clear which projects had incurred those debts. “I’m sure none of us pay bills at home when we don’t know what they are,” Figures said.

Pre-K and juvenile probation officers are two major services that would receive more ETF money. Pre-K, which enjoys broad bipartisan support at the Legislature, would get an extra $15 million, a 23 percent increase. The state also would boost funding for juvenile probation officers by 19 percent, providing an additional $1.25 million from the ETF and an extra $500,000 from the GF.

Pared-down prison construction plan clears Alabama Senate

The budgets themselves weren’t the only major budgetary news at the Legislature this week. The Senate passed a major milestone in its two-year prison construction debate when it voted 23-11 Thursday for a plan that would fund construction of up to three new men’s prisons. The bill now awaits House action.

SB 302, sponsored by Sen. Cam Ward, R-Alabaster, would allow local jurisdictions, such as counties or regional associations of counties, to bid to build prisons. Successful bidders would be allowed to issue bonds to build two or three prisons to Department of Corrections (DOC) specifications and then lease the prisons back to the DOC for 30 years. The state would gain ownership of the prisons at the end of the lease period. The state would close all but three existing men’s prisons, leaving six total.

The bill would allow the state to borrow up to $325 million to build one new prison and renovate others, including Julia Tutwiler Prison for Women in Wetumpka, but only if localities agreed to build at least two new prisons. Those numbers are down sharply from Ward’s original plan, which would have let Alabama borrow $800 million to build four new prisons.

Ward estimated that the additional prison space would allow Alabama to reduce the population of each prison to less than 150 percent of capacity and reduce DOC operating and personnel costs. That would free up funds for lease payments to local governments, he said.

Sen. Linda Coleman-Madison, D-Birmingham, argued strongly during floor debate that the state needed to build a new women’s prison, as Ward’s original plan would have. “There are only 800 women in Tutwiler, and they’re not rioting or attacking guards,” she said, accusing the Legislature of ignoring the needs of incarcerated women. “The foundation is crumbling. Water is leaking. There is nowhere to sit other than your bed.”

Ward agreed that Tutwiler needed replacement or major renovations. But he said the cost savings from closing it wouldn’t be enough to pay the lease on a new prison.

The Southern Poverty Law Center also has criticized Ward’s bill, saying it would not solve problems with staffing, overcrowding and mental health care access in Alabama prisons. The bill is not a wholesale solution to the state’s corrections issues but is a step in the right direction, Ward told AL.com.

By Carol Gundlach, policy analyst, and Chris Sanders, communications director. Posted March 16, 2017.

2017 legislative update: End of judicial override draws closer as Alabama House committee approves Senate bill

The era of judicial override in Alabama death penalty cases came one step closer to an end Wednesday, when the House Judiciary Committee approved a bill that would end the unusual practice. SB 16, sponsored by Sen. Dick Brewbaker, R-Pike Road, now awaits consideration by the full House. The Senate passed the bill 30-1 last month.

Wednesday’s vote was the second time that the House committee approved a measure to end Alabama’s practice of allowing judges to override juries’ sentencing recommendations in death penalty cases. The committee voted 10-2 last month to approve a similar House bill: HB 32, sponsored by Rep. Chris England, D-Tuscaloosa.

Alabama is the only state in the country that allows judicial override in capital cases. The practice regularly is used to impose death sentences despite a jury’s sentencing recommendation of life in prison without the possibility of parole. (Read Arise’s fact sheet to learn more about judicial override.)

Alabama judges used judicial override 112 times between 1978 and early 2016, according to the Equal Justice Initiative. In 101 (or 90.2 percent) of those instances, override was used to impose a death sentence despite a jury’s recommendation of life without parole.

The House and Senate bills are largely identical, with two major exceptions. Brewbaker’s bill explicitly states that it would not apply retroactively to defendants sentenced to death before the bills passage. It also would preserve current Alabama law allowing juries to recommend death if 10 of 12 jurors agree. England’s bill would require a unanimous jury vote to impose the death penalty.

England said Wednesday that he is willing to accept the changes in the Senate version. His ultimate goal with the legislation, he said, is to end judicial override.

By Chris Sanders, communications director. Posted March 8, 2017.

2017 legislative update: Momentum to end judicial override in Alabama grows as bills clear committees in House, Senate

The movement to end judicial override in Alabama has won two big victories in the first two weeks of the Legislature’s 2017 regular session. The House Judiciary Committee voted 10-2 Wednesday to approve a bill to end Alabama’s practice of allowing judges to override juries’ sentencing recommendations in death penalty cases. The Senate Judiciary Committee voted 5-3 last week to advance a similar bill.

The bills – HB 32, sponsored by Rep. Chris England, D-Tuscaloosa, and SB 16, sponsored by Sen. Dick Brewbaker, R-Pike Road – now await consideration by the full House and Senate.

Alabama is the only state in the country that allows judicial override in capital cases. The practice regularly is used to impose death sentences despite a jury’s sentencing recommendation of life in prison without the possibility of parole. Alabama judges used judicial override 112 times between 1978 and early 2016, according to the Equal Justice Initiative. In 101 (or 90.2 percent) of those instances, override was used to impose a death sentence despite a jury’s recommendation of life without parole.

Bills differ on whether to require unanimity

The House and Senate bills are largely identical, with one major exception: England’s bill also would require a unanimous jury vote to impose the death penalty. Current Alabama law allows juries to recommend death if 10 of 12 jurors agree. House committee members Wednesday rejected an attempt to remove that provision from England’s bill.

Arise policy analyst Stephen Stetson testified last week in favor of ending judicial override and requiring unanimity for juries to impose a death sentence. “Members of a jury can reach the best result,” Stetson told senators.

By Chris Sanders, communications director. Posted Feb. 15, 2017.

2017 legislative update: Kicking the can: Windfall temporarily cushions shortfalls for Medicaid, other General Fund services in Alabama

The state budget hearings that ended Tuesday made one thing clear: There’s still no long-term answer to Alabama’s budget woes. The state once again likely will use one-time money next year to delay hard decisions about how to provide sustainable funding for vital services like Medicaid, child care and mental health care. And even though funding for K-12 and higher education will grow slightly in 2018, Alabama still hasn’t restored education support to where it was before the Great Recession.

Sen. Trip Pittman, R-Montrose, who chairs the Senate’s General Fund (GF) budget committee, said Alabama isn’t collecting enough money to support essential services in the long term. “We’re going to need more revenue if we’re going to live up to the responsibilities of our state,” Pittman said.

One-time money shields Medicaid from massive cuts – for now

GF revenues will be essentially flat in 2018, despite the growing costs of services like Medicaid and corrections, according to Legislative Fiscal Office (LFO) projections. The GF, which supports non-education services in Alabama, will have $1.94 billion available next year, LFO Deputy Director Kirk Fulford said. That’s about $4 million less than this year’s funding level.

Alabama’s funding problems would be much larger if Medicaid weren’t receiving a one-time infusion of $105 million in BP oil spill settlement money in 2018. With that money unavailable for 2019, the state’s budget picture will be bleak without significant new revenue to support health care and other services.

GF revenue may not have grown, but the costs of the services it supports have. GF agencies asked for nearly $140 million more than they received in 2017, Fulford said.

The largest request was from Medicaid, which asked for an additional $63.5 million (for a total of $869 million) from the GF to maintain current services and move forward with regional care organization (RCO) reforms designed to save money and keep patients healthier by focusing on preventive care. Alabama’s return on those state dollars is significant: Medicaid insures more than 1 million Alabamians – mostly children, seniors, and people with disabilities – and nearly 70 percent of its funding comes from the federal government.

Medicaid Commissioner Stephanie Azar warned lawmakers that if enough money isn’t available to complete RCO reforms by October 2017, the federal government will withdraw the Medicaid waiver that allows the changes to move forward. That would end the RCO reforms and cost Alabama nearly $750 million in promised federal funds.

Gov. Robert Bentley’s proposed $1.924 billion GF budget would provide $23 million more for Medicaid and level funding for most other services. Bentley also has requested $19 million to give state employees a 4 percent cost of living increase.

ALL Kids’ uncertain fate could force special session; DHR, courts, ALEA all request more funding

The future of ALL Kids is another major question mark for the GF. Congress must reauthorize the Children’s Health Insurance Program (CHIP), which supports ALL Kids in Alabama, by Sept. 30. The state didn’t have to put up any of its own money in 2016 or 2017 to support the ALL Kids program, which insures children whose low- and moderate-income families don’t qualify for Medicaid. But if Congress reverts to an earlier CHIP formula, Alabama once again would have to pay a share of ALL Kids’ cost. Medicaid and the Department of Public Health would need an additional $91 million to meet such a requirement, Fulford said. That could force the Legislature to return for a special session later this year.

Unmet GF needs extend far beyond health care. The state court system requested $106 million, a $9 million increase, citing a $3 million shortfall for juvenile probation officers and a $1.2 million shortfall for trial courts. Without the increase, the state would have to lay off juvenile probation officers, acting Chief Justice Lyn Stuart said. Sen. Vivian Figures, D-Mobile, raised serious concerns that such layoffs could lead to more juveniles falling into the adult corrections system.

The Department of Human Resources (DHR), which oversees crucial services like child protection, child care and the Supplemental Nutrition Assistance Program (SNAP), sought an additional $15.7 million, according to the LFO. The Alabama Law Enforcement Agency (ALEA), which oversees state troopers, requested an extra $37.4 million in GF money to continue current services, while the Department of Corrections asked for another $13.8 million. Bentley’s proposal to issue $800 million in bonds to build four new “mega-prisons” is likely to be a contentious topic at the Legislature this year.

‘We’ve got to start doing a better job of doing our job’

Many legislators expressed concerns about the Department of Mental Health, noting that it is at risk of federal court intervention. Rep. John Knight, D-Montgomery, made a passionate case for the state to invest more in community-based mental health care. “We’ve got to start doing a better job of doing our job,” Knight said.

Sen. Linda Coleman-Madison, D-Birmingham, said the state’s lack of investment in mental health care means many Alabamians who need treatment end up in the corrections system instead. Coleman-Madison emphasized that prisons cannot be treated as a substitute for mental health care. “Locking people up is not the answer,” she said. “We’re better than this.”

Regular shortfalls for services like Medicaid, mental health care and child care are a common refrain: The GF relies on a hodgepodge of revenue sources, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Read The Alabama Tax & Budget Handbook for more on how this deficit came to be and how Alabama can end it.

State Finance Director Clinton Carter pointed to declining revenue from Alabama’s oil and gas leases in the Gulf of Mexico as one of the causes for stagnant GF revenue. Since 2006, royalties from these leases, which flow into the Alabama Trust Fund (ATF), have dropped by more than $325 million. Because interest from the ATF helps support the GF, declining ATF revenues mean less money for GF services.

Carter did highlight some good news for the GF, though. Two years ago, the Legislature allowed “remote sellers” (online sellers that don’t have a physical presence in Alabama) to collect state and local sales taxes voluntarily on sales to Alabamians in exchange for keeping a small share of the revenue. The GF has received more than $50 million from these collections since 2016, Carter said.

But Carter said all the new revenue that has come into the GF since 2010 has gone to only two agencies: Medicaid and corrections. If those agencies are excluded from the calculation, funding for the remaining GF agencies has been essentially flat over this period.

Bentley seeks pre-K boost in slow-growing education budget

The funding picture is slightly better for the Education Trust Fund (ETF), which receives most of its support from sales taxes and income taxes that increase as the economy grows. Pre-K programs are a high priority in Bentley’s proposed ETF budget, which includes a $20 million (or 30 percent) increase for them. Bentley would direct $4.4 billion to K-12 education, $1.6 billion for higher education and $366.8 million for other expenses (such as rehabilitation services for children) supported by the ETF.

Nearly $6.42 billion will be available to fund education next year, Fulford said. That’s about $90 million (or 1.4 percent) more than was available in 2017. Challenges to the education budget include higher health insurance and retirement costs, Fulford said, as well as an open-ended commitment to cover higher education costs for spouses and children of deceased or disabled Alabama veterans.

By Carol Gundlach, policy analyst, and Chris Sanders, communications director. Posted Feb. 9, 2017.

2016 legislative update: Alabama avoids deep Medicaid cuts. What's next?

Alabama Medicaid is safe – for now. State lawmakers wrapped up their special session last week with a sigh of relief after approving a one-time solution to stop deep Medicaid cuts. The Legislature agreed to use BP oil spill settlement money to address Medicaid’s $85 million shortfall for 2017 and to give the program another $105 million in 2018.

HB 36, sponsored by Rep. Steve Clouse, R-Ozark, will reverse the 30 percent Medicaid payment cuts to pediatricians and other primary care doctors that had begun in August. The bill will allow Alabama to move forward with the Medicaid regional care organization (RCO) reforms that will emphasize preventive care in an effort to save the state money and keep patients healthier. The measure also will prevent Medicaid from having to cut outpatient dialysis, prescription drugs and other services next year.

The House on Sept. 7 voted 87-9 to approve the conference committee’s version of the bill. Later that day, the Senate passed it 22-8. This Associated Press story has more about the plan.

“We’re relieved that the Legislature pulled Alabama back from the brink of devastating Medicaid cuts that would have hurt more than 1 million people – mostly children, seniors, and people with disabilities,” Arise executive director Kimble Forrister said. “And we’re pleased to see lawmakers take steps to help shore up Medicaid funding for the next two years. But vulnerable Alabamians’ access to health care shouldn’t be left up to stopgaps or one-time money.”

BP bill was a short-term answer to a long-term problem

The bottom line is that HB 36 is yet another temporary solution. Lawmakers uttered the phrase “kick the can down the road” many times while debating the plan, and with good reason. The bill represents another missed opportunity for the Legislature to meet Medicaid’s need for a permanent, stable source of revenue that can meet the needs of a growing population.

Fortunately, the bill includes some modest relief for the General Fund (GF) budget. Lawmakers freed up a projected $35.2 million a year on average through 2026 for Medicaid and other GF services. That is the result of using most of the BP settlement funds to repay the Alabama Trust Fund (ATF) for money borrowed to prevent GF cuts in recent years. (The ATF receives royalties from oil and gas drilling off Alabama’s shores.) The bill also gives the state longer to repay ATF money borrowed in 2013-15, extending that deadline from 2026 to 2033. Those moves should ease pressure on the GF budget over the next decade, but they are still nowhere close to an adequate solution to Alabama’s recurring GF shortfalls.

The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenue sources, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Read The Alabama Tax & Budget Handbook for more on how this deficit came to be and how Alabama can end it.

The GF’s recurring shortfalls have dire implications for Medicaid, which is the backbone of Alabama’s health care system. Medicaid provides vital health coverage for more than one in five Alabamians – mostly children, seniors, and people with disabilities – and helps many rural hospitals and clinics keep their doors open.

“Medicaid is essential to the hospitals and clinics on which we all rely,” Forrister said. “Putting our state’s health care infrastructure at risk is no way to build a stronger Alabama. Neither is lurching from one crisis to another because of a repeated failure to solve the General Fund’s long-term shortfall.”

Alabama needs a lasting funding solution for Medicaid, and there is a strong economic and financial case that the solution should include Medicaid expansion. Closing the coverage gap for working adults and college students would mean a healthier, more productive workforce. It would mean thousands of new jobs across Alabama. And it would mean big savings for the state on mental health care and other services. Click here to read Arise’s fact sheet on how Medicaid expansion would benefit Alabama’s health, economy and budgets.

Lottery proposal dies, returns to life, then dies again

Alabama’s latest Medicaid funding crisis began in April when the Legislature enacted a GF budget that left Medicaid $85 million short of the amount needed to maintain current services. That move prompted public outcry and motivated the #IamMedicaid social media campaign that Alabama Children First launched with Arise’s support in April to help show the human faces behind the Medicaid debate. Responding to pressure from the public, advocates and health care providers, Gov. Robert Bentley called the Legislature into special session in August to consider two possible solutions to the Medicaid crisis.

Bentley’s proposed long-term answer was a state lottery with proceeds dedicated to Medicaid. (Arise takes no position for or against a state lottery, but no lottery plan would have generated revenue in time to stop the 2017 Medicaid cuts.) As a short-term measure until lottery revenue became available, Bentley proposed a bond issue against the state’s BP oil spill settlement, freeing up state dollars for Medicaid in 2017. Clouse, who chairs the House GF budget committee, had proposed a similar measure during the regular session.

The two plans met drastically different fates. By the slimmest of margins, the Senate passed a proposed constitutional amendment to establish a lottery. After a rollercoaster debate, dozens of proposed amendments and reconsideration of an initial vote against the plan, the House sent the lottery back to the Senate either to approve or refer to a conference committee. Instead, the Senate effectively voted to kill the lottery after passing one only a few days earlier. Disagreement over whether to allow casino-type games at dog tracks and other facilities led to a three-way deadlock among pro-lottery, anti-lottery and pro-casino senators, losing the lottery the supermajority of votes it needed for Senate passage.

Legislature passes BP bill to stop Medicaid cuts after touch-and-go debate

With the lottery dead, the Legislature’s only remaining option was to pass short-term funding for Medicaid during the final days of the special session. The result was a complicated bond issue guaranteed by proceeds from the BP oil spill settlement. By issuing bonds instead of accepting periodic payments from BP, Alabama could pay off state debts and create savings that would help fund Medicaid in 2017 and subsequent years.

The original House-passed bill would have given Medicaid an additional $70 million in 2017. Medicaid supporters in the Senate insisted on longer-term support and full Medicaid funding for 2017. Eventually, both chambers approved a conference committee report that provided Medicaid with the $85 million needed to avoid cuts in 2017, as well as $105 million in 2018.

In addition, the BP bill will support $120 million of road projects in Mobile and Baldwin counties and repay $400 million that the state borrowed in past years from the ATF. Legislators engaged in extensive and often heated debate over how much of the state’s BP settlement money should go to the coastal areas most deeply hurt by the 2010 oil spill. The debate broke largely along regional lines, with many north Alabama lawmakers arguing for more debt repayment and many south Alabama legislators seeking more investment in the Mobile area.

What’s next for Medicaid in Alabama?

Alabama Medicaid’s imminent funding crisis is over, but much work remains to ensure a strong future for our state’s health care system. Revenue from the BP bill should help Medicaid avoid further cuts in 2017 and will reduce the program’s projected shortfall in 2018. But when the Legislature returns in February, Medicaid funding for 2019 and beyond still will be uncertain.

Arise will continue to push for Medicaid expansion and permanent, adequate and stable tax revenue to help secure health coverage for children, seniors, people with disabilities, and working families across Alabama. “Closing the coverage gap for working people and college students would keep folks healthier, create thousands of jobs, and save the state millions of dollars on mental health care and other services,” Forrister said. “Expanding Medicaid would be a victory for Alabama’s economy, budgets and families.”

By Carol Gundlach, policy analyst, and Chris Sanders, communications director. Posted Sept. 15, 2016.

2016 legislative update: Lottery bill dead, BP settlement bill still alive in Alabama Legislature

A state lottery bill died, returned to life and then died again in the Alabama Legislature this week. The House voted 64-35 Thursday night for an amended version of SB 3, sponsored by Sen. Jim McClendon, R-Springville, that included revenue earmarks for Medicaid, education, and rural and community fire departments. That move came after the House reconsidered its initial 61-37 vote on the bill, which fell two votes short of the 63 votes required to pass a constitutional amendment. However, the Senate on Friday voted 23-7 against concurring with the House's changes, killing SB 3 for the session.

The House and Senate both adjourned in short order after that vote. The Legislature will take next week off and return Sept. 6 for the 10th of 12 allowable meeting days during the special session. Lawmakers still have not addressed Medicaid’s $85 million shortfall for next year. A state lottery (an issue on which Arise takes no position for or against) would not have generated revenue in time to avert those cuts.

A measure that could help stop the 2017 Medicaid cuts is still alive. HB 36, sponsored by Rep. Steve Clouse, R-Ozark, would use money from Alabama’s BP oil spill settlement to free up $70 million toward Medicaid’s $85 million shortfall. The House passed the bill 91-10 last week. The Senate has debated the bill but has not yet voted on it.

Medicaid provides health coverage for one in five Alabamians, mostly children, seniors, and people with disabilities. Alabama already has cut Medicaid payments to pediatricians and other primary care doctors by 30 percent starting Aug. 1, and even more cuts will follow if lawmakers do not address Medicaid’s funding shortfall.

By Chris Sanders, communications director. Posted Aug. 26, 2016.

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