The 2012 Legislative Session is in its seventh week and they are no closer to finding a solution to the daunting financial dilemma facing the General Fund Budget than when the session began on February 7th. There is even some talk that decisions or solution to the nightmare may be delayed to a Special Session later this year closer to the start of the fiscal year, which begins October 1st. However, that procrastinating would cost the beleaguered General Fund an additional $200,000 that it does not have at this time. Maybe the legislature is hoping that some manna from heaven will reign down on them and they can avoid the Armageddon that awaits. This miracle has occurred the past few years in the form of federal stimulus dollars but that rodeo is up. The chickens have finally come home to roost.
This $360 million shortage in the General Fund looms over the legislature like a dark ominous cloud. This shortfall amounts to a 23% cut in revenue for the Fund. The General Fund is the major source of money for Medicaid, prisons, courts, public safety, child welfare and most non-education functions of state government.
The General Fund agencies will have to face draconian cuts because there will be no new taxes enacted. Most of the GOP lawmakers, as well as Gov. Robert Bentley, have taken a hard line approach when it comes to any revenue enhancement measures.
All state departments will not feel the same pain. The reliance on General Fund revenues varies from agency to agency. For example, the Alabama Department of Transportation or Highway Department receives no General Fund money. Its revenue derives primarily from the state fuel taxes as well as federal grants. The state’s gasoline taxes are earmarked directly to them.
Other agencies like Medicaid and mental health use General Fund money to qualify for matching federal grants. Therefore, a cut in state dollars would be doubly painful. Medicaid is matched over two to one by the federal government. They send us more than $2 for every $1 we spend. Currently at least 80% of all nursing home residents in Alabama are paid for by Medicaid. Over 50% of all live births in the state are also paid for by Medicaid.
If legislators make drastic cuts to Medicaid and prisons you could see a scenario in Alabama next year where Mr. and Mrs. John Doe in Arab get a letter from their local nursing home telling them to come get Aunt Susie. She can no longer stay there. That same day, your 16 year old teenage daughter will have to be driven to Huntsville to get her drivers license because the test will only be given in the four metropolitan counties. On the way to Huntsville they will probably pass by a couple of convicted felons who have been released early from prisons in the state or either walked away without being noticed because there was only one prison guard to keep an eye on 500 prisoners.
The Education Budget projections do not reveal as bleak a picture as the General Fund. The legislature may very well be able to level fund education in the state.
If the budgeting problems are not enough for legislators to dwell over, there are a myriad of issues that they need to tackle in the second half of the annual session. For example, the governor has asked the legislature to start a limited number of charter schools in the state. Last year’s immigration law has to be tweaked to make it workable and the Republican majority wants to provide more tax breaks to businesses that create jobs. In addition, the Legislature must address the requirement to reapportion their own districts as called for by the Constitution of Alabama and the United States.
The next seven weeks should be interesting.
See you next week.