Legislature’s Budget Funds Essential State Agencies, Avoids New Taxes

By Cam Ward

The Alabama Legislature is nearly two-thirds of the way through the 2016 regular session. While the Legislature is considering a number of bills related to everything from payday lending to the allocation of the BP settlement, the only constitutionally required duty of the Legislature is to pass budgets for both the Education Trust Fund and the General Fund (the budget for all non-education state spending).

On Wednesday, the Legislature fulfilled part of its constitutional obligation by passing a $1.8 billion General Fund budget. There has been some criticism leveled at the budget, which I will address, but first I want to describe how the General Fund budget was put together (the Education budget will likely be finalized by the second week of April).

Before the session began, lawmakers held a series of intense, public budget hearings in January with every major state department. Republican legislators were determined to take a new approach to budgeting your taxpayer dollars. This new approach, called zero-based budgeting, requires state agencies to prove from the ground up each line-item request, and forces legislators to ask hard questions and carefully examine each department’s spending habits.

The zero-based budgeting method has already accomplished two purposes this year.

First, it established a sound financial precedent for future Alabama legislatures. Requiring each agency to make a rigorous, line-by-line, case for their budget means agencies must prove to lawmakers that the agency’s mission and programs are still an essential function of government. In other words, the pressure is now on the state agency to prove why it should continue to receive taxpayer money.

The reform and downsizing of government can only happen by focused intentionality. Left to its own devices, a state agency will drift from year to year, treating its budget request as a birthright owed instead of a case to be proven.

Second, zero-based budgeting process has given the Legislature a more precise target of where to allocate taxpayer dollars. Some agencies, we realized, did not need an increase over last year’s budget and indeed some could make do with much less.

So, here are some details on the Legislature’s $1.8 billion General Fund budget. The budget slightly increases funding for Public Health, National Guard units, Corrections, and the Department of Human Resources. Most other state agencies were level funded, while the budgets for some like the Department of Labor and the Department of Finance were cut. (You can access the budget online at www.lfo.state.al.us).

A massive outbreak of tuberculosis in rural west Alabama meant Public Health needed every bit of its $10 million increase. Temporary additional money was needed for Corrections to implement the prison reform I led last year that will save millions of dollars over the next ten years and stave off a federal takeover of Alabama’s prisons.

By far, the most difficult challenge for state lawmakers continues to be the behemoth of Medicaid, the federally-mandated health insurance program for children, the elderly, the disabled, and the pregnant. More than one million Alabamians are on the Medicaid rolls, and the program consumes nearly 40% of the budget. For the upcoming fiscal year alone, the Legislature allocated $700 million for Medicaid, an increase of $15 million over last year.

Governor Bentley has said Medicaid’s funding should be increased to $785 million so Alabama can access additional federal matching dollars and finish implementing the reforms we passed a few years ago. Yet the options for increasing Medicaid’s budget by an additional $85 million – via lottery/gaming, new taxes, or moving money from the Education budget- are not palatable to most factions of the people or the Legislature.

The Legislature has done its duty in passing an austere General Fund budget that avoids new taxes and prioritizes funding for the state agencies that need it most. The Governor has said he will veto the budget, and if he does, the Legislature will override his veto. Governor Bentley may believe Medicaid needs more money: but if so, he needs to present a detailed plan showing from where the money will come.

Republican Senator Cam Ward represents District 14 in the Alabama State Senate, which includes all or parts of Shelby, Bibb, Chilton, Hale, and Jefferson counties. He serves as Chairman of the Senate Judiciary Committee. Follow him on Twitter: @SenCamWard