2015 General Session of the Legislature is in the Books

statehouseYesterday, the legislature ended their work for the 2015 General Session by adjourning sine die after utilizing 29 of their allotted 30 days.

By the way, in the event you might be curious, “sine die” is derived from the Latin phrase “without day”. So when the legislature adjourns sine die, they adjourn “without assigning a day for further meeting or hearing.” Thank goodness for Wikipedia.

Why did they quit early?

 

Frankly there wasn’t much left to do except to pass a bunch of bills that have been piling up which weren’t all that important.

They passed the important bills though. The legislature’s main responsibility is to ensure the funding for the continuing operations of state government. They accomplish that principally through two bills; the Education Fund Appropriations and the General Fund Appropriations.

They had passed the Education Appropriations Act earlier in the session and the Governor had already signed it.

The challenging one, that has everyone wringing their hands in consternation, is the General Fund Appropriations Act which essentially allocates all the non-earmarked revenues for the benefit of non-education state agencies.

Last year’s General Fund appropriation was approximately $1.84 billion, which was based off of revenues made up of $1.64 billion of recurring taxes and $200 million in “one time” transfers (including $145 million that was taken from the Alabama Trust Fund).

This year, there were no more “one-time” transfers (the Band Aids) and the recurring taxes were level from last year at $1.64 billion.

piggybankSo they had $1.64 billion to spend and that’s the size of the appropriation bill that ultimately passed.

One could make a quite legitimate argument that the legislature has taken the fiscally responsible approach by only spending what they have.

Unfortunately, the state’s media, the general fund agencies and the Governor do not agree. The Senate passed the FY16 General Fund Appropriations Act yesterday and it was returned to the House of Representatives (because it had a few changes from the previously passed House version). The House quickly took it up, concurred with the Senate changes and passed it and sent it to the Governor.

The Governor vetoed it.

After passing the bill, the Senate adjourned sine die, so they were done for the session. The House chose to override the Governor’s veto and then sent it to the Senate. But, whoops…they are no longer around, so it dies without becoming law.

So what happens now?

Thankfully, Alabama’s constitution requires that the legislature pass a balanced budget. So they will have to come back at some point in a Special Session to finish their constitutionally mandated work.

The Governor will choose when that will be and what can actually be addressed during the session.

So what are the options that are on the table?

Option One. Force efficiencies in state government, take the savings and apply those revenues to adequately fund priorities. Sounds good right? Wrong.

The easiest and lowest hanging fruit was to get the state out of the liquor business. It would have generated at least $15- $20 million in savings. Dead on arrival. Legislators wanted to protect ABC landlords and the Governor wanted to protect his turf. The failure of that effort sent a signal that government efficiency measures were not going to happen

Option Two. Raise Taxes. Republicans raising taxes? Don’t laugh. It almost happened. The House Republican Caucus had essentially agreed to move forward with $150 million in new taxes. Thankfully, a small group of conservative House members came to their senses on the day of the vote and was able to convince their peers that they were about to take an action that they would deeply regret later on. But there are plenty members left that think targeted tax increases are ok. Tobacco and soft drink taxes seem to be especially vulnerable. They probably hope that maybe nobody will notice these taxes and they can get away with it without political consequences.

Option Three. Increase Revenues through gambling. Though nothing moved along these lines, it’s still a possibility.

Option Four. Do nothing. Be fiscally responsible and spend only the revenue that you have. Wait to see if the sky falls. This option was adopted during the regular session.

save-spendOption Five. Totally restructure how state government is funded. Set priorities, drive efficiencies, put limits on growth, set aside savings for economic downturns, remove earmarks from tax revenues, adopt “zero based budgeting” and develop a tax revenue base that is broad and equally distributed to all taxpayers.  And put the solutions in the Constitution to make sure future generations are protected.

The Governor desires a $2.3 billion General Fund appropriation.  Be prepared, because over the next several months, all you are going to hear about is that state government is going to shut down.

Most legislators would be happy with “level funding” at FY15 levels.

Regardless of who prevails, there will be a “frenzy” to find $200 million up to $700 million of new revenue.

Most likely a special session will result again in Option Four. We will be advocating for Option Five.

Stay tuned…..

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