Alabama Forestry Foundation- Blackbelt Initiative (VIDEO)

The Foundation-LogoAlabama Forestry Foundation was founded in 1978 to advance the knowledge of the management and utilization of Alabama’s forests, to promote stewardship and sustainable management of Alabama’s forest resources, to protect the private property rights of Alabama landowners and to promote markets for Alabama forest products.

Education is a key component of the Foundation’s activity. Annual projects include Project Learning Tree, Teacher Conservation Workshops and the Architecture Student Tour in conjunction with Auburn University’s College of Architecture.

Another important educational project is the Blackbelt Initiative. The Blackbelt Initiative was instituted to promote career opportunities in rural Alabama’s forest industry by involving local public officials, educational professionals, business leaders, teachers, students and parents. Alabama’s timber industry offers a unique opportunity for rural students to learn a profession and return to their home communities to pursue employment. Too many of our good students are leaving rural Alabama and we will begin to feel that impact in the not-to-distant future.

In order to prepare these students for careers in forestry related employment, the Foundation recognizes the need for improvement in math and science skills.

To address this, the Blackbelt Initiative funds an Excellence in Math & Science Program at two rural schools; J.U. Blacksher in the Monroe County community of Excel, and Thomasville Elementary in Clarke County.  The Initiative also provides training support for teachers at McIntosh Elementary in Washington County.

forestThis program funds teacher “coaches” at the schools to provide support to teachers; assisting them to incorporate math and science skills within all aspects of the curriculum. Working closely with the Alabama Department of Education’s AMSTI professionals, the teacher “coaches” receive enhanced training and support to provide the best possible education and learning environment for these rural school children in grades K-6. Learning these important foundational skills will encourage the students to appreciate the future employment opportunities that are provided by Alabama’s forests.

Watch this video to learn more about the Foundation’s Blackbelt Initiative:

The Foundation’s critical work will be used demonstrate to public policy officials the need to better fund math and science skills at the earliest possible stage of a child’s education. The results the Foundation determines from this program will be communicated to these officials and will hopefully be used to encourage increased funding for AMSTI throughout the state.

This work would not be possible without the generous contributions that our members have provided to the Foundation. We gratefully acknowledge the generous support provided by The Sybil H. Smith Charitable Trust, The Ben May Charitable Trust, Boise, International Paper, John Estes Land Company, Louisiana Pacific Corporation, Scotch Land Management and the Weyerhaeuser Foundation.

The Foundation anticipates receiving a $250,000 grant for the FY16 school year to continue the Blackbelt Initiative. This grant, however, requires a dollar for dollar match. So we need your help.

Please consider making a tax deductible contribution to the Foundation’s Blackbelt Initiative in order for us to maximize the opportunities that this grant provides.

For more information on the Alabama Forestry Foundation, please visit www.alabamaforestryfoundation.org

AFA Legislative Wrap Up- Week 10

dollars1The Alabama Legislature re-convened on Tuesday, May 12th for its 10th week of work for the 2015 Legislative Regular Session. Meeting on Tuesday and Thursday, the Legislature has now used up 22 of its allotted 30 legislative days. The House has introduced 669 bills and the Senate has introduced 481 bills. The Legislature plans to re-convene Tuesday, May 12th and is supposed to work a normal two day week.

As we have discussed previously, the Legislature is mired in the midst of determining what to do about its main responsibility- passing a balanced budget for the state. This is accomplished by passing appropriations bills that set forth spending based on projections on what the anticipated revenues will be for the year.

Alabama, in FY14 (which is the latest full year of data available, as we are currently in FY15), spent $28.9 billion in total. The revenue to offset that spending comes from a variety of sources including state taxes and fees and federal funds.

The Legislature focuses on two primary appropriations bills; the $6 billion education fund that allocates for education related expenses and the $1.85 billion general fund (FY15 appropriation…more on this later) that allocates for all other state agencies.

Almost all of the remaining revenue is already dedicated to certain spending through statutory or constitutional “earmarks.” The practice of earmarking was adopted historically, frankly, because the citizens didn’t trust their lawmakers to spend their dollars wisely. Earmarks ensure that revenues are spent in the manner that the voters desire.

Tax revenue for the state is made up of numerous types of taxes.

Among these various taxes, “Growth” taxes are those revenue streams that increase during improving economic times. Calling them “growth” taxes is probably a misnomer because they also rapidly diminish during weak economies. Alabama’s “growth” taxes are its income and sales taxes.

The Education Fund bill’s expenditures are offset by revenues generated by earmarks of the growth taxes. The General Fund bill’s expenditures are offset by revenues generated by non-growth taxes.

Because of this dynamic, two things occur.

First, during periods of economic growth, revenue for education expenditures grow, while funds for state agencies remain stagnant.

Second, during periods of economic downturn, revenues for education expenditures rapidly disappear, while funds for state agencies remain stagnant. The rapid disappearance of revenues for education is exactly why the legislature implemented the Rolling Reserve Act. This legislation creates a reserve fund that protects against the dramatic loss of revenue during economic downturns.

The General Fund remains stagnant, regardless of the state of the economy, and thus is always gasping for more revenue if their expenses increase.

Last week, the Senate’s Finance & Taxation Education Fund Committee considered a bill, SB12, introduced by Senator Paul Sanford (R-Huntsville). This legislation would put all revenues attributed to the Education Fund and the General Fund into a newly created “Recurring Revenue Fund” and then would re-distribute 78% for education appropriations and 22% for state agency appropriations.

The legislation would allow the General Fund to grow as it would allow it to obtain a percentage of the growth taxes.

The bill was not favorably received as it died on an 8-5 vote on a motion to indefinitely postpone the bill, forwarded by Senator Gerald Dial and seconded by Senator Quinton Ross.

During committee discussion, two things were apparent.

First, a majority on the committee would prefer raising taxes or finding other sources of revenues to support the General Fund rather than take away any “growth” revenues for education. In fact, one member, Senator Vivian Figures, advocated expanding Medicaid as a way to properly fund the General Fund. Huh?

Second, there appears to be no desire on behalf of the majority of this legislature to address systemic issues affecting the way the state allocates its resources.

So what’s the next step?

As set forth above, the FY15 General Fund appropriations bill allocated $1.85 billion for all non-education state agencies.

This past week, the House Ways & Means General Fund committee passed a FY16 General Fund appropriations bill of $1.65 billion, $200 million less than last year. This bill is scheduled for consideration this Tuesday before the full House of Representatives.

Many legislators are concerned that this reduction in spending will result in catastrophic consequences and that the public will react in a negative manner. So they are still considering tax increases. Many tax increase proposals are pending in the House (see Governor’s $451 million package and the House’s $150 million package) and yet others are being discussed (taxes on soft drinks, etc.).

So it will be interesting to watch this week to see what action the Legislature takes on moving the appropriations bills. The Education Fund bill has passed the Senate and is scheduled for consideration in the House Ways & Means Education Committee on Tuesday. It is expected to pass with no material changes from the Senate version. It may come to the full House as early as this Thursday.

Because the Senate has made it fairly clear that they are not inclined to increase taxes, the General Fund bill is expected to be passed by the House and taken up in committee in the Senate this week with little change anticipated from the bill passed out of committee. The Governor has said that he will veto the bill in its current form.

Stay tuned….

House of Representatives Delays Special Order Calendar

Tax Day in the House of Representatives did not occur today.

house chamberThe House of Representatives’ Republican caucus met today and decided to not go forward with their previously released Special Order Calendar that contained 12 bills, nine of which were tax increase bills.

 

Chairman of the House Rules Committee, Mac McCutcheon (R-Huntsville) stated on the House floor that the leadership had determined that further work was necessary on some of the bills to make sure that they were ready for consideration on the House floor and that the calendar would be voted on again in Rules Committee at some point in the future.

So, in other words, the tax increase bills are not going to be considered in the near future but remain alive as they work to determine what their budget plan is as they move to the end of the legislative session.

Whether they had the votes to pass the tax increase bills is subject to debate.

A strong contingent of House members has emerged that has expressed no interest in voting for tax increases, especially if they take the vote and find out later that the Senate does not plan to pass them (or even take them up).

The Senate has not indicated any desire to balance the budget through tax increases. That position, of course, is subject to change at any time in the process.

Stay tuned…..

Top 20 Fiscally Responsible Legislators- As of May 12, 2015

top20From the Weeds polled 10 respected Alabama legislative insiders to determine a Top 20 ranking for the most conservative legislators based on fiscal issues only. Their responses varied widely and there were a few surprises.

 

Coming in at #5 is Representative Phil Williams (R-Huntsville) who gained attention this past week for voting twice against a massive increase in the tax rate on lubricating oil. The House Ways & Means Education committee voted two times on the bill; with the first vote failing, while several Republicans flipped on the second vote to allow it to prevail. Representative Williams was the only Republican to vote “no” both times.

Also of note is #6, Representative Will Ainsworth (R-Guntersville). Ainsworth has introduced legislation to remove all statutory earmarks which would allow the legislature to prioritize spending in order to address the state’s budget challenges.

No surprise is #1 Trip Pittman (R-Daphne). Pittman is known as a strong advocate for fiscal responsibility. He has sponsored and managed a joint resolution expressing the legislature’s desire to not expand Medicaid, introduced legislation to protect the Rolling Reserve Act in the constitution and has championed the overhaul of the management of the two-year college system.

Also not a surprise is #2 Senator Paul Sanford (R-Huntsville). Sanford has introduced a bill, which will have a public hearing in committee tomorrow, that would take all tax revenues into one pot and then distribute 78% to education appropriations and 22% to state agency appropriations. This would allow the traditional General Fund revenues to grow at the same rate as that of the current Education Fund revenues.

Somewhat of a surprise is the lower ranking garnered by #12 Senator Arthur Orr (R-Decatur). Senator Orr has been a strong proponent of reducing the size of state government, sponsoring bills that would consolidate state agencies and remove the State of Alabama from the retail liquor business.

Today is Tax Day in the Alabama House of Representatives and there will be numerous other fiscal votes occurring, discussed or proposed over the next week, so the poll will be conducted again this coming weekend to see if there is any shakeup to the Top 20.

The Alabama legislature is composed of 140 members; 35 senators and 105 members of the House of Representatives. Recognizing that probably 120 members will be irritated at not being listed, here are the results:

(#1) Senator Trip Pittman
(#2) Senator Paul Sanford
(#3) Senator Clay Scofield
(#4) Representative Ed Henry
(#5) Representative Phil Williams
(#6) Representative Will Ainsworth
(#7) Senator Bill Holtzclaw
(#8) Senator Rusty Glover
(#9) Representative Mike Holmes
(#10) Representative Arnold Mooney
(#11) Senator Dick Brewbaker
(#12) Senator Arthur Orr
(#13) Senator Bill Hightower
(#14) Senator Phil Williams
(#15) Representative Barry Moore
(#16) Senator Tim Melson
(#17) Representative Mike Jones
(#18) Representative Rich Wingo
(#19) Representative Ken Johnson
(#20) Senator Paul Bussman

AFA Legislative Update Week 9

tax dollarsThe Alabama Legislature re-convened on Tuesday, May 5th for its 9th week of work for the 2015 Legislative Regular Session. Meeting on Tuesday and Thursday, the Legislature has now used up 20 of its allotted 30 legislative days. The House has introduced 646 bills and the Senate has introduced 467 bills. The Legislature plans to re-convene Tuesday, May 12th and is supposed to work a normal two day week.

Budget finance hysteria appears to have become the order of the day for the legislature.

The Tax & Spend Republicans in control of the House of Representatives have gone nuts. This week they released their plan to address the budget “shortfall,” which includes tax increases, enacting cost savings and pursuing a “compact” to give the Poarch Creek Indians exclusive control over gambling in the state.

The House leadership issued a “continuing” special order calendar which takes effect next Tuesday, May 12th. The calendar contains 12 bills, nine of which are tax increases.

Here are nine tax increase bills that are to be considered which will raise an estimated $145 million per year:

(1) HB572 (Todd) raising the tax on cigarettes by 25 cents a pack, $60 million.
(2) HB568 (Weaver) assessing fees on federally qualified health care centers, $3.5 million.
(3) HB581 (Beech) revising the business privilege tax, $39 million.
(4) HB240 (Johnson, K) repeals exemption from income tax withholdings, $12 million.
(5) HB593 (Johnson, K.) removing exemption on out of state residents that purchase cars in Alabama, $1 million.
(6) HB578 (Sells) increasing fees for issuing vehicle titles, $14 million.
(7) HB267 (Clouse) raising the tax on car rentals from 1.5% to 2%, $6 million
(8) HB587 (Collins) removes excise tax and applies sales tax to lubricating oil, $8.2 million.
(9) HB595 (Faulkner) requires owners of coin-operated amusement machines to pay a business license tax in lieu of sales taxes, $1 million.

Three other bills on the agenda address “streamlining” state government:

(1) HB584 (Holmes) consolidating properties owned by the Alabama Historical Commission into the Department of Conservation and placing its administrative duties in the Department of Archives & History, $1.1 million
(2) SB76 (Marsh) abolishes the 12 member Building Commission and transfers its duties to the Division of Construction Management within the Department of Finance. Also creates the Divisions of Facilities Management, Leasing Management and Energy Management, no material savings.
(3) HB257 (Knight) creates a new 12 member Permanent Joint Legislative Committee on Oversight and Accountability to provide continuous oversight of all state government operations, no material savings.

So this is what things have come to?

$145 million in tax increases and $1.1 million in reduced government spending.

Really?

Is it really easier for them to increase taxes than it is to actually cut the size of government?

Ironically, on Thursday, while the Senate was locked down in a filibuster that was designed to keep from getting to a bill that would remove the state from retail alcohol sales (estimated to save $15 million per year), the House Ways & Means Education Committee was ramming through a bill to increase the tax on lubricating oil (estimated to raise $8.2 million per year).

Regardless of what the leadership in the House of Representatives does, it appears that the Senate may take a more thoughtful and deliberate route.

orrRight now, the only material attempt in the Senate to address the budget question has been the legitimate efforts by Senator Arthur Orr to address meaningful government spending reform.

But that effort is meeting significant opposition….from both sides of the aisle.

Of course, there is also Senator Marsh’s proposal to authorize gambling at dog tracks, enter a “compact” with the Poarch Creek Indians and to institute a lottery. Though originally believed to have significant support, there are indications that this measure may not be on the fast-track.

Other than that, there is no defined plan to yet emerge in the Senate.

Here is the cold, hard, simple truth.  The state expects to collect approximately $1.6 billion in current revenues for FY16.  Perhaps a solution (that is not being considered) is to live within our means and pass a general fund appropriation bill that only spends what we have.

Stay tuned…..

ALERT! Massive Lubrication Oil Tax Bill Greased for House Passage

oil barrelsThe House of Representatives Ways & Means Education Committee gave a favorable report yesterday to legislation that would dramatically increase the tax on lubricating oil.

 

 

collinsHB587 sponsored by Representative Terri Collins (R-Decatur) removes an excise tax of $0.06/gallon and replaces it with the standard state and local sales tax.

AFA is currently surveying our membership, but the impact will clearly be felt by the loggers and sawmills.

skidderOne AFA sawmill member reports that their taxes would increase 952%!

Wow!

The bill was introduced on Thursday of last week and hurriedly referred to the Ways & Means committee chaired by Representative Bill Poole (R- Tuscaloosa).

pooleSurprisingly, the committee met on Wednesday to have a public hearing on the bill. After testimony concluded and in violation of prior precedent, Chairman Poole called for an immediate vote. Usually, a public hearing is held and the vote occurs at the next scheduled committee hearing.

Clearly, there was concern by certain members of the committee that this increase was too dramatic.

When the vote was called, a request was made that the vote be a “recorded vote” as opposed to a “voice vote.” Much to the consternation of Chairman Poole, Representative Ed Henry seconded the motion and there was no choice but to have the member’s votes recorded.

The vote on the bill failed by an 8-6 vote. Voting FOR the tax increase were Republicans Bill Poole, Steve McMillan, Alan Baker, Danny Garrett, Mark Tuggle and the bill’s sponsor Terri Collins.

Voting AGAINST the bill were Democrats James Buskey, Craig Ford, Rod Scott and Patricia Todd and Republicans Alan Boothe, Donnie Chesteen, Ed Henry and Phil Williams.

In an unusual move, Chairman Poole called a second special meeting of the committee on Thursday, while the House was engaged in a filibuster on another issue. Once again the committee took up HB587 and this time the bill was given a favorable report.

huntsville williamsThe only Republican voting against the bill was Representative Phil Williams (R-Huntsville). An amendment was offered to appease the counties and municipalities ensuring that a small percentage of the tax increase will remain for them (the original bill removed this).

The bill now continues on its lubricated fast track. It’s scheduled for consideration before the full House of Representatives on Tuesday, May 12th (next week).

The bill is but one of nine tax increase bills that the Republican leadership has proposed for consideration next week on a special order calendar.

AFA Legislative Update- Week 8

The Alabama Legislature re-convened on Tuesday, April 28st for its 8th week of work for the 2015 Legislative Regular Session. Meeting on Tuesday and Thursday, the Legislature has now used up 18 of its allotted 30 legislative days. The House has introduced 595 bills and the Senate has introduced 442 bills. The Legislature plans to re-convene Tuesday, May 5th and is supposed to work a normal two day week.

The State’s fiscal situation is clearly the number one item occupying the time of legislators.

dollars2The State of Alabama is a $28 billion enterprise, but the legislature principally focuses on two appropriation bills every year; the approximate $6 billion education fund appropriation and the $1.8 billion general fund appropriation (funds balance of non-education state agencies). The rest of the $20 billion+ expenditures by the state are earmarked monies derived from federal and local sources, fees and taxes.

The FY16 (begins October 1, 2015 and ends September 30, 2016) Education Fund Appropriation bill (SB179) has passed the Senate and is now in the House Ways & Means Education Committee. The FY16 General Fund Appropriations bill (HB135) has not moved out of the House Ways & Means General Fund Committee chaired by Steve Clouse.

Last year’s (FY15) General Fund appropriation was $1.877 billion. Recurring revenues attributed to the General Fund were $1.552 billion. Added to this is $325 million of “one-time” or “non-recurring” funds and prior year carryover. Of this $325 million of “one-time” revenues, $145 million came as a contribution from the corpus of the Alabama Trust Fund; this being the third year of a three year plan to remove money from the ATF to prop up the General Fund.

For FY16, recurring revenues are estimated to be $1.545 billion and available “one-time” funding is estimated to be $45 million, so essentially the state has approximately $1.59 billion of revenue available for the General Fund appropriation.

Governor Bentley has proposed a $2.03 billion FY16 General Fund Appropriation, exceeding projected available revenues of $1.59 billion by $703 million. His budget includes increasing Medicaid by $115 million and Corrections by $40 million and a payment of $32 million, the first of five payments required to payback the ATF General Fund rainy day account (required by the Constitution to be fully paid by 2021).

So where is the extra $703 million going to come from?

The Governor has proposed a projected $541 million in additional taxes and “un-earmarking” $187 million in taxes currently dedicated to the Education Trust Fund.

The $541 million in additional tax revenue is proposed to come from increasing the sales tax on autos ($200 million), increasing tobacco taxes ($205 million), requiring combined reporting for corporate income taxes ($20 million), increasing the financial institution excise tax ($1 million), removing exemptions to the insurance premium tax ($25 million), increasing the public utilities license tax ($47 million), eliminating exemptions for individual income taxes ($12 million) and increasing the auto leasing tax ($31 million).

The Alabama Legislature has not jumped on the Governor’s bandwagon.

They are looking at the General Fund appropriations bill a little differently. From their perspective, they would consider “level-funding” the FY16 appropriations at FY15 levels a great victory.

So, in their view, FY15 spending was $1.877 billion and they have $1.59 billion in revenue as things stand currently. Thus, there is an approximate $300 million “shortfall” that they have to address.

There are many suggested solutions being floated around.

One solution is to reduce expenses by consolidating state agencies and driving efficiencies. SB203 (Orr) would merge the Alabama Forestry Commission with the Department of Agriculture and Industries. It currently is pending before the Senate Finance & Taxation General Fund committee. SB115 (Orr) would phase Alabama out of the business of retail liquor sales. Potentially providing a $15 million annual benefit, it has passed out of committee and awaits consideration before the full Senate. The bill requires implementation by October 1, 2018, so this revenue would not be available until FY19, so it does not help with FY16. HB584 (Holmes) would consolidate the Alabama Historical Commission and the Department of Archives and History.

A second solution is to reduce expenses by reducing public employee benefits. SB410 (Shelnutt) reduces the number of state paid holidays, potentially saving $24 million annually. Bill has passed committee and awaits action before the Senate. HB588 (Greer) also limits the number of paid state holidays for state employees.

A third solution is to reduce expenses by shifting current obligations. HB490 (Clouse) suspends repayment to ATF for FY16.

A fourth solution is to increase revenues by increasing taxes pursuant to the Governor’s plan. None of these bills have been considered in committee; HB139 (McMillan) tobacco tax, HB142 (Hill) requiring combined reporting for corporate income taxes, HB240 (Johnson) repealing withholding exemptions from state income taxes, HB267 (Clouse) increasing sales tax on leased autos to 4%, HB268 (Clouse) increasing sales tax on purchase of autos, HB201 (Greer) increasing the financial institution excise tax, HB276 (England) imposing a public utilities license tax and HB277 (Knight) removing exemptions to the insurance premium tax.

The fifth solution is to increase revenues by taxing gambling activities. Democrats have offered two bills that would create a lottery; HB471 (Ford) is a proposed constitutional amendment to establish a lottery to fund Medicaid and HB472 (Ford) is a proposed constitutional amendment to establish a lottery to fund educational scholarships. Additionally, Republicans are expected to introduce legislation soon; the Marsh Plan would be a constitutional amendment to expand gaming at Poarch Creek Indian Casinos (requiring a Compact), existing dog tracks and create a lottery, and the expected Hubbard Plan that would by statute require a Compact with the Poarch Creek Indians.

A sixth solution is to redirect existing revenue through modifying the Rolling Reserve Act which could potentially “free-up” significant dollars. Estimated receipts for the Education Trust Fund for FY16 are $6.248 billion. The cap imposed by the Rolling Reserve Act is $5.961 billion, leaving $287 million in excess funds. SB281 (Holley), HB330 (Boothe), and HB322 (Poole) all would propose changes to the Rolling Reserve Act. None of these have received any action in committee.

A seventh solution is to redirect existing revenue through removing earmarks. SB12 (Sanford) establishes the Alabama Recurring Revenue Fund and all education and general fund revenues would be directed to the Fund which then would re-distribute the funds on a percentage basis to GF and ETF. This would allow the GF to participate in growth tax revenues. HB533 (Ainsworth) removes all statutorily enacted tax earmarks and directs them to the general fund. HB153 (Poole) is the Governor’s bill to un-earmark certain taxes currently directed to the Education Fund and re-direct them to the General Fund. None of these proposals have been addressed in committee.

Other solutions include HB475 (Knight) setting up a constitutional amendment removing federal taxes paid as an Alabama income tax deduction, HB478 (Knight) setting up a constitutional amendment removing federal income taxes paid as an Alabama income tax deduction while also removing the sales tax on food, and HB477 (Knight) constitutional amendment increasing ad valorem taxes 1 mill for General Fund. None of these bills have moved in committee and, because they require constitutional amendments, are not expected to be considered to help the FY16 appropriations.

As you can see, there are lot’s of proposals being tossed around and discussed.  AFA will continue to monitor these discussions.  Our position is clear…we do not support a “band-aid” approach to managing the state’s finances.  We believe that there is ample existing revenue and plenty of opportunity to continue to drive cost reductions in state government.  Systemic changes are needed in Medicaid, government structure and public employee benefits.  “Band-aid” solutions merely push the real problems down the road.

Stay tuned….