Special Session Update- Day 1

capitol.jpgThe Alabama legislature convened yesterday for the first day of the 2015 First Special Session…and promptly adjourned until Monday, August 3rd.

Not sure about the math, but this leaves the possibility of having 9 additional work days in the session prior to expiration of the 30 calendar days allowed (unless they work on the weekend).

So the question of the day in the halls of the Statehouse was “what day will the Second Special Session start?”

A bill requires 5 working days at a minimum to pass both bodies of the legislature and to be transmitted to the Governor. Bills that reach the Governor less than five days before the end of the session may be approved by him within ten days after adjournment. Bills not approved within that time do not become law. This is known as a “pocket veto.”

If the legislature again fails to pass a General Fund appropriations bill that satisfies the Governor, the Governor can just sit on what they do pass and effectively will have vetoed it. At that point, there will be a requirement for a second special session.

The Governor has proposed a series of bills that essentially will provide an additional $302 million in revenue. These revenue measures include; increasing the business privilege tax ($38 million), increasing the tobacco tax ($70 million), doing away with the FICA exemption ($182 million) and not allowing withholding for state income taxes ($12 million). A soft drink tax has also been proposed in lieu of removing the FICA exemption ($182 million).

He has also proposed to utilize the prospective BP settlement for economic damages to offset state debts incurred in the past. The $1 billion anticipated amount would offset the amount borrowed by the General Fund from the Alabama Trust Fund in 2010 ($161 million) and 2013-2015 ($435 million). The balance would then go into the General Fund to use for ongoing operations. The $1 billion BP settlement for economic damages is expected to be $200 million up front and the remainder funded over a period of 18 years.

Removing the FICA exemption and not allowing withholding for state income taxes increases revenue to the Education Trust Fund by $194 million. In order to get the revenue into the General Fund where it is needed, the Governor has proposed removing the earmark for the use tax which would move approximately $225 million from the Education Trust Fund to the General Fund. This action would result in the Education Trust Fund being reduced by $31 million, which will not be wildly popular with legislators.

The House of Representatives adjourned yesterday without taking any bill introductions. Bills that increase or decrease revenue must originate in the House of Representatives. At this point, it is unclear what members of the House will be sponsoring the Governor’s bills.

State Budget Mess- Part II

trustWell…here we go again. Time to buckle the chin straps and get the ankles taped. No, it’s not football season, yet…unfortunately.

But it is time to bang a few heads and tee it up for another round of Montgomery politics. This chapter may get rough and it most certainly will be ugly.

The Governor has called the legislature back for a special session to pass an appropriations bill that will address the spending needs of the General Fund agencies. They will convene at 4 p.m. this evening and will have 30 calendar days to conduct 12 legislative work days.

The need for the special session was never in question. The timing is causing a little head scratching. Everyone had been planning that the special session would begin in mid-to-late August. The Governor surprised most everyone by moving that time-table up a month.

So here we are…starting the special session today…and there is no plan. Nada. Zip. Zero. Well, that’s not entirely correct. There are a bunch of plans/ideas, it’s just that none of them seem to have the necessary votes to get to the finish line.

The Governor has offered his solution…raise taxes.  He has reduced his desired revenue increase package from $541 million down to $350 million (Ummm….see BP Settlement), but offers no restructuring of government.

Senate President Pro Tem Del Marsh has his gaming plan. But, even with Pat Dye’s help, there doesn’t seem to be much support for it and again, no restructuring of government.

House Speaker Mike Hubbard has proposed a mixed bag of Indian gaming and targeted taxes. It appears that no one in the Senate is interested in this plan, so if the House passes tax increases they will be out on a limb all by themselves, and again, it does not include any restructuring of government.

So where does this leave us?

At the conclusion of the regular session, the legislature passed an appropriations bill that spent only the amount of current revenue anticipated for FY16, approximately $1.65 billion. The Governor vetoed it. The media and the state agencies went nuts.

The taxpaying citizens of Alabama, however, have been strangely quiet.

Perhaps they believe that government should be fiscally responsible. Perhaps they believe that plenty of revenues are being sent to Montgomery. Perhaps they believe that government should be smaller instead of continuing to grow unchecked.

Perhaps our elected leaders should listen to those that elect them.

The General Fund appropriations bill is just a small part of the fiscal picture. The reality is that Alabama will spend nearly $28 billion in FY16. The Education Fund appropriation sets forth nearly $6 billion in spending. Add General Fund and Education Fund appropriations together and you get about $7.6 billion. The difference in this amount and the $28 billion is made up with earmarked taxes, fees and federal dollars.

Perhaps we need to set some priorities in state government and see that those are funded adequately.

But that’s not easily done. Earmarked taxes preclude the legislature from moving that revenue from one spending need to another as priorities change.

Removing earmarks is just a piece of the puzzle. What is needed is a master plan.

A master plan that acknowledges that our current public pension system is not sustainable; a plan that determines priorities for the state; a plan that provides flexibility for addressing these priorities; a plan that addresses the incredible growth of Medicaid; addresses prison overcrowding, etc., etc.

The average tax paying citizen wants to see the plan. Not just the revenue side, but the spending side as well. Until that plan is developed, there will not be support for increased revenues.

The plan may materialize in the special session, but certainly will not be completed. We have been waiting for the plan since, well…forever. Certainly since we were promised in 2012 that if we allow for a raid of the Alabama Trust Fund that the political leadership would begin the process of putting a plan in place.

But no difficult decisions have been made and now we find ourselves in another “crisis.” For goodness sake, they couldn’t even make the decision to get the state out of the retail alcohol business; much less address the systemic issues that are driving the state into an economic disaster.

Please…no more band-aids. Please don’t fall victim to the promise of a BP windfall. Please don’t enact “targeted” tax increases.

Let’s start the process of fixing this mess.

Exploring the Backroads- Crooked Oaks Lodge

As our legislators have returned home for the time being, things have settled down a bit in Montgomery allowing the AFA staff to get out of the office and visit our members across the state. Alabama is blessed with many beautiful locales and we will begin a series of articles focusing on some of the most intriguing….

First up….Crooked Oaks Lodge, Notasulga, Alabama

Crooked Oaks 2Crooked Oaks Lodge (www.crookedoaks.com) is owned and operated by former Auburn football coach and legend Pat Dye. The lodge is a 6-bedroom, 4 bath guesthouse. Four bedrooms are located upstairs in the lodge and open onto “The Gallery” Crooked Oaks 6which is a mini-museum of football memorabilia from Coach Dye’s 40 years in football. The two remaining bedrooms are downstairs and have private baths.

In the great room, you can relax in front of the stone fireplace or the 60-inch television or gather around the fire-pit on the patio next to the lodge. Best of all, in the late afternoon/early evenings, time is best spent in one of the numerous rocking chairs on the porches that allow for some of the best quiet time in Alabama while overlooking a lake used by a variety of waterfowl.

In addition to the main lodge, there are additional accommodations that include a 3-bedroom, 2-bath cottage and a 1-bedroom, 1-bath guest room. All the rooms on the property have beautiful rustic wood paneling and hand-hewn cedar beds.

Nestled among 700 acres in Macon County near the Notasulga community, the lodge provides a get-away destination that offers deer, quail and turkey hunting, a great place to stay for Auburn football weekends or just an opportunity for some peace and tranquility.

DSC_0033Crooked Oaks is the site of AFA’s annual Auburn Area Regional Reception and easily accommodates our 100+ guests. This reception has become one of the most popular membership events and is eagerly anticipated each year.

Coach Dye lives on the property and so it is not unusual for him to come by to visit. He has several dogs that also like to come by and provide a warm welcome.DSC_0055

A visit to Crooked Oaks is not complete without a guided tour of Coach Dye’s Quail Hollow Gardens (www.quailhollowgardens.com), his Japanese Maple Gardens and Nursery. Trees are available for purchase and the best time to view the tree’s fall colors is October and early November. The gardens boast over 5,000 trees and is well worth the time to check it out.

quail hollow 2

Next up…Dream Ranch, Guntersville, Alabama