AFA Legislative Update

statehouse3The Alabama Legislature returns this week to work its 15th and 16th legislative days.  The pace of work has been brisk and principally directed towards passing the constitutionally mandated spending bills as early as possible, perhaps before they take Spring Break on the week of March 28th.

General Fund Appropriation

The Senate has passed a General Fund Appropriation bill (SB125) and Chairman Steve Clouse has quickly moved the bill through the House Ways & Means Committee to allow floor consideration as early as Tuesday of this week.  The House committee made some slight changes to the Senate version and the Senate is expected to concur with those changes if the bill comes out of the House in similar fashion to what was passed from committee.  There is expected to be much discussion regarding Medicaid funding and it will probably be a contentious day in the House.  If the Senate concurs with the House bill, the Governor is expected to veto the bill because it does not include enough for Medicaid.  The legislature is expected to override the Governor’s veto and is anticipating a potential special session to address the issue later in the year.

Education Fund Appropriation

The Appropriation bill for education spending, HB117 sponsored by Representative Bill Poole (R- Tuscaloosa) has passed the House of Representatives and now moves to consideration by the Senate’s Finance & Taxation Education Fund committee.  The committee, chaired by Senator Arthur Orr (R- Decatur) is expected to consider the bill in the next week or so.  The bill passed with no opposition in the House.

Fuel Tax Increase

The House of Representatives is expected to take up the “Accountability” portion of the fuel tax increase package, SB180 sponsored by Senator Gerald Dial (R- Lineville), on Wednesday in the House Transportation committee.  The long-awaited introduction of the second bill, the actual fuel tax increase itself, is also expected to occur this week.  The bill, sponsored by Representative Mac McCutcheon (R- Madison), is expected to include an increase in both gasoline and diesel taxes, a mechanism to automatically adjust the tax on a four year basis (without any future votes required) and an index from which to make the adjustment.  The index most prominently discussed to date would include an average of surrounding contiguous states.  AFA is opposed to any new fuel tax increase until transparency and fiscal accountability and a change in prioritization (allowing counties more revenue) for existing fuel taxes is implemented.  An automatic adjustment mechanism, especially one linked to other state’s actions, is also not supported.

Property Tax Increase

A bill, SB136, sponsored by Senator Vivian Figures (D- Mobile) would set up a state-wide referendum to increase property taxes by 5 mils to be dedicated to Medicaid funding.  The bill was given a favorable report out of the Senate’s Finance and Taxation General Fund Committee last week.  The committee, chaired by Senator Trip Pittman (R- Montrose), voted 7-6 in favor of the bill.  During the committee’s discussion, it was apparent that several committee members were in favor of discussing property tax increases as part of the overall “solution” for the constantly challenged General Fund Appropriations process.

The six senators that opposed the bill were Clyde Chambliss (R- Prattville), Steve Livingston (R- Scottsboro), Tim Melson (R-  Florence), Paul Sanford (R- Huntsville), Larry Stutts (R- Tuscumbia) and Cam Ward (R- Alabaster).  Please contact these members and express your appreciation for their support in opposing the property tax increase.  Their contact information can be obtained here.

The seven senators voting in favor of the property tax increase included 4 Republicans and 3 Democrats:  Trip Pittman (R- Montrose), Greg Albritton (R- Range), Bill Holtzclaw (R- Madison), Jabo Waggoner (R- Vestavia Hills), Priscilla Dunn (D- Birmingham), Billy Beasley (D- Clayton) and Bobby Singleton (D- Greensboro).



AFA Legislative Update








The Alabama Legislature met for three legislative days this past week and has now completed one third of the allotted 30 working days for the session.

General Fund Appropriation

Senate Finance & Taxation General Fund Chairman Trip Pittman (R- Montrose) quickly moved the General Fund FY17 Appropriation bill through committee and the full Senate this week. The bill allocates $1.82 billion in spending for non-education government agencies.  The bill includes level funding of $685 million for Medicaid. The Alabama Forestry Commission received $6.7 million in General Fund dollars which is a reduction of $300,000 from the current year. The funding bill appears to be on an expedited schedule and now goes to the House of Representatives.

Fuel Tax Increase

The first bill of a two bill package passed out of the Senate’s Transportation and Energy Committee yesterday. A substitute to SB180 was offered by the bill’s sponsor, Senator Gerald Dial (R- Lineville). This bill, referred to as the “Accountability” bill, sets forth the criteria for allocation of any new revenues that may materialize from a planned second bill to increase fuel taxes. Dial’s Substitute made more money available to local uses than the previous proposal. The Substitute sets aside $32 million generated by the increased taxes for a new ATRIP program that will be used as a payment stream for a new bond issue for county road and bridge projects. Additionally, each county will receive an additional $500,000 that was previously available but only with a match requirement. The Substitute removes the match requirement. There is no obligation on the counties to use their money to address structurally deficient bridges.

The second bill will actually increase the tax on diesel fuel and gasoline. Sponsored by Representative Mac McCutcheon, the bill will be introduced in the House of Representatives and is expected to propose an increase of $0.12/gallon on diesel and gasoline over a three year period. A $0.12/gallon increase results in a whopping $400 million tax increase. Local entities would get an increase of $180 million over their current allocation.

Workers Compensation

AFA is promoting a bill to reduce the uncertainty of workers compensation expense regarding future liabilities faced by the Forest Fund and its clients. SB122, sponsored by Senator Arthur Orr (R- Decatur), received a favorable vote in the Senate’s Fiscal Responsibility and Economic Development Committee on a 12-2 vote.

Special thanks should be sent to Senator Orr for handling the bill, Senator Phil Williams (R-Gadsden) the Chairman of the Committee and the following Senators for voting with us; Bill Hightower (R- Mobile), Clay Scofield (R- Guntersville), Clyde Chambliss (R- Prattville), Greg Reed (R- Jasper), Jim McClendon (R- Springville), Larry Stutts (R- Tuscumbia), Paul Sanford (R- Huntsville), Steve Livingston (R- Scottsboro), Tim Melson (R- Huntsville), and Trip Pittman (R- Montrose). You can find the contact information for the Senators at

The only two Senators voting against us were Senators Cam Ward (R- Alabaster) and Bobby Singleton (D- Greensboro). Representatives of the plaintiff lawyers association testified at the committee hearing against the bill.

The bill now moves to consideration by the Rules Committee for placement on the Special Order Calendar to allow for consideration by the full Senate.

AFA Legislative Update

capitol.jpgThe Alabama Legislature convenes today for Day 5, the first of an anticipated three day workweek. The pace of activity has been brisk as it appears the members desire to complete their work in an expeditious manner.

Each year, the legislature must address “sunset” legislation by the 10th legislative day. Sunset legislation involves evaluating the need to keep agencies, boards and commissions operational. If the legislature decides that one is not needed, they would simply not vote to extend it or, in effect, “sunset” it. The fact that the legislature is addressing these bills early is indicative of their desire to move quickly through the session.

The only other responsibility the legislature has is the passage of appropriations bills. At this point the General Fund Appropriations (SB125/HB104) and the Education Trust Fund Appropriations (HB117) bills have been introduced but only reflect the Governor’s plan. The legislative versions are expected to be substituted in committee. Currently no committee hearings have been scheduled to address the appropriations bills.

Tax Incentives

A couple of good tax incentive bills are making their way quickly through the process. SB131 creates an income tax for contributions to health savings accounts mirroring what is allowed by federal law. SB131 is sponsored by Senator Paul Sanford (R- Huntsville) and has been given a favorable report out of committee.

HB36 creates a tax incentive for a small business that hires new employees during the course of the year. Sponsored by Representative Kyle South (R- Fayette), the bill has passed the House and has been assigned to the Senate’s Fiscal Responsibility and Economic Development Committee.

Fuel Tax Increase

The plan to increase fuel taxes began its process in the Senate last week. The plan involves the passage of two bills; the first is an “accountability” bill that will determine how the new tax revenue is distributed and spent and the second will be the actual tax increase. SB180, sponsored by Senator Gerald Dial (R- Lineville), was brought up in the Senate’s Transportation & Energy Committee last Thursday. Dial’s bill would allocate 2/3 of the new revenue to the State’s DOT and 1/3 to local entities (counties and municipalities).

Senator Greg Albritton (R- Range) offered a substitute to SB180 that would; (1) distribute the new revenue at 55% to the DOT and 45% to the locals, (2) require any new tax revenues received by the counties to be used to replace/repair structurally deficient bridges first, and (3) allocates the existing diesel tax revenue at 55% to the DOT and 45% to the local entities (currently 98% goes to DOT). If adopted, Albritton’s Substitute would re-prioritize $62 million to counties and municipalities that currently goes to DOT, regardless if whether a tax increase is adopted. AFA is supporting the Albritton Substitute.

The second bill, increasing the fuel tax, is expected to be introduced in the House by Representative Mac McCutcheon (R- Huntsville) only after the Senate has passed the “accountability” bill. The tax increase being discussed is 6 cents/gallon the first year, an additional 3 cents/gallon the second year and an additional 2 cents/gallon the third year. The total 11 cents/gallon increase is equivalent to a $368 million increase.

Legislative Action Alert!

The Alabama Senate’s Transportation & Energy Committee is considering SB180 sponsored by Senator Gerald Dial (R- Lineville). The Alabama Forestry Association and the Alabama Farmer’s Federation are working together to support a Substitute to SB180 that is being offered by Senator Greg Albritton (R- Bay Minette).

Senator Albritton’s Substitute would re-allocate $62 million of existing diesel tax revenue to the counties for road and bridge projects. This would give the counties much needed revenue without having to raise taxes.

Please contact your county commissioners immediately and let them know about Senator Albritton’s Substitute and ask them to call their senators and express support for the Substitute.

If you are able to make contact with a commissioner, please let Bill Harris know the outcome of your discussion at We need to know what contacts have been made.

The Senate Transportation and Energy is chaired by Gerald Allen (R- Tuscaloosa) and is made up of Senators Greg Albritton (R- Bay Minette), Clyde Chambliss (R- Prattville), Linda Coleman (D- Birmingham), Gerald Dial (R- Lineville), Jimmy Holley (R- Elba), Bill Holtzclaw (R- Madison), Steve Livingston (R- Scottsboro), Jim McClendon (R- Springville), Arthur Orr (R- Decatur), Greg Reed (R- Jasper), Quinton Ross (D- Montgomery), Hank Sanders (D- Selma), Clay Scofield (R- Guntersville), Cam Ward (R- Alabaster) and Tom Whatley (R- Auburn).

Supporting us today in committee were Senators Albritton, Allen, Chambliss, Holtzclaw, Livingston, Orr, Scofield and Sanders. Please contact these senators (their contact information can be found at and express your appreciation for their support and encourage them to continue to support the Substitute.

The Transportation and Energy Committee is expected to meet early next week on Tuesday, February 16th so time is of the essence.

Ala Legislature- Day 2

The Alabama legislature met briefly yesterday to accept committee reports and bill introductions.  The next meeting day will be Tuesday, February 9th.

Of note, both the GF Budget Appropriation (HB104/SB125) and the ETF Budget Appropriation (HB117) bills advanced by the Governor were introduced.  Every indication points to the members wanting to address their constitutional mandate to pass a balanced budget quickly.

sanford2Senator Paul Sanford (R-Huntsville) has introduced several bills to address the funding distribution between the GF and the ETF.

SB130 would direct that 100% of the “use” tax , excise tax and the insurance premium tax be directed to the GF.  This would have the effect of transferring $181 million from the ETF to the GF.  This bill is the Governor’s bill and the foundation for his budget that he delivered to the legislature yesterday.

Alternatively, Sanford has also introduced (again) his bill, SB16 to “pool” all revenues and then distribute them 78% to the ETF and 22% to the GF.  This mechanism would allow the GF to participate in growth taxes.

As a reminder; the FY16 ETF Appropriations (current year) is the largest appropriation for education (other than the federal stimulus years) in the State’s history.  The ETF FY17 appropriation is anticipated to be even larger.

Medicaid continues to be the main problem for the GF.  Last year it was funded at $685 million (out of a total $1.65 billion GF appropriation) and this year the Governor is seeking an additional $100 million increase.  In an effort to address this issue, Senator Vivian Figures (D-Mobile) introduced SB136 yesterday which would increase property taxes by 5 mills to be directed towards Medicaid.  This is not likely to pass.

Other action yesterday:

SB62 by Senator Tom Whatley (R- Auburn) and HB43 by Representative Alan Boothe (R- Troy) both passed out of their respective committees yesterday.  Their bills would eliminate the prohibition of hunting whitetail deer and feral swine over bait.

HB36, The Small Business Act, sponsored by Representative Kyle South (R- Fayette) passed out of committee and is ready for consideration by the House.  This bill, part of the Republican House Caucus agenda, provides a $1,500 tax credit for employers that bring on new employees during the year.

Alabama Legislature 2016 – Day 1

statehouseThe Alabama Legislature convened yesterday for the first day of the 2016 Regular Legislative Session.  Both chambers met briefly and then adjourned to attend the Governor’s State of the State Address.

The first day saw 207 bills introduced, less than a normal first day.  This is most likely indicative that the mood of the body is to pass the budgets and get out of town.  Frankly, the legislators are still worn-out from a contentious 2015 that saw the regular session and two special sessions keep them in Montgomery for a great part of the year.

The good news is that the legislature and the Governor have indicated that they will not be seeking any new taxes.  Clearly, after last year, the members went home and heard a loud and clear message from their constituents that no new revenues are needed in state government.  The focus should be on doing the most with what revenues are available.

The focus this year will be on “zero-based” budgeting.  While many opinions are held regarding what that really means, generally it is understood that state agencies must approach their budgets with first identifying the priorities of the services they provide and then determining what resources are needed to achieve those priorities.  Lower priorities will most likely not be funded.  The current system of budgeting essentially takes last year’s appropriation and adjusting it to reflect increased costs and new programs.  This process does not allow for setting priorities.

Senator Arthur Orr (R-Decatur) introduced SB122, an Alabama Forestry Association sponsored bill that addresses workers compensation reform that will be beneficial to ForestFund, AFA’s sponsored workers compensation self insurance fund.  The bill was assigned to the Senate’s Fiscal Responsibility and Economic Development Committee chaired by Senator Phil Williams (R- Gadsden), who plans to hold a committee hearing to address the legislation as early as next week.  There will be opposition to this bill.

Also of note, Senator Cam Ward (R- Alabaster) introduced SB15 to un-earmark approximately $400 million in taxes to direct them to the General Fund as opposed to specific state agencies.  Included in his bill is the Forest Products Severance Tax and the Forest Product Processor’s Privilege Tax.  These taxes amounted to $5.865 million in FY15 and had previously been directed to the Alabama Forestry Commission.  AFC’s total budget for FY15 was $22.4 million which included the $5.865 earmarked tax and also a $8.757 million General Fund Appropriation.  AFC’s budget for FY16 (the current year) is $25.2 million which includes a $7.042 million General Fund Appropriation.  Potentially losing the earmark for AFC will have a dramatic effect on services provided to Alabama’s timberland owners.  Additionally, by removing the earmark, the bill also removes the statutory requirement that AFC must use 85% of the severance tax for fire protection.

Must See TV- RSA’s Bronner Encourages State Employees to become more “Hostile”

bronnerYellowHammer News reported yesterday that RSA chief David Bronner concedes that nearly $1 billion in taxpayer funding is keeping the Alabama pension system afloat.  See the article by mashing here.


The article also references a video of Bronner addressing the Alabama State Employees Association on September 24, 2015.  Part I of his speech can be found here and Part II is here

At the 8:18 minute mark in Part II, Bronner advocates for the State Employees union to become “stronger, tougher, meaner…more hostile” in their advocacy efforts in convincing state legislators and the governor to expand government.

As you will note from watching the videos, Bronner’s presentation included advocating for higher state taxes and expansion of Medicaid under ObamaCare.  He also takes an off-color shot at Donald Trump and attacks a state legislative pension reform committee, the Koch Brothers, Troy University and the Alabama Policy Institute.

According to the Birmingham Business Journal in an April 8, 2015 article “Top of the List:  Alabama’s highest-paid state employees,” Bronner is the highest paid state employee at $572,097.  Nine of the top 25 paid state employees are employed by RSA.  The article can be found here.

Meanwhile, Alabama’s pension system is only 65.9% funded (and that’s using RSA’s own numbers) with a total unfunded liability of $15.2 billion.  This is after the taxpayers have contributed nearly 12% of the entire discretionary budget, nearly $1 billion, in FY16 appropriations.



Increased Fuel Taxes in the Pipeline Heading Your Way

The public spectacle of mass hysteria during the recent 2015 Regular Session and two special sessions has been well documented. The media, state employees and state agencies (especially Medicaid and its providers) effectively convinced legislative officials that the “sky was falling.”

As has been pointed out previously, the sky is not falling. But more on that at a later date.

gastaxQuietly, behind the scenes, an even more disturbing plot has been hatched to raise revenues by increasing fuel taxes.

Representative Mac McCutcheon (R-Huntsville) introduced legislation in the first special session (HB50) and the second special session (HB28) that would dramatically increase the fuel tax.

Currently, Alabama citizens pay $0.19/gallon of state tax on gasoline and diesel, regardless of the underlying fuel cost. McCutcheon’s legislation would immediately raise that by $0.05/gallon and then raise it $0.02/gallon per year until the rate of tax equals 15% of the “current year price.”

The U.S. Energy Information Administration’s “U.S. Regular Gasoline Prices” for the Gulf Coast Region on 9/28/15 was $2.015/gallon. Diesel for the same time period was $2.323/gallon. The 15% “cap” proposed in the McCutcheon legislation would be $0.30/gallon for gasoline and $0.35/gallon for diesel in addition to the existing $0.19/gallon.

Had McCutcheon’s legislation passed (and assuming gas/diesel prices remained constant), the 2015 taxes on gasoline would be $0.26/gallon ($0.19 existing + $0.05 immediate increase + $0.02 annual increase) or a whopping increase of 37%. Additionally (again assuming gas/diesel prices remain constant), the tax would increase $0.02/gallon per year…each year…until the total reached $0.49/gallon (an estimated 11 years of automatic increases) or a total increase of 160%!  And that’s assuming that the “current year price” does not escalate over time.


The McCutcheon legislation actually was approved by the House Transportation Utilities and Infrastructure committee on September 14, 2015, which positioned it for possible consideration before the full House of Representatives. Given their willingness to raise revenue to continue to grow the size of state government, it’s somewhat surprising the House did not pass the bill.

The House TU&I Committee that voted the bill out is composed of Chairman Lynn Greer (R-Rogersville), Vice Chairman Joe Faust (R- Fairhope), George Bandy (D- Opelika), Will Ainsworth (R- Guntersville), Napoleon Bracy (D- Prichard), Barbara Drummond (D- Mobile), Victor Gaston (R- Mobile), Dexter Grimsley (D- Newville), Nathaniel Ledbetter (R- Rainsville), Phillip Pettus (R- Killen), Chris Sells (R- Greenville), Kyle South (R- Fayette) and Margie Wilcox (R- Mobile). A committee composed of 13 members, 9 of which are Republicans…voted to increase fuel taxes by 37% in 2015 alone!

When asked about the vote, Will Ainsworth said “I was upstairs (in the Senate) working with (Senate ProTem) Del (Marsh) on another matter when the committee met.  I would have voted no, but I certainly wasn’t there to vote yes.  I understand that it was a voice vote.”

Do we need to increase fuel taxes? Let’s look at that.

Currently the gasoline tax revenue is shared between the state (45%) and the counties and municipalities (55%) and the diesel tax goes almost entirely to the state.  In FY14, gasoline taxes generated $399 million and diesel taxes generated almost $144 million. The state uses its funds to match federal funds (ahem…that is taxpayer funds as well) and as a result, the State DOT had a total budget in FY14 of $1.45 billion.

Meanwhile, the counties and municipalities got about $200 million of the taxes collected. By the time you distribute this among 67 counties (one-half equally and the other half by population), not much trickles down to rural counties. And of that, it’s in the county’s discretion to spend it on replacing/repairing bridges, resurfacing roads, paving dirt roads, etc.

Enacting McCutcheon’s legislation would have increased gasoline taxes by $150 million and diesel taxes by $72.8 million, or a total of $222.8 million, in 2015 alone, with only $35-$40 million of that amount available to the counties and municipalities.

Even if all the allocated amounts to the counties were used to replace/repair bridges, it wouldn’t even begin to address the problem.

gastax2The graph above (produced by the American Petroleum Institute in 2012) would indicate that Alabama’s existing total tax rate (federal, state and local combined) is situated fairly normally for a southern state.

Fuel cost is one of the most critical expense items for logging operations (which includes transporting to the mills).  But, loggers also need well maintained rural roads and bridges…which costs money and most rural counties don’t have enough.

So do we need to raise fuel taxes?  Maybe, at some point….but, before we agree to that, we need to see more funding going to the counties. A good start would be to allocate the existing diesel tax in a similar fashion to that of the gasoline tax.

In the short term….one thing is for sure. McCutcheon’s bill (or one similar) will be back in the 2016 Regular Session. The Alabama Forestry Association will be formulating a position on this legislation and you are welcome to provide your input.

Stay tuned….

**Updated 10/6/15 to reflect the Ainsworth comments regarding the committee’s voice vote.

2015 2nd Special Session- Wrap Up

skyThe second Special Session of 2015 has finally concluded and the hay is in the barn. The Alabama Legislature passed several measures that allowed them to cobble together a FY16 $1.75 billion appropriation bill for General Fund spending on non-education state agencies.


This appropriation level is 4.5% less than the FY15 funding level of $1.84 billion.  According to the mainstream media, state employees and state agencies, the world is going to come to an end. “The Sky is Falling.”

What you don’t hear is that state government in FY16 will be 1.5% bigger than FY15.

sky2The State’s General Fund Appropriation represents only 6% of the total expenditures of the state. In FY16, the state will spend $29.4 billion and, by far (74%), the greatest source of funding is earmarked taxes and federal funds. That means the legislature only has control over 26% of state expenditures. That has to change, but we will address that in the future.

Back to what happened in the second special session, where the legislature essentially passed five meaningful pieces of legislation.

First was the increased tax on cigarettes which is estimated to increase revenue to the General Fund by $66 million. This bill passed in the House by a vote of 52-46. Of the 46 “no” votes, only 17 were Republicans. 48 Republicans in the House voted for the tax increase. In the Senate, the bill passed on a 21-13 vote. Of the 13 “no” votes, 9 were Republicans. 16 Republicans in the Senate voted for the tax increase. The Republican members that supported the tax increase were essentially telling the taxpayers of Alabama that no further reductions in state government were achievable.

The second and third items were referred to as Medicaid “provider” taxes that increase revenue to Medicaid (and thus the General Fund) by $17 million. An increase paid by nursing homes and pharmacies on their services were spread over the entire base of their clients. This additional revenue allows the state to match more federal dollars. Ahem…federal dollars are tax dollars as well, aren’t they?

Pharmacists will pay a “supplemental fee” of $0.15 for every prescription they fill in Alabama. In return, they will receive an increase in the amount of reimbursement they get through dispensing fees approved for Medicaid recipients. According to testimony before the legislature, a pharmacist will need to be serving a clientele composed of 8% Medicaid recipients in order to “break even.” So if they serve over 8%, they will make more money than before. Medicaid beneficiaries are estimated to be 25% of Alabama’s population. No wonder they agreed to this tax increase. The losers will be Alabama’s tax payers that pay federal taxes. Uhhh….isn’t that most of us?

The fourth major item was the transfer of part of revenues derived from the use tax to the General Fund. Previously earmarked for the Education Trust Fund, the use tax is a tax that is put on products purchased out of state to make up for the loss in sales tax from in-state purchases. Prior to the passage of this legislation, the use tax was distributed 25% to the General Fund and 75% to the Education Trust Fund. Now it will be 53% to the General Fund and 47% to the Education Trust Fund. This results in $80 million more to the General Fund and, of course, $80 million less to the Education Trust Fund.  But don’t worry, the education community has been well taken care of.

The fifth and final important item was a change made to the Rolling Reserve Act which sets a cap on education spending. At the end of each fiscal year, any “excess” between actual revenue the state receives and the cap is placed in a “stabilization” account. Prior to the change, all the excess transferred to the stabilization account was to be put into a proration prevention account, up to 20% of the prior year’s education appropriation (approximately $1.2 billion). Once that was filled up, any further excess could be used for any education related non-recurring capital related expense. This legislation changes the cap formula (takes out the lowest year of the prior 15 years appropriations, thus raises the cap allowing more spending) and also changes the distribution to the proration account (instead of 20% and $1.2 billion in protection, it’s now 7.5% or $450 million in protection) and also changes the rate of distribution to the proration account (unlimited previously, now its, for the first year, 2% of prior year education appropriations or an estimated $120 million and 1% each year thereafter).

So what does this mean? Well at the end of this fiscal year (September 30, 2015), there will be an estimated $150 million surplus. Previously, this surplus would have completely gone to fill the proration account. With this legislation, $120 million will go to the proration account and $30 million will be increased spending set forth in a supplemental appropriation that will come in the next Regular Session.

During the special session, education interests were screaming bloody murder about the “raid” to prop up the General Fund. Here’s the truth…after all is said and done, education expenditures increased by 1.42% for FY16. This does not even take into the account what will occur in future years with an increased cap, immediate spending from the surplus and, oh yeah…bills were passed during the 2015 Regular Session that resulted in increases to the ETF of approximately $40 million.

The drumbeat for raising revenue has already begun in anticipation of the 2016 Regular Session which begins next February where work will begin on the FY17 appropriations. We will continue to hear that the state will shut down, state parks will close, troopers will be off the roads and on and on and on….

By the way…did you know that the Alabama Law Enforcement Agency got an increase of 39% for FY16? Hmmm….wonder why they don’t tell us that?

Stay tuned…..

2015 2nd Special Session – Day 6


The Alabama State Senate voted yesterday to increase taxes.

16 Republicans joined with 5 Democrats to approve the tax measures. 13 “no” votes included 9 Republicans; Paul Bussman, Clay Scofield, Phil Williams, Paul Sanford, Shay Shelnutt, Slade Blackwell, Bill Holtzclaw, Rusty Glover and Bill Hightower.  Senator Dick Brewbaker did not have a recorded vote.

The Senate increased taxes on cigarettes ($66 million), prescription drugs ($13 million, $8 million net to Medicaid) and nursing home beds ($10.5 million, $8.3 million net to Medicaid).

They transferred $80 million in use tax from the Education Fund to the General Fund.

They also amended the Rolling Reserve Act to raise the cap for Education spending (by taking out the lowest year’s spending level of the prior 15) and reduced the size and manner of filling the Stabilization fund (now 7.5% of the prior year education funding level as opposed to 20%, filled). Net effect creates an estimated additional $30 million in spending for education in FY16.

Both the Senate and House will be working now to finalize the FY16 General Fund Appropriations bill that will fund state operations beginning October 1st.  The changes passed yesterday will most likely increase the spending levels by approximately $163 million over the bill that was passed in the General Session, but will still require cuts when compared to the current year spending levels.

Early indications are that the Governor will sign the budget at this level.

Stay tuned…..