September 11, 2015
Legislative Days 1-4
The Alabama Legislature completed the first week of the second special legislative session today. Legislators were called back into session by Governor Bentley to fill a $200 million hole in the General Fund Budget before the 2016 Fiscal Year Begins on October 1. If the legislature is unable to raise enough revenue, state agencies and services will be cut.
Both chambers met Tuesday through Friday introducing bills and working revenue measures through committee in order to find a solution. It is yet to be seen if what the House passed will pass the Senate.
The House will reconvene next Monday September 14 at 10:00am and the Senate will reconvene the same day at 2:00pm.
House Passes General Fund Budget And Tax Increases
In an effort to pass a General Fund Budget based on new revenue instead of cuts, the House this week passed a number of revenue generating measures. One of those bills was HB3 by Representative Connie Rowe which would increase the tax on cigarettes by $0.25 cents. In all, the House passed five different measures that would raise nearly $107 million in taxes.
On Friday the House reconvened for the fourth legislative day. The previous day one of the solutions proposed by Representative Mike Hill, HB21, failed to receive final passage by the entire House. It was an increase to the cap on the Business Privilege Tax that would have given the General Fund a net gain of $22 million. Without this key component of the tax revenue package, Representative Steve Clouse, Chairman of the General Fund Budget Committee, on Friday proposed a substitute budget making up for the lack of revenue.
Representative Clouse’s reworked budget level funds Corrections/Pardons & Parole including $16million for prison reform, and level funds Medicaid with $50 million for Regional Care Organizations. The substitute also takes $500k from the Auditors office and transfers it to the Finance Department. Other state agencies will be cut an additional 2.5%. Representative Clouse’s substitute passed the House 59-37 and will be considered by the Senate Finance & Taxation General Fund Committee as early as Monday.
Senate Committee Fails To Pass Lottery Bill, Tax Revenue Bills Pass Committee
This week Senators began work on their own plan to fix the budget shortfall. Unfortunately, the Senate has been hesitant to pass bills that increase taxes on the people of Alabama. Senator Paul Sanford put forth two ideas to help fix the budget. One plan that died on the Senate floor would have restructured the way funds are distributed to the Education Trust Fund and the General Fund, known as the Alabama Shared Revenue Fund. His other plan was a bill to authorize a public vote to establish a “power ball” like lottery. The bill failed to receive final approval by the Tourism & Marketing Committee which is chaired by Senate Pro Tem Del Marsh.
After initially being pulled from the committee agenda, the Finance & Taxation General Fund Committee considered, and passed, the tax revenue bills passed earlier in the week by the House. Those bills included an increase to the cigarette tax, taxes on pharmacies, nursing homes, adjustments to the rolling reserve fund, and changing the distribution for some use taxes.
Next week the House and Senate will reconvene and the Senate will take up the General Fund Budget in committee and the tax revenue bills will be heard by the entire Senate. The General Fund passed by the House is contingent on the revenue measures also passed by the House. If one of them fails to receive final approval by the Senate, the General Fund Budget will have to be reworked to adjust for the amounts of revenue raised.