Category: Blog

Arise legislative recap: May 10, 2019

By Matt Okarmus

The Consumer Financial Protection Bureau (CFPB) is threatening to reverse a rule that promotes financial security for borrowers across the country. This week, we look at the CFPB’s proposal to eliminate a requirement for payday lenders to determine whether borrowers have the ability to repay before lending to them. Arise’s Mike Nicholson discusses this proposed change ahead of the May 15, 2019, comment deadline.

 

Visit this link by May 15, 2019, to tell the CFPB to keep this important consumer protection intact.

CHIP funding uncertainty shows a core problem in Alabama’s budgets

By Carol Gundlach

The Alabama Legislature has yet to decide how to fund health coverage for more than 170,000 children next year. And that’s a symptom of a fundamental illness that has plagued our state’s budgets for decades.

The Children’s Health Insurance Program (CHIP) is one of Alabama’s most successful programs. Through Medicaid and ALL Kids, CHIP supports health coverage for 14% of Alabama’s children. Alabama’s 1997 adoption of CHIP and its later decision to expand eligibility to children in households that make up to 317% of the federal poverty level (nearly $68,000 for a family of three) has made our state a leader on children’s health coverage in the South.

Alabama’s investment in CHIP ensures that kids can get the health care they need to learn and thrive. And CHIP is a great deal for our state. For every $1 Alabama spends on CHIP, the federal government provides more than $3 in matching money. (CHIP parents pay an annual fee and copays that can’t total more than 5% of their annual income.)

Unfortunately, Alabama often struggles to provide its share of CHIP funding, even during a “good” budget year. Gov. Kay Ivey recommended that CHIP’s state match for 2020 be paid out of the Education Trust Fund (ETF), which receives most of the “growth tax” revenue from sales and income taxes. But the Senate balked at this idea and removed CHIP from the ETF budget it passed last week. Meanwhile, the General Fund budget that the House passed in April also includes no CHIP funding.

In the next couple of weeks, both chambers are expected to take up the budget that the other one passed. In the meantime, the parents of more than 170,000 Alabama children wait to learn whether their kids will still have health insurance this fall.

It’s time to stop lurching from one crisis to another

CHIP is one of Alabama’s most popular programs, and we fully expect the House and Senate to fund it. But the uncertainty illustrates the central problem of Alabama’s budgets: We don’t bring in enough money to meet basic needs. In past years, Medicaid has been the subject of funding crises. This year, the threat of a federal lawsuit over abominable conditions in state prisons may force a special session. And in 2021, CHIP may be at risk as a temporary boost to the federal matching rate ends.

Every year, Alabama seems to have at least one essential service that it struggles to fund adequately. And every year, the Legislature juggles too little money, robs Peter to pay Paul, or grasps at another source of one-time funding to squeak through another year. Barely maintaining the status quo is no way to promote shared prosperity. And it’s no way to make life better for everyday Alabamians.

Alabama Arise has a solution to break the cycle of uncertainty and invest in our state’s future. And it’s a solution that’s beginning to interest lawmakers as they consider how to pay for CHIP, Medicaid, corrections and other necessities.

Ending the FIT deduction would strengthen Alabama’s future

That solution is to end Alabama’s income tax deduction for federal income taxes (FIT). It’s a loophole that only two other states – Iowa and Louisiana – allow in full. (Three other states allow a partial deduction.) And it’s a skewed tax break that primarily benefits the richest households among us.

For those who earn $30,000 a year, the FIT deduction saves them about $27 on average. But for the top 1% of taxpayers, it’s worth an average of more than $11,000 a year. Closing this tax loophole would bring our state’s upside-down tax system closer to balance. It also would allow Alabama to end the state sales tax on groceries without cutting school funding.

Ending the FIT deduction would bring in an additional $719 million a year. That’s enough to pay for Medicaid expansion, secure long-term CHIP funding and invest in education, corrections and other pressing needs.

And this new revenue wouldn’t be just one-time money. It would be there every year to help Alabama meet the needs of the state and its people.

As one legislator told us recently: “This is the only plan that makes sense.” We think so, too, and we’re working hard to convince more lawmakers that they need to support this proposal, for the sake of our children’s health and for all of us.

Arise legislative recap: May 3, 2019

By Matt Okarmus

Protecting the right to vote is essential to ensure everyone’s voice is heard. Arise’s Dev Wakeley discusses several bills introduced this session that would strengthen voting rights for all Alabamians.

 

Not back yet: Alabama’s K-12, higher education funding still lower than 2008

By Chris Sanders

Alabama children who entered first grade in 2008 will get their high school diplomas next year. And they’ll graduate from an education system that still gets less state support than it did when they were first learning how to add and subtract.

The $7.1 billion Education Trust Fund (ETF) budget that the Alabama Senate passed 28-2 Thursday contains substantial funding increases for K-12 schools, two-year colleges and four-year universities. (Read the excellent coverage from AL.com’s Trisha Powell Crain and the Montgomery Advertiser’s Brian Lyman for the full details.) The budget’s sponsor, Sen. Arthur Orr, R-Decatur, called it “the largest ETF budget in history.”

In terms of raw dollar amounts, that’s true. But it’s not the full story. To compare funding across the years on an apples-to-apples basis, you need to adjust for inflation. And adjusted for inflation, Alabama’s education funding is still much lower than it was in 2008, before the Great Recession hammered state revenues.

The math: ETF increases aren’t keeping up with inflation

Alabama allocated $6.7 billion to the ETF in 2008, which is equivalent to $7.8 billion in today’s dollars. That means the Senate’s $7.1 billion budget for next year still would be 8.6% below the ETF’s 2008 level.

The story is similar for both K-12 and higher education, both of which are on track to fall far short of their inflation-adjusted 2008 funding levels. Under the Senate budget, K-12 schools would get 6.9% less than they did in 2008, while higher education funding would be 17.2% below where it was that year.

Even so, the 2020 Senate budget would be a move in the right direction. This plan would provide $4.9 billion for K-12 schools and $1.9 billion for higher education. Those amounts would be 6.8% and 10% increases, respectively, over this year’s allocations. That is significant, praiseworthy progress toward returning to 2008 levels.

But it’s also important not to look at 2008 through rose-colored glasses. Though that budget was the ETF’s recent high-water mark, it still didn’t invest adequately in a range of important services. State officials at the time identified hundreds of millions of dollars of unmet needs in reading and math education, distance learning, need-based tuition assistance and other areas. As time has passed and inflation has continued to outpace state funding increases, Alabama’s unmet educational needs have only grown.

How Alabama can fund needed investments

Our state’s education funding isn’t an uncontrollable force of nature like the weather. Policy choices determine the amount of money that Alabama raises – or doesn’t raise – for education. And lawmakers have a range of choices to bring in more money for investments in our schools, colleges and universities.

One option would be to modernize Alabama’s income tax rates, which haven’t changed since 1935. The state’s 5% top rate kicks in starting at just $3,000 of taxable income. That means the marginal rate that multimillionaires pay is no higher than the one that applies to many families who struggle to make ends meet.

Another approach would be to close tax loopholes that disproportionately benefit large corporations and wealthy households. Alabama’s deduction for federal income taxes (FIT) is one example of that kind of skewed tax break. For those who earn $30,000 a year, the FIT deduction saves them about $27 on average. But for the top 1% of taxpayers, it’s worth an average of more than $11,000 a year.

Ending the FIT deduction would raise $719 million a year. That’s money Alabama could use to invest in education, end the state sales tax on groceries and take other steps to make life better for everyday folks.

Budget and tax decisions reflect what we value as a society. Alabama could continue to cling to a tax system that delivers lavish tax breaks to wealthy people while making it harder for struggling families to get ahead. Or our state could choose instead to prioritize stronger investments in education, health care and other services that benefit everyone.

Voting rights bills would bring Alabama closer to full participation

By Dev Wakeley

Every eligible citizen should be able to vote, with no unnecessary barriers blocking the exercise of that fundamental right. But Alabama has an unusually troubled history of shameful voter suppression. And the Legislature has been reluctant to implement changes to help bring our state’s voting practices up to modern standards.

This year, Alabama has an opportunity to strengthen our voting practices and expand voting for tens of thousands of people. Three lawmakers – Reps. Prince Chestnut, D-Selma, Thomas Jackson, D-Thomasville, and Neil Rafferty, D-Birmingham – discussed several bills that would safeguard and expand voting rights in Alabama during a news conference Wednesday at Dexter Avenue King Memorial Baptist Church in Montgomery. Representatives from Alabama Arise and the Alabama State Conference of the NAACP also attended to show support for the legislation.

Alabama Arise policy analyst Dev Wakeley and executive director Robyn Hyden (at left) showed their support for legislation to protect and strengthen voting rights during a news conference May 1, 2019, at Dexter Avenue King Memorial Baptist Church in Montgomery.

Chestnut sponsors two of the bills: HB 501, which would establish automatic voter registration (AVR) in Alabama, and HB 502, which would allow Alabamians to vote absentee without having to give a reason. Jackson’s HB 256 would require each county to open at least one location for early voting. And Rafferty’s HB 486 would allow eligible Alabamians to register to vote on the same day as the election.

How automatic voter registration would strengthen democracy in Alabama

All four of these bills would improve government responsiveness to citizens’ wishes in a state with deep stains on its history of democracy. Arise particularly supports Chestnut’s efforts to establish automatic voter registration (AVR) in Alabama. Our fact sheet explains how AVR has saved money and boosted turnout in other states.

AVR would allow more than half a million unregistered and inactive voters in Alabama to be registered or updated automatically through transactions they already conduct with state agencies. Implementing AVR could save the state millions of dollars and significantly boost turnout.

The participation gains could be especially strong among people of color and younger voters. After Georgia put AVR in place in late 2016, turnout increased by nearly 30% between the 2014 and 2018 midterms. Turnout among nonwhite voters set new records, jumping by more than 36%. And turnout among young adults increased by nearly 45%.

Unfortunately, the Alabama House already has left the early voting bill languishing in a subcommittee for weeks. And amid rumors of an early end to the regular session, time is ticking for all four voting rights proposals.

Protecting the right to vote is essential, and it’s important not to allow these reforms to die quietly in committee. The people of Alabama deserve automatic voter registration and other changes to help ensure everyone’s voice is heard.

Arise legislative recap: April 26, 2019

By Matt Okarmus

A state Senate committee approved a bill Wednesday to cut new holes in Alabama’s safety net.

Arise’s Carol Gundlach explains how these new limits on Medicaid, SNAP and TANF would increase hunger and hardship for tens of thousands of struggling Alabamians.

Senate panel OKs costly new SNAP, Medicaid limits that would punish struggling Alabamians

By Carol Gundlach

There’s an old saying: If you like laws or sausage, you should never watch either one being made. Wednesday afternoon was a perfect example of how stomach-turning it can be to see how laws are often made in Alabama.

The Senate Fiscal Responsibility and Economic Development Committee approved a bill Wednesday to cut new holes in Alabama’s safety net. This plan would erect harmful, expensive new barriers to food assistance under the Supplemental Nutrition Assistance Program (SNAP), health coverage under Medicaid, and cash aid under the Temporary Assistance for Needy Families (TANF) program. And it would increase hunger and hardship for tens of thousands of struggling Alabamians in the process.

The bill – SB 294, sponsored by Sen. Arthur Orr, R-Decatur – is a version of the “HOPE Act” promulgated by the Foundation for Government Accountability (FGA), a nationwide conservative organization based in Florida. The bill now awaits consideration in the full Senate.

At a public hearing Wednesday, four Alabamians spoke against SB 294:

  • Carol Gundlach, policy analyst at Alabama Arise.
  • Jim Jones, director of Alabama Childhood Food Solutions.
  • Laura Lester, executive director of the Alabama Food Bank Association.
  • Ashley Lyerly, director of advocacy with the American Lung Association in Birmingham.

All of us agreed that this bill would make people in Alabama poorer, hungrier and sicker. The only speaker in support was an FGA staffer from Arkansas who repeatedly misstated many of the bill’s provisions. Compounding the problem, many committee members showed unfamiliarity with how safety net programs work in Alabama. The result was a frustrating discussion that consistently mixed up SNAP, TANF, Medicaid and even SSI eligibility requirements. In the end, few people left the room with a clear understanding of the bill.

How SB 294 would hurt struggling Alabamians

But it’s important to recognize the wide-ranging harm this plan would cause. SB 294 would take many steps to worsen life for Alabamians in poverty:

  • Reinstitute a SNAP asset test that could deny food assistance to some families with more than one automobile or to seniors with small savings accounts for medical or funeral costs.
  • Eliminate a slightly higher gross income limit for seniors, which helps make up for their higher medical costs.
  • Prohibit Gov. Kay Ivey from requesting a federal waiver of work requirements imposed on a small group of SNAP recipients, unless the unemployment rate is greater than 10%.
  • Require every non-disabled SNAP participant over age 16 to participate in an expensive workfare program, including parents with children over 6. This requirement would make it impossible for Alabama to continue operating an excellent job-training program that serves 36 counties.
  • Deny SNAP food assistance to people who fail to “comply” with child support services. But the word “comply” is not defined in SB 294. So we don’t know for sure what hoops people would need to jump through to get SNAP.
  • Reduce the maximum number of months that parents can receive TANF cash assistance to 36 months in a lifetime. This would cut even more adults off TANF, which is already a shadow of what was once the country’s most important anti-poverty program.
  • Require SNAP and Medicaid participants to recertify eligibility every six months. This complicated process inevitably would end assistance for otherwise eligible people who simply couldn’t navigate the red tape.

Many of SB 294’s would-be limits lack specificity. But proposed new data verification requirements are spelled out in minute detail. The bill also would allow Alabama to contract with a private company to comply with those requirements, a provision that raised several eyebrows.

The good news: SB 294 is a long way from becoming law

Now that it has won committee approval, SB 294 could appear on the Senate’s calendar at any time. But we expect the Senate to vote on the education budget next week, so SB 294 is unlikely to come up before May 7 at the earliest. And even if the Senate passed the bill, it still would have to clear the House as well. The closer we get to the end of the regular session, the less time SB 294 has to become law.

We’ll be keeping an eye on this harmful bill while we organize Arise supporters to make their opposition known. Watch this space for further updates!

Arise legislative recap: April 19, 2019

By Matt Okarmus

“The grocery tax is a tax on a basic necessity of life. It’s a tax on survival. And it’s time for Alabama to bring this tax to an end.”

Arise communications director Chris Sanders discusses a recent bill by Rep. Chris England that would be a major step forward on untaxing groceries. The video also details Arise’s plan for how Alabama could end the state grocery tax and expand Medicaid without cutting a dime from the education budget.

Removing the FIT deduction would allow Alabama to untax groceries, expand Medicaid

By Alabama Arise

Alabama’s federal income tax (FIT) deduction provides a huge tax break for high-income individuals – but at what cost? $719 million to be exact.

The FIT deduction is one big reason Alabama’s tax system is upside down. For those who earn $30,000 a year, the deduction saves them about $27 on average. But for the top 1% of taxpayers, the FIT break is worth an average of more than $11,000. The higher the income, the more the FIT deduction is worth for those who can most afford to pay more to fund education, health care and other vital needs.

Only two other states offer a full FIT deduction like Alabama does. (Three other states offer a partial deduction.) Ending the FIT deduction would bring in an additional $719 million a year, the Institute on Taxation and Economic Policy estimates. That would be enough to allow Alabama to remove the state sales tax on groceries. For most people in our state, the net result would be a tax cut.

This proposal would make it easier for everyday Alabamians to make ends meet, but its benefits wouldn’t end there. Alabama also could use the new revenue to expand Medicaid, ensure full funding for the Children’s Health Insurance Program (CHIP) in 2021 and make critical investments in education and other areas. CHIP supports health coverage for more than 170,000 children through Medicaid and ALL Kids.

Alabama’s constitution dedicates income tax revenue to education, and the FIT deduction is written into the document as well. So this plan would require the Legislature and the public to approve a constitutional amendment. But ending the FIT deduction would be a good way for Alabama to begin prioritizing public investments that benefit everyone over tax breaks that primarily benefit a select few.

The real story of the House’s 2020 General Fund budget is what isn’t in it

By Carol Gundlach

Now that the gas tax is a reality, the Alabama Legislature appears to be in a hurry to finish up essential business – and maybe even adjourn a little early. The House on Tuesday passed a General Fund (GF) budget that differed little from Gov. Kay Ivey’s recommendations.

With Alabama finally out of the worst of the recession and revenues beginning to flow again, many legislators seem to be feeling a bit like Santa Claus. But the real story is what’s not under the GF’s tree.

The House’s GF budget, which awaits Senate action, would squeeze out increases for nearly every state agency, most of which have been living through tight times for the last decade. The state’s badly cash-strapped court system would receive nearly $40 million more, hopefully reducing its dependence on fines and fees. The Department of Corrections, facing court challenges over treatment for inmates with cognitive disabilities, would get an additional $41 million. That money would allow the department to hire an additional 500 prison guards.

Helping agencies would get increases, too. Mental health would receive an additional $9 million, as would the Department of Human Resources (DHR). The small but vital Department of Senior Services would get an additional $1 million.

Even state employees, who haven’t seen a pay increase in years, would get a 2% cost of living increase. And retired state employees would receive a one-time bonus based on the number of years served.

The head-scratcher budget request came from Medicaid. For years now, Medicaid’s funding needs have challenged previous bare-bones GF budgets. Now, during a good revenue year, Medicaid Commissioner Stephanie Azar actually requested $52 million less. Azar said the agency can carry over a considerable sum from this year to maintain current services in 2020.

The investments our state isn’t making

The 2020 GF budget does indeed look pretty good at first glance. But the House plan is conspicuous for what was not included.

Perhaps most notably, the budget doesn’t fund Medicaid expansion to cover more than 300,000 Alabama adults with low incomes. The net state cost would be $164 million in the first year and about $25 million a year thereafter. The $52 million reduction in Medicaid’s budget would have made a nice down payment on expansion.

While the Department of Corrections can hire another 500 prison guards, the real need is closer to 2,000 new guards, according to a federal court order. And the budget does not include money for the new prison construction that Ivey has urged.

Lawmakers transferred ALL Kids to the education budget for 2020 to help balance the GF budget. But House GF budget committee chairman Rep. Steve Clouse, R-Ozark, said ALL Kids will move back to the GF in 2021. That move would add to the strain that the underfunded GF budget regularly faces. To draw down available federal matching money, the Children’s Health Insurance Program (CHIP) will need $98 million more from the state in 2021 than it receives today. CHIP provides health coverage for more than 173,000 Alabama children through both ALL Kids and Medicaid.

A funding solution to help everyday Alabamians

Alabama is, quite simply, in need of new revenue. And Alabama Arise has a plan to raise that revenue while giving most residents an overall tax cut.

Alabama is one of only three states that allow taxpayers to deduct all of their federal income tax (FIT) payments from their state income taxes. This tax loophole makes little (if any) difference for families with low and moderate incomes. But it saves millionaires a whopping average of $11,327 a year in state income taxes. If Alabama ended its FIT deduction, the state would bring in an additional $719 million a year.

That new money would allow Alabama to expand Medicaid and end the state grocery tax (two long-time Arise priorities). It also would ensure full CHIP funding in 2021 and leave additional money to meet other critical needs. (Because the state constitution earmarks income tax revenue for education, some of those moves would require an amendment.)

The proposed 2020 GF budget is only flush when compared with years when the state was truly in dire straits. It’s time for our lawmakers to find the political courage to address Alabama’s needs and raise the revenue required to meet them. Ending the state’s FIT deduction would be a good first step.