Category: Blog

Alabama needs a lasting solution to its General Fund shortfall

By Carol Gundlach

Taxes pay for important things. Services like education, health care and public safety are the backbone of economic growth, and tax dollars support them. Alabama has a long, sad history of not raising enough revenue to fund these vital services adequately, and it’s all led to this: a looming 2016 budget shortfall that could undermine our state’s future for years to come.

With just four meeting days left in the Alabama Legislature’s 2015 regular session, lawmakers still have not passed a General Fund (GF) budget to fund essential services like Medicaid, child welfare and mental health care. Alabama must have new revenue to pay its bills and meet its obligations to future generations.

Deep cuts could do real damage to Alabama’s future

Unlike most states, Alabama has two major budgets: the Education Trust Fund (ETF), which supports services related to K-12 and higher education, and the GF, which supports everything else. Taxes that grow with the economy, like individual income and sales taxes, are earmarked (or set aside) for the ETF, while the GF relies on a hodgepodge of other revenue sources, most of which grow slowly even in good times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth.

Alabama’s temporary solutions to the GF’s persistent shortfall are gone. Faced with flat or declining tax revenues, the GF has relied on one-time money in 11 of the last 12 years. The sources have varied widely: state property sales, legal settlements, loans from the Alabama Trust Fund, transfers from the state’s road and bridge fund, and federal stimulus money under the Recovery Act. But none of that one-time revenue is available anymore, and that leaves the Legislature facing a 2016 shortfall estimated to be between $250 million and $300 million.

Gov. Robert Bentley has proposed addressing the shortfall with several tax measures, including higher state taxes on cigarettes and automobiles and the closure of some corporate income tax loopholes. But only one of the bills has escaped committee. Instead, the House proposed a different, and much smaller, package of tax increases. The bills have not yet received a floor vote and almost surely are dead for this session.

Without new revenue, the House and the Senate’s GF budget committee have approved a budget with deep cuts to core services like Medicaid, corrections and mental health care. The cuts would hurt Alabama’s economy and devastate our state’s quality of life for decades:

  • No more Medicaid coverage for services like outpatient dialysis, prosthetics and adult eyeglasses,
  • Cuts to community mental health services for thousands of Alabamians,
  • Loss of child care supports for tens of thousands of children,
  • Even more overcrowding in a state prison system already operating at nearly twice its designed capacity,
  • Longer trial delays as hundreds of court employees are laid off,
  • Elimination of vital public safety and forensics services, and
  • Closure of 25 National Guard armories and most state parks.

Legislators have floated ideas to try to solve the GF shortfall without tax increases in recent weeks. While the proposals may sound plausible on the surface, none of them would be adequate to address the current funding crisis.

Taking more money from education is not the answer for Alabama

The Legislature recently placed a cap (called the Rolling Reserve) on the amount of education revenue that can be appropriated each year. As a result, the ETF has a surplus that cannot be spent on everyday school operations under current law.

If this is the case, some argue, what would be wrong with using that “excess” education money to plug the GF hole? Several proposals this year seek to do just that, by “un-earmarking” taxes dedicated to education, by combining the ETF and GF budgets, or by transferring a portion of the money above the Rolling Reserve cap to the GF.

But these proposals don’t account for one big fact: Alabama’s education funding is still nowhere close to recovering from massive cuts during and after the Great Recession. The 2016 ETF budget will give K-12 schools only 92 percent as much money as they received in 2008, despite higher costs and population growth.

Alabama’s recent education cuts are among the country’s worst. The state’s per-pupil K-12 spending in 2015 was 18 percent lower than in 2008, the second worst decline in the nation, according to the Center on Budget and Policy Priorities (CBPP). Alabama’s per-student higher education cuts from 2008 to 2016 are also the nation’s second worst, the CBPP found.

The lingering cuts point to a need for Alabama to revise the Rolling Reserve Act to make more ETF revenues available to schools. The Legislature still could pass a bill sponsored by Rep. Bill Poole, R-Tuscaloosa, to allow a share of the excess ETF money to be spent for critical school construction and repair needs. Even in the face of the GF’s funding woes, taking desperately needed funding from our schools is not the right way to build a stronger Alabama.

State lottery, casinos at dog tracks would not solve Alabama’s 2016 shortfall

Some legislators have proposed an expansion of gambling as a way to raise GF revenue. Proposals include creating a state lottery and developing casinos at locations already approved as dog tracks.

Regardless of one’s feelings about those proposals (on which ACPP takes no position), they would not solve the 2016 budget crisis. Any legislative measure to expand gambling would require a statewide vote on a constitutional amendment. Even if voters approve, it would be a year before regulatory structures could be put in place to allow revenue to begin coming to the state. That would be much too late to prevent devastating cuts in 2016.

A state gambling compact with the Poarch Band of Creek Indians (along with a $250 million loan that the tribe has offered) could fill the 2016 shortfall. But the loan would be one-time money and therefore not a long-term answer for the GF’s structural deficit. Bentley also has said he does not intend to negotiate a compact before legislators approve new tax revenue.

Most states reported declines in gambling revenue between 2013 and 2014, a recent study by the Rockefeller Institute found. Total state gambling revenue nationwide increased by less than 1 percent in that time, according to the study. Adjusted for inflation, revenues actually declined.

Alabama needs new tax revenue to pay for vital services

Ultimately, the surest way to solve Alabama’s GF shortfall and invest in our state’s future is with responsible tax increases, sufficient to meet our needs. Bentley’s proposals – including raising the cigarette tax and taxing automobiles at the same 4 percent rate that our state applies to food and clothing – would be a good start toward ensuring long-term funding for Medicaid, corrections, child care and other important services.

Alabama is at a crossroads. The choices that our state makes this year will help determine what kind of state our children and grandchildren will inherit. Do we raise new revenue to protect vital services like health care and public safety? Or do we erode our state’s quality of life with savage cuts to those services? Whether in the remaining days of the regular session or (more likely) in a special session, it’s up to the Legislature to decide which direction Alabama takes.

By Carol Gundlach, policy analyst. Posted May 29, 2015.

Alabama Legislature passes Medicaid long-term care reforms

By M.J. Ellington

Medicaid long-term care patients in Alabama would have more options about their care under a bill that passed the House 98-0 Thursday and went to Gov. Robert Bentley. SB 431, sponsored by Senate Majority Leader Greg Reed, R-Jasper, cleared the Senate 30-0 last week.

The plan would deliver comprehensive Medicaid long-term care services, including in-home and other community-based services and nursing home care, through one or more integrated care networks (ICNs). One goal is long-term cost control.

State Health Officer Don Williamson told legislators that the ICN system could lead more people to choose in-home care rather than nursing home placement. The legislation would remove caps on the number of Alabamians eligible to receive less costly at-home and community-based Medicaid services.

The plan would give patients more options for care while retaining the more costly nursing home option if needed. The bill would set up a managed-care health delivery system for seniors and for people with disabilities who have Medicaid coverage and meet the criteria for admission to a nursing home.

“As quietly as this bill passed, its historic significance is easy to miss,” ACPP policy director Jim Carnes said. “When these changes go into effect, it will be a new day in Alabama for patient choice and cost-effectiveness in long-term care.”

The ICN plan would be similar in structure to the regional care organizations (RCOs) into which other Medicaid patients will move. The state’s new RCO model is designed to keep patients healthier while cutting costs.

The long-term care plan was developed with input from the nursing home industry, health experts and advocates on the Medicaid Long-Term Care Workgroup, of which Arise is a member. The bill calls for each ICN to have a Citizens’ Advisory Committee that includes members nominated by Alabama Arise and a number of advocacy partners.

Pharmacy ‘privilege tax’ to help Medicaid budget approved by House committee

Most pharmacies in Alabama would pay an additional 15 cents in privilege tax on each prescription they fill or refill under HB 698, which won the approval of the House’s General Fund (GF) budget committee Thursday. Just four legislative days remain for the bill to clear the House and Senate.

Medicaid would gain about $8 million under the proposal. Rep. Elaine Beech, D-Chatom, the bill’s sponsor, said retail pharmacists agreed to pay the supplemental privilege tax as a way to help Medicaid avoid drastic service cuts. Beech’s bill excludes prescriptions for hospital patients and pharmacies operated by the state or state agencies.

Without more revenue, Williamson said, Medicaid will have little choice but to use a pharmacy benefits manager and mail-order prescription drugs to help cut costs. Many pharmacies, especially those in rural areas, depend on Medicaid prescription drug business. Pharmacies will continue to pay an existing privilege tax of 10 cents, bringing the total pharmacy tax to 25 cents per prescription if the legislation becomes law.

A similar bill sponsored by Sen. Rodger Smitherman, D-Birmingham, cleared the Senate’s GF budget committee Tuesday. SB 507 also would impose an additional privilege tax of 15 cents per prescription, but it would not exclude hospital pharmacies and state-owned pharmacies.

By M.J. Ellington, health policy analyst. Posted May 28, 2015.

A quiet win: SNAP, TANF eligibility bans end under new Alabama prison reform law

By Kimble Forrister

Tucked away in the new prison reform law that Gov. Robert Bentley signed Thursday is a big win for second chances in Alabama: an end to the state’s lifetime eligibility bans for SNAP and TANF assistance for people with a past felony drug conviction. It’s a win on an issue that has been an Arise priority since 2013, and it means a fresh start for people who have served their time and are seeking to rebuild their lives.

For ACPP, it all started in 2013 when Jacquelyn Hardy of Birmingham made a passionate case for ending the bans at our annual meeting, where members vote each year on our issue priorities. Before Hardy’s presentation, few of us knew that Alabama bars anyone with a felony drug offense from ever receiving food assistance under the Supplemental Nutrition Assistance Program (SNAP) or cash assistance under the Temporary Assistance for Needy Families (TANF) program. Afterward, no one who heard her could forget.

Advocates found an ally in Sen. Linda Coleman, D-Birmingham, who agreed to sponsor a bill to end Alabama’s lifetime SNAP and TANF bans for people who have completed their sentence or are successfully serving probation or parole. Coleman’s bill passed the Senate easily in 2014 but died in the House after losing a procedural vote.

Supporters didn’t give up, and their persistence worked. This year’s big breakthrough came during Senate floor debate on SB 67, the prison reform bill sponsored by Sen. Cam Ward, R-Alabaster. Coleman offered language ending the SNAP and TANF bans as an amendment to Ward’s bill, and Ward agreed to support it. The Senate passed the prison reform bill, including the amendment, 32-2 in early April.

When the bill reached the House, Judiciary Committee chairman Rep. Mike Jones, R-Andalusia, helped ensure that the language ending the SNAP and TANF bans remained in the bill. The House passed the measure 100-5 on May 7, and the Senate signed off on the House version the same day.

The prison reform law is set to take effect Jan. 30, 2016, but one big hurdle remains: Alabama still has to pay for it. None of the bill’s provisions, including the end to the SNAP and TANF bans, can go into effect until the Legislature appropriates $26 million to fund the bill’s other reform measures.

Even though the SNAP and TANF provision is almost entirely a question of federal costs, it will go into effect only if the prison reform funding is approved. Ward insists leaders have assured him the needed money will be included in the General Fund (GF) budget – one of the few glimmers of hope in the protracted battle over a GF budget that desperately needs new revenue to avoid deep cuts to vital services like corrections and health care.

For thousands of people leaving prison, the restoration of SNAP and TANF benefits will mean a huge improvement in their ability to make a fresh start and support their families. Thanks to the support of lawmakers like Coleman and Ward and the determination of advocates like Jacquelyn Hardy, Alabama has achieved a policy change that will help families for decades to come.

By Kimble Forrister, executive director. Posted May 21, 2015.

Medicaid long-term care options would expand under bill that clears Alabama House committee

By M.J. Ellington

More Alabamians with Medicaid coverage would have more options for long-term home and community care under a bill that the House Health Committee approved unanimously Thursday. The bill, which the Senate passed 30-0 Tuesday, now goes to the full House for consideration.

SB 431, sponsored by Senate Majority Leader Greg Reed, R-Jasper, would deliver comprehensive Medicaid long-term care services, including in-home and other community-based services and nursing home care, through one or more integrated care networks (ICNs). A House version of the plan – HB 585, sponsored by Rep. April Weaver, R-Brierfield – won committee approval earlier this month.

The legislation would set up a cost-effective, managed-care health delivery system for seniors and for people with disabilities who have Medicaid coverage and meet the criteria for admission to a nursing home. The bill would remove caps on the number of Alabamians eligible to receive less costly at-home and community-based Medicaid services. The plan would give patients more options in care while retaining the more costly nursing home option if needed.

The ICN plan would be similar in structure to the regional care organizations (RCOs) into which other Medicaid patients will move. The state’s new RCO model is designed to keep patients healthier while cutting costs.

The ICN plan was developed with input from the nursing home industry, health experts and advocates on the Medicaid Long-Term Care Workgroup, of which Arise is a member. The bill calls for each ICN to have a Citizens’ Advisory Committee that includes members nominated by Alabama Arise and a number of advocacy partners.

By M.J. Ellington, health policy analyst. Posted May 21, 2015.

Alabama Legislature passes bill to require annual report on state tax breaks

By Carol Gundlach

Alabamians could learn far more about the cost and effectiveness of state tax breaks under a bill that the Legislature passed without a single “no” vote. SB 119, sponsored by Sen. Bill Hightower, R-Mobile, passed 92-0 in the House on Tuesday and 30-0 in the Senate in March. The Senate agreed with the House’s changes Thursday, and the bill awaits Gov. Robert Bentley’s signature.

SB 119 would require the Legislative Fiscal Office to provide an annual “tax expenditure” report to legislative budget committees. This report would list all tax exclusions, exemptions, deductions, credits and special rates and estimate the amount of revenue that the state forgoes as a result of these tax breaks. Alabama was one of only seven states with no such report as of 2011, according to the Center on Budget and Policy Priorities. SB 119 also requires biannual public hearings on tax breaks.

ACPP executive director Kimble Forrister praised lawmakers’ approval of the bill. “For years, ACPP has called for greater transparency and accountability when tax breaks are given by the Legislature,” Forrister said. “SB 119 will ensure that legislators and the public know how much revenue is diverted by these tax breaks. We appreciate Sen. Hightower’s leadership in bringing this bill and urge the governor to sign it.”

Tax expenditures are provisions in state or federal tax codes that reduce the amount of tax owed by households or corporations. These tax breaks are sometimes called “spending through the tax code” because, like spending, they are intended to achieve policy goals. But tax expenditures often get far less scrutiny than spending does.

States commonly give tax breaks to individuals by exempting certain income from being taxed, by allowing some expenses to be deducted from income, or by charging different tax rates on different types and levels of income. Examples of individual tax breaks include the personal exemption and the mortgage interest deduction.

Corporate tax breaks often are billed as a way to help recruit industry into a state or keep businesses from relocating to another state. These breaks can include reduced sales, income, property or employer taxes.

Tax breaks can become hotly debated public issues, like when Alabama is in a bidding war with other states for big projects like the Boeing or Mercedes plants. But often, tax breaks are issued automatically and receive little public, or even legislative, attention. Many of these tax breaks are tilted toward higher-income taxpayers, because they are more likely to owe taxes and to invest in deduction-eligible projects.

The Legislature has created hundreds of tax breaks in recent decades, and 2015 has been no different. Lawmakers this year have approved several new tax incentives to reduce taxes for businesses that hire military veterans, locate in rural or high-poverty communities, create new jobs, or reinvest in existing industries.

Some of Alabama’s tax breaks may create new jobs and help reduce poverty, while others may not. An annual tax expenditure report would help shed light on these breaks and allow the public and lawmakers to decide whether the investment has been worth the cost.

Studies have found that tax breaks have little influence on individual or corporate decisions and that the breaks often are not a better public investment than the schools, health care, public safety or other vital services that the money could have paid for instead. SB 119 would help Alabamians evaluate how much revenue the state forgoes through its tax code and whether these breaks are good for our state.

By Carol Gundlach, policy analyst. Posted May 21, 2015.

Title loan reform bill gets hearing, but Alabama House committee doesn’t vote on it

By Stephen Stetson

An auto title loan reform bill finally got a public hearing before the Alabama House Financial Services Committee on Wednesday, nearly two months after its introduction. But as is customary, the committee did not vote on the bill on the same day as the hearing. A vote could come next week.

HB 400, sponsored by Rep. Rod Scott, D-Fairfield, would cap interest rates on title loans in Alabama at 36 percent a year. State law now allows title lenders to charge rates of up to 300 percent a year.

Several people testified about the bill, including a spokeswoman for TitleMax, one of the nation’s largest title lenders. She claimed a 36 percent rate cap would put title lenders out of business.

Supporters testifying in favor of the bill included Arise’s Stephen Stetson, Joe Godfrey of the Alabama Citizens’ Action Program (ALCAP) and Alabama Appleseed legal director Shay Farley. Farley explained the dollar cost of high-cost auto title transactions to committee members. “Anybody can look at the numbers and see that this isn’t right,” she said.

HB 400, this year’s only title loan reform bill, was introduced in early April and has 67 bipartisan co-sponsors, nearly two-thirds of the House’s membership. With just seven meeting days left in the 2015 regular session, time is running short for the bill to clear both the House and Senate. Check out the Montgomery Advertiser’s coverage to learn more.

By Stephen Stetson, policy analyst. Posted May 20, 2015.

Medicaid, mental health, child care would be slashed under Alabama House’s General Fund budget

By Carol Gundlach

Alabamians’ quality of life would suffer for years to come if the no-new-revenue General Fund (GF) budget that the state House passed 66-36 Tuesday becomes reality. The barebones budget would slash vital services like health care, child care and public safety. Alabama’s promising new reforms of Medicaid and prisons would end, and services for low-income children could face devastating cuts. The budget now goes to the Senate.

“Alabama simply can’t afford the cuts in the no-new-revenue General Fund budget,” Arise’s Kimble Forrister said Tuesday. “It’s time to stop cutting the services that make our state a better, healthier place to live and to start investing in Alabama’s future.”

At no point during floor debate did a House member mention Gov. Robert Bentley’s plan to raise $541 million in GF revenue. The bills, including proposals to increase the state cigarette tax and the state sales tax on automobiles, still await a House vote.

‘We were elected to govern, not to pander’

Opponents of the budget cuts repeatedly raised concerns about their impact on children, seniors, low-income Alabamians, and people with disabilities. Rep. Thomas Jackson, D-Thomasville, argued that the budget would take food from low-income families. Rep. Laura Hall, D-Huntsville, said the cuts would prevent the state’s promising new prison reforms from being implemented. “I don’t know how anyone can be proud to pass prison reform and then not fund it,” Hall said.

Rep. Patricia Todd, D-Birmingham, emphasized the budget’s proposed cuts to AIDS drug assistance and put the GF debate in stark terms. “People are going to die because of this budget,” Todd said. “We were elected to govern, not to pander.”

Rep. Steve Clouse, R-Ozark, who chairs the House’s GF budget committee, said the budget wasn’t what he wanted to present. But “we’re having problems with our colleagues in the Senate and want to give them motivation to come to the table” and identify new revenue, Clouse said.

With the Legislature’s regular session nearing an end, talk of one or more special sessions is running rampant, and the threat of deep cuts to services that make our state a better place to live and work is real. Here is a look at a few of the ways Alabamians would feel the cuts in their everyday lives:

Proposed budget cuts would end new Medicaid reforms and impose severe cuts to other health care programs. The proposed GF budget would reduce Medicaid funding by 5 percent. State Health Officer Don Williamson has said the cut would force Medicaid to abandon its new regional care organization model, designed to keep patients healthier while cutting costs.

Williamson said last month that a smaller 3 percent cut would force the agency to end coverage of outpatient dialysis, forcing kidney patients to be admitted to the hospital to receive routine dialysis. Medicaid also would have to stop paying for adult eyeglasses and prosthetics.

In addition, Medicaid would reduce reimbursement payments to doctors, which could mean fewer physicians treating Medicaid patients. Medicaid also would contract with a single provider of prescription services, likely forcing many local, independent pharmacies to close.

The committee’s budget would also cut home health services for the elderly and disabled. Patients losing these services could be forced to enter much more expensive nursing homes, reducing patients’ independence and increasing costs to the struggling Medicaid program. Funding for life-saving HIV and AIDS medications would be cut by 50 percent.

Proposed budget cuts would reduce community mental health services. In recent years, the Department of Mental Health responded to budget cuts by closing nearly every public mental health hospital. Many advocates applauded the new focus on less restrictive (and less expensive) community-based services.

But the 2016 GF budget proposal would reduce funding for those very services by 5 percent. Patients unable to receive mental health treatment may be forced into private hospitals, or they may end up incarcerated in local jails without access to needed counseling and medications.

Proposed budget cuts would devastate social services for low-income families and children. Together, the House’s GF budget and the education budget awaiting House approval would reduce Department of Human Resources (DHR) funding by 14 percent. Clouse said Tuesday that the addition of revenues already earmarked, or set aside, for DHR would reduce the total cut to 5 percent.

Because much state DHR funding is matched by federal money, the agency’s total cuts would be much larger than the lost state dollars alone. DHR last week outlined severe service reductions in response to the cuts. They would include:

  • Reductions in child care assistance for thousands of working families,
  • Elimination of adult day care services for 300 elderly and disabled adults, and
  • Reductions in protective services for abused and neglected children.

Alabama’s network of Community Action Agencies provides nutrition, housing, Head Start and energy assistance services to low-income people. The proposed GF budget would cut state funding for these services by 50 percent.

Proposed budget cuts would end prison reform and could risk a federal takeover of the state prison system. The House approved GF budget would make devastating cuts to Alabama’s civil and criminal justice system, ensuring that the recently passed (and highly praised) prison reform legislation could not be implemented.

Alabama’s prison system, already operating at nearly twice its designed capacity, would absorb a 5 percent cut under the proposed budget, increasing the risk of federal intervention. The budget also includes major cuts for the very programs needed for prison reform to succeed: drug courts; community corrections; and parole services, essential for reducing recidivism.

Bentley has signed the prison reform bill into law. But before any of those reforms can be implemented, the governor’s office must certify that the Department of Corrections and the Board of Pardons and Paroles have enough money to move ahead with the changes. The proposed GF budget would derail prison reform by making this certification impossible.

Our state needs new revenue to avoid these cuts. Overall, the GF budget falls more than $200 million short of the amount needed to prevent deep service cuts and invest in reforms. Lawmakers thus far have not considered Bentley’s proposals to raise revenue and avoid those cuts, including increasing the state cigarette tax and automobile sales tax. Other tax bills that won House committee approval last week also have stalled.

Alabama faces an important choice that will help determine what kind of state our children and grandchildren will inherit. Do we raise new revenue to protect vital services like health care and public safety? Or do we erode our state’s quality of life with devastating cuts to those services? The House budget would side with the latter option, and Alabama would suffer the consequences of that choice for years to come.

By Carol Gundlach, policy analyst. Posted May 19, 2015.

Medicaid long-term care reforms sail through Alabama Senate

By Jim Carnes

Medicaid patients in Alabama would have more options to receive long-term care in their community under a bill that the state Senate passed 27-0 Tuesday.

SB 431, sponsored by Senate Majority Leader Greg Reed, R-Jasper, would create one or more integrated care networks (ICNs) to deliver a broad range of Medicaid long-term care services, ranging from home- and community-based supports to nursing home care. A House version of the plan – HB 585, sponsored by Rep. April Weaver, R-Brierfield – won committee approval earlier this month.

The new system would operate in coordination with the Medicaid regional care organizations (RCOs) set to take effect Oct. 1, 2016. The new RCO model is designed to keep patients healthier while cutting costs, but Medicaid could have to abandon it if the severe cuts under the House’s no-new-revenue General Fund budget become law.

SB 431 effectively would lift long-standing participation caps on home- and community-based waivers, enhancing patient choice and expanding care options that are less costly than institutionalized care. The plan represents a significant breakthrough with the nursing home industry and was developed by the Medicaid Long-Term Care Workgroup, of which Arise is a member. The bill calls for each ICN to have a Citizens’ Advisory Committee that includes members nominated by Alabama Arise and a number of advocacy partners.

By Jim Carnes, policy director. Posted May 19, 2015.

Alabama would suffer for years to come under no-new-revenue General Fund budget

By Carol Gundlach

Alabamians’ quality of life would suffer for years to come if the no-new-revenue General Fund (GF) budget that the House’s GF budget committee approved Thursday becomes reality. The House is expected to vote Tuesday on the budget, which would slash vital services like health care, child care and public safety. The state’s promising new reforms of Medicaid and prisons would end, and services for low-income children could face devastating cuts.

With the Legislature’s regular session nearing an end, talk of one or more special sessions is running rampant, and the threat of deep cuts to services that make our state a better place to live and work is real. Here is a look at a few of the ways Alabamians would feel the cuts in their everyday lives:

Proposed budget cuts would end new Medicaid reforms and impose severe cuts to other health care programs. The proposed GF budget would reduce Medicaid funding by 5 percent. While the Medicaid agency has not specified what services would be reduced or eliminated, State Health Officer Don Williamson has said the cut would force Medicaid to abandon its new regional care organization model, designed to keep patients healthier while cutting costs.

Williamson said last month that a smaller 3 percent cut would force the agency to end coverage of outpatient dialysis, forcing kidney patients to be admitted to the hospital to receive routine dialysis. Medicaid also would have to eliminate hospice care coverage and stop paying for adult eyeglasses and prosthetics.

In addition, Medicaid would reduce reimbursement payments to doctors, which could mean fewer physicians treating Medicaid patients. Medicaid also would contract with a single provider of prescription services, likely forcing many local, independent pharmacies to close.

The committee’s budget would cut home health services for the elderly and disabled by more than 9 percent. Patients losing these services could be forced to enter much more expensive nursing homes, reducing patients’ independence and increasing costs to the struggling Medicaid program. Funding for life-saving HIV and AIDS medications also would be cut by 50 percent.

Proposed budget cuts would reduce community mental health services. In recent years, the Department of Mental Health responded to budget cuts by closing nearly every public mental health hospital. Many advocates applauded the new focus on less restrictive (and less expensive) community-based services.

But the 2016 GF budget proposal would reduce funding for those very services by 5 percent. Patients unable to receive mental health treatment may be forced into private hospitals, or they may end up incarcerated in local jails without access to needed counseling and medications.

Proposed budget cuts would devastate social services for low-income families and children. Together, the committee’s GF budget and the education budget awaiting House committee approval would reduce Department of Human Resources (DHR) funding by 14 percent.

DHR commissioner Nancy Buckner last month outlined draconian service reductions in the event of major budget cuts. These could include the elimination of the Temporary Assistance for Needy Families (TANF) program, which provides cash assistance and services for extremely low-income families, including more than 30,000 children.

Other cuts could include major reductions in child care assistance for thousands of working families, the elimination of adult day care services, and the elimination of child support collection services for more than 200,000 Alabama families. Because much state DHR funding is matched by federal money, the agency’s total cuts would be much larger than the lost state dollars alone.

The House committee budget would eliminate GF support for the Department of Youth Services (DYS), which provides supervision and services for youthful offenders and their families. The total reduction would be 12 percent, accounting for DYS funds in the education budget.

Like mental health, DYS has moved in recent years toward less expensive and more appropriate community services and has closed expensive residential beds for low-risk offenders. These community services would be cut under the proposed GF budget. With fewer residential beds, juvenile offenders would be left unsupervised or incarcerated in county facilities instead.

Alabama’s network of Community Action Agencies provides nutrition, housing, Head Start and energy assistance services to low-income people. The proposed GF budget would cut state funding for these services by 50 percent.

Proposed budget cuts would end prison reform and could risk a federal takeover of the state prison system. The committee’s GF budget would make devastating cuts to Alabama’s civil and criminal justice system, ensuring that the recently passed (and highly praised) prison reform legislation could not be implemented.

The state’s already reeling trial courts would face a 16 percent cut under the budget, leading to hundreds of layoffs. The budget also would cut juvenile probation services by nearly 40 percent and forensic sciences by 22 percent. These cuts could force courts to close at least two days a week, delay trials and hearings, and delay criminal cases that require DNA and other forensic evidence. The deep cuts also would result in more unsupervised juvenile offenders even as youth services are slashed.

Alabama’s prison system, already operating at nearly twice its designed capacity, would absorb a 5 percent cut under the proposed budget, increasing the risk of federal intervention. The budget also includes major cuts for the very programs needed for prison reform to succeed. The state’s drug court program would be cut nearly 40 percent. Community corrections, the alternative to imprisonment, would be cut by half. And parole services, essential for reducing recidivism, would be reduced by 14 percent.

Bentley has said he plans to sign the prison reforms that the Legislature passed last week into law. But before any of those reforms can be implemented, the governor’s office must certify that the Department of Corrections and the Board of Pardons and Paroles have enough money to move ahead with the changes. The proposed GF budget would derail prison reform by making this certification impossible.

Our state needs new revenue to avoid these cuts. Overall, the committee’s $1.64 billion GF budget falls more than $200 million short of the amount needed to prevent deep service cuts and invest in reforms. Lawmakers thus far have not considered Gov. Robert Bentley’s proposals to raise revenue and avoid those cuts, including increasing the state cigarette tax and automobile sales tax. Other tax bills that won House committee approval last week have stalled.

Alabama faces an important choice that will help determine what kind of state our children and grandchildren will inherit. Do we raise new revenue to protect vital services like health care and public safety? Or do we erode our state’s quality of life with devastating cuts to those services? The House committee’s budget would side with the latter option, and Alabama would suffer the consequences of that choice for years to come.

By Carol Gundlach, policy analyst. Posted May 15, 2015.

Alabama Medicaid long-term care bills head for full House, Senate votes

By M.J. Ellington

Alabama would deliver Medicaid long-term care services in a new way under two identical bills that won legislative committee approval Wednesday. House and Senate committees approved the respective bills – HB 585, sponsored by Rep. April Weaver, R-Brierfield, and SB 431, sponsored by Senate Majority Leader Greg Reed, R-Jasper – without opposition.

State Health Officer Don Williamson said the plan’s goal is two-fold: to enable more people receiving long-term care to remain in the community instead of going to nursing homes, and to slow the growth of health spending for people who need long-term care. At-home care costs $10,000 per year, compared to $60,000 for nursing home care, he said.

The legislation would remove the current state cap on participation in Medicaid home- and community-based services. When fully operational, the plan could save between $700 million and more than $1 billion per year, Williamson said.

The bills would bring Medicaid long-term care services under a provider-led managed care system similar to (and coordinated with) the new Medicaid regional care organizations (RCOs), Williamson told the Senate Health and Human Services Committee. The RCO model, set to take effect in October 2016, is designed to keep patients healthier while cutting costs.

Alabama’s Medicaid Long-Term Care Workgroup recommended the plan to set up integrated care networks. The group has been meeting since February and includes Arise policy director Jim Carnes.

The plan would create citizens’ advisory committees for the integrated care networks that include representatives of Alabama Arise member groups and other health advocates. Committees amended both bills Wednesday to help ensure the membership of those committees and the networks’ governing boards reflects the diversity of the population served. Arise requested the diversity changes.

“Arise and our advocacy partners have been working for years to expand Medicaid home- and community-based service options for long-term care,” Carnes said. “The integrated care network plan is a historic breakthrough that will help Alabama meet looming health care challenges as our senior population grows.”

By M.J. Ellington, health policy analyst. Posted May 6, 2015.