Issue: Budgets

New revenue for a stronger Alabama

By Carol Gundlach

What makes a state strong? We likely all could agree on a few answers: healthy people, a dependable workforce, a stable government, safe streets and vibrant communities. But without new revenue to address a huge General Fund budget shortfall, Alabama will face devastating cuts to education, health care, public safety and other vital services that make shared prosperity possible.

If the Legislature can’t agree on new revenue to avoid these cuts, Alabamians would see thousands of lost jobs, a sharp decline in our state’s quality of life and a weaker future for years to come. Here’s a snapshot of what Alabama would look like if the cuts in a no-new-revenue General Fund budget become reality.

What went well in 2015 — and the challenges that remain for Alabama

By Kimble Forrister

It’s over! But it’s not over yet. After approving a wholly inadequate General Fund budget that would jeopardize our state’s future, the Alabama Legislature ended the 2015 regular session Thursday. But Gov. Robert Bentley vetoed that budget, and he will call lawmakers back for a special session on the budget later this summer.

Arise members celebrated some big victories this year, but major challenges still remain. Here’s a quick review of how Arise issues fared:

Budgets and taxes: None of Bentley’s revenue bills passed. Without new revenue, vital services like Medicaid and public safety face devastating cuts that would hurt Alabama’s quality of life for years to come. Just a few examples:

  • Thousands of Alabamians would lose community-based mental health care services.
  • Medicaid would end coverage of crucial services like outpatient dialysis and prosthetics.
  • State prisons would be even more overcrowded and at greater risk of federal takeover.

But there was some good news, too. Lawmakers overwhelmingly approved a bill to save money and give Alabamians more choices in Medicaid long-term care services. The state will have a powerful new tool – a “tax expenditure report” – to determine if tax breaks are worth the cost. And a new prison reform law will help save money and reduce overcrowding – but it only takes effect if the state funds it.

Ending Alabama’s lifetime SNAP ban: Alabamians can celebrate a big win for second chances! The prison reform bill includes language ending the state’s lifetime SNAP and TANF eligibility bans for people with a past felony drug conviction. Thousands of people can regain SNAP eligibility on Jan. 30, 2016, if the prison reform law gets the money required for it to take effect.

Alabama Accountability Act: The Legislature approved major changes to the act. The new version allows more money that would have supported public education to go to private schools instead – but it also includes some of Arise’s recommendations for greater accountability and transparency.

Housing Trust Fund: A bill to fund affordable housing in Alabama encountered powerful opposition and did not emerge from committee. Supporters plan to meet with opponents to seek agreement before the 2016 session.

Payday and title lending reform: In a big win for consumers, the Alabama Supreme Court ruled the state Banking Department can create a single statewide database of payday loans. But much work remains in the drive for a 36 percent interest rate cap: No bills to regulate payday or auto title loans passed, but public pressure for reform continues to grow.

The regular session is over, but Arise’s work continues. Stay tuned for updates as we prepare for this summer’s crucial debates over our state’s future. Together, we can build a better Alabama for all!

By Kimble Forrister, executive director. Posted June 4, 2015. Updated June 12, 2015.

Alabama Accountability Act changes receive final legislative approval

By Carol Gundlach

A bill that would expand tax credits under the Alabama Accountability Act (AAA) received final legislative approval Wednesday and went to Gov. Robert Bentley. SB 71, sponsored by Senate President Pro Tem Del Marsh, R-Anniston, is not the total repeal that Arise supported. But the bill would make significant improvements to the existing law (including some that Arise recommended), even as it allows more money that would have supported public education to go to private schools instead. Here are six changes to the AAA under SB 71:

(1) More tax credits would be available. Businesses and individuals can get tax credits for donations to organizations that grant scholarships to help eligible students attend private schools under the AAA. The original law capped the total amount of such credits at $25 million a year, but SB 71 would raise the cap to $30 million. The bill also would raise the current $7,500 annual limit on scholarship tax credits for individuals to $50,000 and let taxpayers claim credits against their 2014 taxes for donations made in 2015.

(2) Scholarship sizes would be limited. SB 71 would limit AAA scholarships to no more than $6,000 a year for elementary school students, $8,000 a year for middle school students and $10,000 a year for high school students.

(3) The income limit for scholarship eligibility would be lower. SB 71 would reduce the income eligibility limit for AAA scholarships from its prior level – 150 percent of the median household income, or nearly $65,000 in Alabama – to 185 percent of the federal poverty level (FPL), or about $44,000 for a family of four. Scholarship-granting organizations (SGOs) would have to re-evaluate students’ eligibility every other year. Students with existing scholarships could continue to receive them as long as their family income is no more than 275 percent FPL, or nearly $67,000 for a family of four.

(4) The definition of “failing school” would change. Another big difference under SB 71 is a change in the AAA’s definition of “failing school.” The bill would deem a public school to be “failing” if it is “listed in the lowest 6 percent of public K-12 schools based on the state standardized assessment in reading and math” or if the state school superintendent designates it as one. Schools that serve students with special needs are excluded from the act’s definition of “failing” schools. Students zoned for “failing” schools would have first priority for AAA scholarships until July 31 of each year, when any remaining scholarship money could go to eligible students living anywhere in Alabama.

(5) Participating schools and groups that grant AAA scholarships would face additional requirements. SB 71 would require SGOs to report quarterly on how many scholarships they give, as well as how many of them go to students who were zoned for “failing” schools or who already attended private schools. Participating schools now would have to give state achievement tests, be accredited within three years and disclose tuition rates online before each semester begins. The bill also would require an independent comparison of the test scores of students participating in the AAA scholarship program and similar students in public schools. A SGO now could be audited by the Alabama Department of Revenue (ADOR), and the ADOR would have the authority to bar a SGO or private school from participating in the tax credit scholarship program. All required annual and quarterly SGO reports would have to be made available to the public on the ADOR’s website.

(6) Unspent scholarship money must be returned to public education. SGOs would have to use any scholarship funds on hand at the start of a calendar year by the end of the following school year. Any such money not spent on AAA scholarships by then would go to the state Department of Education to help support “underperforming” schools.

By Carol Gundlach, policy analyst. Posted June 4, 2015.

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.

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.

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.

The Alabama Tax & Budget Handbook

By Alabama Arise

We’re all in this together. All of us – regardless of age, health, wealth, background or location – depend on a network of services from our local, state and national governments. From garbage collection to fire protection, from roads to schools, from public health to public safety, our tax dollars support the daily upkeep of our common good.

The 50 state governments are vital links in this network. It’s a solemn trust: Each state is responsible for ensuring the safety, general well-being and education of its people. And each state government carries out this responsibility in its own way.

As Alabamians, many of us studied our state government in fourth grade and learned a little more about it in other classes. But until we’re out making a living, paying taxes and voting, these lessons may seem disconnected from our everyday lives.

The Alabama Tax & Budget Handbook is designed to make that connection. The handbook breaks down state finances into basic functions that affect every taxpayer: What do our tax dollars pay for? How does state spending work? Where does the state get its money? It also looks at how those functions measure up – in relation to residents’ needs and abilities, as well as the performance of other states. And it offers ideas for making Alabama’s finances fairer, simpler, more adequate for meeting our needs, and more easily understood and visible to the public.

Alabama crossroads: We need new revenue

By Kimble Forrister

We all want to live in a healthy, secure and prosperous state. Alabama is taking important steps toward that goal now, but deep General Fund budget cuts could undo that progress.

Medicaid’s new regional care organizations will keep patients healthier while cutting costs. Prison system improvements will protect Alabamians while lowering costs and helping former inmates transition back into their communities. Investing in these changes now will save money later.

We’re at a crossroads in Alabama. Cutting vital services is the wrong path.

The devastating cuts in the no-new-revenue General Fund budget proposal would force us to abandon our Medicaid and corrections improvements. And without new revenue, Alabama faces deep service cuts that could make the state a worse place to live for years to come.

Cuts to Medicaid, which covers one in five Alabamians, would top $300 million. That would force the program to end coverage of vital services like adult eyeglasses, prosthetics, hospice care and outpatient dialysis. It also likely would lead to even fewer doctors serving Medicaid patients, most of whom are children, seniors, and people with disabilities.

The costs for Alabama’s children would be real. Cuts to the Department of Human Resources (DHR) would make Alabama the first state to end its Temporary Assistance for Needy Families (TANF) program. That would eliminate cash assistance for more than 30,000 children living in deep poverty, as well as uniforms, car repairs and other job readiness assistance for their parents.

DHR cuts also would end child care benefits for 15,000 children. That could hurt our state’s economy by forcing thousands of working parents to quit their jobs. More than $340 million in child support payments would be risk if DHR ends collection services, and hundreds of seniors would lose adult day care services that allow them to live independently.

Mental health funding cuts would harm more than 25,000 Alabamians by reducing or eliminating community-based mental illness and intellectual disability services. That would reduce independence for thousands of Alabamians. The cuts also could cost hundreds of people their jobs by forcing them to stay home to care for family members who lose crucial support services. In addition, severe mental health cuts could land Alabama back in federal court.

Deep General Fund cuts would have serious public safety implications as well. Nearly a fourth of Alabama’s state troopers would be laid off. The prison system, which already operates at nearly twice its designed capacity, would close two facilities. That would mean even more overcrowding and an even greater chance of a federal takeover of the state’s prison system.

More than 1,100 state workers would lose their jobs, including more than 600 court employees. That likely would force courts to close at least two days a week, meaning longer wait times for criminal trials or restitution cases.

This is no way to invest in our state’s future. Alabama needs new revenue to end the chronic budget shortfalls that are holding us back. The General Fund needs a sustainable revenue stream to support Medicaid, corrections, mental health care and other vital services. Raising the cigarette tax and raising the state sales tax on automobiles to 4 percent – the same as we pay on groceries – would be two good places to start.

If we want a better Alabama tomorrow, we need to start building it today.

By Kimble Forrister, executive director. Posted April 23, 2015.

Bills to reform payday lending, change Accountability Act clear Alabama legislative committees

By Stephen Stetson

Alabama borrowers would have much longer to repay payday loans under a bill that emerged from a state Senate committee Wednesday. SB 335, sponsored by Sen. Slade Blackwell, R-Mountain Brook, now awaits action by the full Senate.

Blackwell’s bill would bring substantial reform to the payday loan industry in Alabama. It would extend the length of time that borrowers have to repay their loans to six months. Alabama law allows payday lenders to set loan terms between 10 and 31 days, but nearly every transaction is a two-week loan term.

The bill received a favorable report from the Senate Banking and Insurance Committee, which Blackwell chairs, by a vote of 11-1. Only Sen. Tom Whatley, R-Auburn, dissented.

Accountability Act changes clear House committee with two amendments

A bill that would expand tax credits and limit the size of scholarships under the Alabama Accountability Act (AAA) won House committee approval Wednesday. SB 71, sponsored by Senate President Pro Tem Del Marsh, R-Anniston, passed the Senate last month and awaits action by the full House.

The House’s education budget committee made two changes to the bill. Students already receiving AAA scholarships would remain eligible for that assistance as long as their family’s income does not exceed 275 percent of the federal poverty level – about $66,000 for a family of four – under an amendment offered by Rep. Phil Williams, R-Huntsville.

Another amendment by Rep. Terri Collins, R-Decatur, would require an independent comparison of the test scores of students participating in the AAA scholarship program to those of similar students in public schools. Collins’ amendment also would exclude schools that serve students with special needs from the act’s definition of “failing schools.”

The AAA, passed in 2011, allows Alabama businesses and individuals to get tax credits for donations to organizations that grant scholarships to help eligible students attend private schools. Click here to learn more about the act and how SB 71 would change it.

By Stephen Stetson, policy analyst, and Rebecca Jackson, communications and development associate. Posted April 15, 2015.

Plan to write ETF spending limit into state constitution wins Alabama Senate panel’s approval

By Kimble Forrister

The Rolling Reserve Act’s education spending limit would be written into the Alabama Constitution under a measure that the state Senate’s education budget committee approved 8-4 Wednesday. SB 248, sponsored by Sen. Trip Pittman, R-Montrose, now awaits action by the full Senate.

Pittman, who chairs the Senate’s education budget committee, defended his proposal from criticism of the decision to seek to enshrine the Rolling Reserve Act as a constitutional amendment. Pittman said he wants a hard spending cap that the Legislature has to follow. The act, which is already a statute, limits education funding even though Alabama has yet to restore state support for K-12 schools and higher education to the pre-recession levels of 2008.

The current Rolling Reserve Act caps spending growth in the Education Trust Fund (ETF) using a formula based on the average ETF revenue growth in the previous 15 years. SB 248 would modify the cap to disregard the year with the lowest revenue growth during those years. The bill would need to pass the House and Senate and be approved in a statewide referendum to become law.

House committee weighs other Rolling Reserve changes

The House’s education budget committee Wednesday held a public hearing on a bill that would change how ETF revenues exceeding the Rolling Reserve cap are used. HB 322, sponsored by Rep. Bill Poole, R-Tuscaloosa, would direct more of that money to capital expenses like bus purchases and school building repairs. The bill would not change the cap formula.

Current law requires ETF revenues above the spending cap to be used first to repay the ETF’s rainy day account and then to boost the Budget Stabilization Fund until it reaches 20 percent of the size of current-year ETF spending. HB 322 would change that arrangement. After ETF funding is set and the rainy day account is repaid, Poole’s bill would use remaining revenues to send an amount equal to 1 percent of the previous year’s spending to the Budget Stabilization Fund. Any money left after that would go toward buses, school maintenance and other capital expenses.

Gov. Robert Bentley supports another proposal for amending the Rolling Reserve Act. That plan is found in both HB 330, sponsored by Rep. Alan Boothe, R-Troy, and SB 281, sponsored by Sen. Jimmy Holley, R-Elba. Bentley’s plan would put more money into the classroom by moving it back into the ETF for operating expenses, acting Finance Director Bill Newton said.

Poole and Newton agreed to talk further and seek common ground. Poole, who chairs the House’s education budget committee, said he plans to bring his bill for a committee vote next Wednesday.

By Kimble Forrister, executive director. Posted April 1, 2015.