Issue: Health

‘No repeal without replacement’ is essential step to protect health care for Alabamians

By Chris Sanders

Arise Citizens’ Policy Project policy director Jim Carnes issued the following statement Thursday, Jan. 19, 2017, in response to the release of Gov. Robert Bentley’s letter to U.S. Rep. Kevin McCarthy on suggested changes to the Affordable Care Act:

“We’re glad the governor recognizes the importance of not repealing the Affordable Care Act without a replacement, and we’re glad he urged Congress to protect funding for Medicaid and ALL Kids. But it was deeply disturbing to see him raise the prospects of allowing ‘a waiting period for pre-existing conditions’ and giving states more power to ‘reduce Medicaid benefits or enrollment.’

“Alabama Medicaid already has one of the lowest income eligibility limits and one of the most limited benefit packages in the country. Slashing our state’s barebones Medicaid program even more deeply would hurt hundreds of thousands of children, seniors, and people with disabilities who live in poverty, and it would do nothing to make our state healthier or more prosperous. Neither would returning to the bad old days of allowing discrimination against people with health conditions like cancer or diabetes.

“The Affordable Care Act has helped millions of people and saved thousands of lives across Alabama. Nearly 200,000 Alabamians have signed up for insurance through the ACA. More than 2 million Alabamians have pre-existing conditions that would have made it hard or impossible for them to get full coverage before the ACA lifted coverage caps and guaranteed their access to insurance. And the ACA has significantly reduced the number of uninsured young Alabamians by allowing 35,000 of them to remain on their parents’ plans until age 26.

“The stakes are too high for Alabamians to stay silent. We urge Alabamians to continue pressuring their members of Congress to protect Medicaid and not to repeal the Affordable Care Act without an immediate replacement that offers comparable coverage and consumer protections.”

Alabama avoids deep Medicaid cuts. What’s next?

By Carol Gundlach

Alabama Medicaid is safe – for now. State lawmakers wrapped up their special session last week with a sigh of relief after approving a one-time solution to stop deep Medicaid cuts. The Legislature agreed to use BP oil spill settlement money to address Medicaid’s $85 million shortfall for 2017 and to give the program another $105 million in 2018.

HB 36, sponsored by Rep. Steve Clouse, R-Ozark, will reverse the 30 percent Medicaid payment cuts to pediatricians and other primary care doctors that had begun in August. The bill will allow Alabama to move forward with the Medicaid regional care organization (RCO) reforms that will emphasize preventive care in an effort to save the state money and keep patients healthier. The measure also will prevent Medicaid from having to cut outpatient dialysis, prescription drugs and other services next year.

The House on Sept. 7 voted 87-9 to approve the conference committee’s version of the bill. Later that day, the Senate passed it 22-8. This Associated Press story has more about the plan.

“We’re relieved that the Legislature pulled Alabama back from the brink of devastating Medicaid cuts that would have hurt more than 1 million people – mostly children, seniors, and people with disabilities,” Arise executive director Kimble Forrister said. “And we’re pleased to see lawmakers take steps to help shore up Medicaid funding for the next two years. But vulnerable Alabamians’ access to health care shouldn’t be left up to stopgaps or one-time money.”

BP bill was a short-term answer to a long-term problem

The bottom line is that HB 36 is yet another temporary solution. Lawmakers uttered the phrase “kick the can down the road” many times while debating the plan, and with good reason. The bill represents another missed opportunity for the Legislature to meet Medicaid’s need for a permanent, stable source of revenue that can meet the needs of a growing population.

Fortunately, the bill includes some modest relief for the General Fund (GF) budget. Lawmakers freed up a projected $35.2 million a year on average through 2026 for Medicaid and other GF services. That is the result of using most of the BP settlement funds to repay the Alabama Trust Fund (ATF) for money borrowed to prevent GF cuts in recent years. (The ATF receives royalties from oil and gas drilling off Alabama’s shores.) The bill also gives the state longer to repay ATF money borrowed in 2013-15, extending that deadline from 2026 to 2033. Those moves should ease pressure on the GF budget over the next decade, but they are still nowhere close to an adequate solution to Alabama’s recurring GF shortfalls.

The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenue sources, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Read The Alabama Tax & Budget Handbook for more on how this deficit came to be and how Alabama can end it.

The GF’s recurring shortfalls have dire implications for Medicaid, which is the backbone of Alabama’s health care system. Medicaid provides vital health coverage for more than one in five Alabamians – mostly children, seniors, and people with disabilities – and helps many rural hospitals and clinics keep their doors open.

“Medicaid is essential to the hospitals and clinics on which we all rely,” Forrister said. “Putting our state’s health care infrastructure at risk is no way to build a stronger Alabama. Neither is lurching from one crisis to another because of a repeated failure to solve the General Fund’s long-term shortfall.”

Alabama needs a lasting funding solution for Medicaid, and there is a strong economic and financial case that the solution should include Medicaid expansion. Closing the coverage gap for working adults and college students would mean a healthier, more productive workforce. It would mean thousands of new jobs across Alabama. And it would mean big savings for the state on mental health care and other services. Click here to read Arise’s fact sheet on how Medicaid expansion would benefit Alabama’s health, economy and budgets.

Lottery proposal dies, returns to life, then dies again

Alabama’s latest Medicaid funding crisis began in April when the Legislature enacted a GF budget that left Medicaid $85 million short of the amount needed to maintain current services. That move prompted public outcry and motivated the #IamMedicaid social media campaign that Alabama Children First launched with Arise’s support in April to help show the human faces behind the Medicaid debate. Responding to pressure from the public, advocates and health care providers, Gov. Robert Bentley called the Legislature into special session in August to consider two possible solutions to the Medicaid crisis.

Bentley’s proposed long-term answer was a state lottery with proceeds dedicated to Medicaid. (Arise takes no position for or against a state lottery, but no lottery plan would have generated revenue in time to stop the 2017 Medicaid cuts.) As a short-term measure until lottery revenue became available, Bentley proposed a bond issue against the state’s BP oil spill settlement, freeing up state dollars for Medicaid in 2017. Clouse, who chairs the House GF budget committee, had proposed a similar measure during the regular session.

The two plans met drastically different fates. By the slimmest of margins, the Senate passed a proposed constitutional amendment to establish a lottery. After a rollercoaster debate, dozens of proposed amendments and reconsideration of an initial vote against the plan, the House sent the lottery back to the Senate either to approve or refer to a conference committee. Instead, the Senate effectively voted to kill the lottery after passing one only a few days earlier. Disagreement over whether to allow casino-type games at dog tracks and other facilities led to a three-way deadlock among pro-lottery, anti-lottery and pro-casino senators, losing the lottery the supermajority of votes it needed for Senate passage.

Legislature passes BP bill to stop Medicaid cuts after touch-and-go debate

With the lottery dead, the Legislature’s only remaining option was to pass short-term funding for Medicaid during the final days of the special session. The result was a complicated bond issue guaranteed by proceeds from the BP oil spill settlement. By issuing bonds instead of accepting periodic payments from BP, Alabama could pay off state debts and create savings that would help fund Medicaid in 2017 and subsequent years.

The original House-passed bill would have given Medicaid an additional $70 million in 2017. Medicaid supporters in the Senate insisted on longer-term support and full Medicaid funding for 2017. Eventually, both chambers approved a conference committee report that provided Medicaid with the $85 million needed to avoid cuts in 2017, as well as $105 million in 2018.

In addition, the BP bill will support $120 million of road projects in Mobile and Baldwin counties and repay $400 million that the state borrowed in past years from the ATF. Legislators engaged in extensive and often heated debate over how much of the state’s BP settlement money should go to the coastal areas most deeply hurt by the 2010 oil spill. The debate broke largely along regional lines, with many north Alabama lawmakers arguing for more debt repayment and many south Alabama legislators seeking more investment in the Mobile area.

What’s next for Medicaid in Alabama?

Alabama Medicaid’s imminent funding crisis is over, but much work remains to ensure a strong future for our state’s health care system. Revenue from the BP bill should help Medicaid avoid further cuts in 2017 and will reduce the program’s projected shortfall in 2018. But when the Legislature returns in February, Medicaid funding for 2019 and beyond still will be uncertain.

Arise will continue to push for Medicaid expansion and permanent, adequate and stable tax revenue to help secure health coverage for children, seniors, people with disabilities, and working families across Alabama. “Closing the coverage gap for working people and college students would keep folks healthier, create thousands of jobs, and save the state millions of dollars on mental health care and other services,” Forrister said. “Expanding Medicaid would be a victory for Alabama’s economy, budgets and families.”

By Carol Gundlach, policy analyst, and Chris Sanders, communications director. Posted Sept. 15, 2016.

Lottery, BP settlement bills clear Alabama legislative committees as special session on Medicaid funding continues

By Carol Gundlach

(Update: The Alabama House voted 91-10 Wednesday to pass the BP settlement bill (HB 36). A Senate committee approved the bill Friday, positioning it for a Senate vote Tuesday. SB 11 lost a procedural vote in the Senate on Thursday, greatly reducing its chances of passage. Senators are expected to debate SB 3 on Friday.)

Two very different lottery bills won approval in the Alabama Senate’s Tourism and Marketing Committee on Tuesday, the second day of a special session prompted by a Medicaid funding shortfall. Both are sponsored by Sen. Jim McClendon, R-Springville, and the Senate could debate both as soon as Wednesday. (Check out Arise’s fact sheet to learn more about how lotteries affect low-income people and state revenues.)

SB 3, introduced at the request of Gov. Robert Bentley, creates a “simple” lottery consisting only of lottery ticket sales. SB 11 would create a ticket-based lottery but also would allow (and tax) “electronic lotteries” at existing dog tracks in Greene, Jefferson, Macon and Mobile counties. SB 11 also would authorize Bentley to seek additional state revenue by negotiating a compact with the Poarch Band of Creek Indians.

SB 3 would direct state lottery revenue to the General Fund (GF), which supports non-education services like health care and public safety. SB 11 would direct state lottery and gambling tax revenues to both the GF and education budgets. Both plans would require voter approval in November.

Arise does not take a position for or against a lottery. But it’s important to note that a lottery would not produce revenue in time to fund Medicaid fully in 2017, or to reverse the 30 percent Medicaid payment cuts to pediatricians and other primary care doctors that began Aug. 1. More cuts will follow unless the Legislature addresses Medicaid’s $85 million shortfall. Medicaid provides health coverage for one in five Alabamians, mostly children, seniors, and people with disabilities.

House approves BP settlement bill that could stop 2017 Medicaid cuts

One measure that could help avert Medicaid cuts in 2017 cleared the House’s GF budget committee Tuesday. HB 36, sponsored by Rep. Steve Clouse, R-Ozark, would use income from the BP oil spill settlement to offset state-issued bonds. Revenue from those bonds would be used to pay off state debts, thereby freeing up $70 million to go toward Medicaid’s $85 million shortfall in 2017. The House could consider the bill Wednesday.

Alabama needs adequate, stable Medicaid funding to avoid cuts that hurt our communities, our neighbors and our health care system. The long-term solution should include passing new revenue and closing the coverage gap for working families, Arise policy director Jim Carnes wrote on Equal Voice News. Expanding Medicaid would allow Alabama to reap considerable state savings on mental health care and other services. (Check out Arise’s fact sheet to learn more about how Medicaid expansion would benefit Alabama’s health, economy and budgets.)

By Carol Gundlach, policy analyst. Posted Aug. 16, 2016. Last updated Aug. 19, 2016.

A long-term budget fix includes Medicaid expansion

By Jim Carnes

As Alabama lawmakers grapple to prevent devastating Medicaid cuts, the time is right to address a related threat to our state: the health coverage gap. Nearly 200,000 Alabama workers we depend on every day – in agriculture, food service, retail, home health and other fields – have no access to regular health care. They have no health insurance because their employers don’t offer it. They earn too much to qualify for Medicaid but too little to qualify for federal tax credits to buy private plans. As a result, they often struggle to work while dealing with health problems that sap their productivity, add stress to their households and get worse without timely care.

Closing the coverage gap would not only save lives and help working families; it would stabilize the budget and boost our economy. This fact sheet by policy director Jim Carnes takes a closer look at how Medicaid expansion would benefit Alabama’s health, quality of life and economy.

Medicaid cuts loom, payday reform falls just short as Alabama Legislature ends 2016 regular session

By Chris Sanders

The Alabama Legislature’s 2016 regular session, which ended Wednesday, was more notable in many ways for what didn’t happen than for what did.

Lawmakers did not agree on a revenue solution to prevent devastating Medicaid cuts that would reduce health care access for hundreds of thousands of children, seniors, and people with disabilities in Alabama. Despite enormous public support, payday lending reform didn’t cross the finish line in the House. State education funding still hasn’t returned to where it was in 2008. And proposals to expand affordable housing and reform Alabama’s death penalty system gained little traction at the State House.

Still, progress was real on several of Arise’s priority issues. With minutes left in the session, lawmakers passed a bill to expedite voting rights restoration for thousands of Alabamians. Payday lending reform made it further in the Legislature than it ever has before, with a reform bill sailing through the Senate 28-1. And the new #IamMedicaid campaign continues to remind lawmakers and the public of the real human faces behind Alabama’s Medicaid debate.

Here is a recap of what happened on each of Arise’s issue priorities this session – and the action that may yet lie ahead on them this year.

State budgets

Deep Medicaid cuts in Alabama moved much closer to reality Tuesday when a bill that would have averted most of them died in a Senate committee. HB 569 would have used BP oil spill settlement money to help free up $70 million to go toward Medicaid’s $85 million shortfall, but the bill died when the Senate’s General Fund (GF) budget committee adjourned without voting on it. Committee chairman Sen. Trip Pittman, R-Montrose, ended the meeting after his colleagues voted 9-6 to side with a proposed substitute by Sen. Arthur Orr, R-Decatur. Orr’s plan would have reduced the amount of road money in the bill and distributed those funds to all areas of Alabama instead of just coastal areas. The substitute also would have increased the share of settlement money used for debt repayment, fully repaying the Alabama Trust Fund (which receives state revenue from oil and gas drilling) for money that the state borrowed to avoid massive GF cuts in recent years.

The Legislature may return later this year for a special session to address the Medicaid shortfall, but Gov. Robert Bentley said “everybody’s got to rest a little bit” before he makes that decision. Even though the regular session is over, lawmakers are expected to continue a series of weekly hearings on Medicaid’s funding structure and importance to the state’s health care system. Meanwhile, Alabama moves ever closer to a future when deep Medicaid payment cuts could prompt many pediatricians to leave the state and could imperil many of the rural hospitals and doctor’s offices upon which Medicaid patients and privately insured Alabamians alike depend. The cuts could end Medicaid coverage for outpatient dialysis and adult prescriptions and eyeglasses as well. Also on the chopping block could be the Program of All-Inclusive Care for the Elderly (PACE) in Mobile, which saves the state money by allowing participating seniors to live independently in their own homes instead of being sent to a nursing home.

The Education Trust Fund (ETF) budget drew many fewer headlines than the GF this year, but state education funding is still about 15 percent below its pre-recession level of 2008, adjusted for inflation. (Even the 2008 funding level was insufficient to meet many of Alabama’s educational needs.) The 2017 ETF budget includes a 33 percent boost in pre-K funding and provides a 4 percent pay raise for most K-12 teachers. Universities and two-year colleges also received slight increases.

Payday lending reform

Alabama’s payday reform movement enjoyed an unprecedented breakthrough in the Legislature this year when a reform bill passed 28-1 in the Senate, but the plan came up just short of final passage. SB 91, sponsored by Orr, was on the House calendar Tuesday but never reached the floor for a vote after a long day of filibusters. Orr’s bill would have given Alabama payday borrowers a more realistic path out of debt by slashing interest rates, allowing installment payments and giving borrowers at least six months to repay. (Current state law allows payday loans to carry interest rates of up to 456 percent a year.) Arise will work with Alabama Appleseed and other advocates to build on this year’s momentum and growing public support as the reform movement continues into 2017.

Voting rights

Alabama will speed up the voting rights restoration process for thousands of people if Bentley signs a bill that the Legislature passed Wednesday. With just minutes left in the session, the House passed SB 186, sponsored by Sen. Linda Coleman-Madison, D-Birmingham, and sent it to the governor. The clock struck midnight just before the Senate could consider another voting rights bill – HB 268, sponsored by Rep. Mike Jones, R-Andalusia – which would have clarified what counts as a “crime of moral turpitude” that bars someone from voting in Alabama. Other proposals to expand voting access, including multi-day voting and same-day voter registration, died in committee.

Death penalty reform

A bill to establish a state Innocence Inquiry Commission for death penalty cases – SB 237, sponsored by Sen. Dick Brewbaker, R-Montgomery – cleared the Senate this year but died Tuesday when the House Judiciary Committee didn’t vote on it. Other proposed reforms to Alabama’s death penalty system, including a three-year moratorium on executions, went nowhere. The U.S. Supreme Court on Monday ordered further review of Alabama’s capital sentencing scheme, which allows judges to override a jury’s sentencing recommendation. A state circuit judge in March declared Alabama’s judicial override system unconstitutional, but the state has appealed that ruling.

Tax reform

Alabama’s tax system will remain upside down for another year, as the Legislature declined to consider measures to end the state grocery tax or close corporate tax loopholes. A bill to increase the state property tax won Senate committee approval but went no further. A proposed 75-cent cigarette tax increase won the endorsement of the Alabama Health Care Improvement Task Force but was never introduced in the Legislature. Lawmakers did, however, enact new tax breaks for small businesses and for increased use of state port facilities. The Legislature also passed a bill – SB 208, sponsored by Orr – to require annual reports on whether tax incentives are producing their intended economic effects.

“Ban the box” legislation

SB 327, sponsored by Sen. Quinton Ross, D-Montgomery, won Senate committee approval on April 7 but never reached the Senate floor. The bill would have removed the criminal history checkbox from state job and license applications, removing a potential barrier to employment for thousands of Alabamians looking to rebuild their lives and provide for their families after serving their time for a criminal offense.

Housing Trust Fund (HTF)

A bill to increase the state mortgage recording fee and distribute some of the revenue to the state HTF died in a House committee. HB 341, sponsored by Rep. Patricia Todd, D-Birmingham, would have created a dedicated state funding source for the HTF, which could create thousands of jobs while addressing Alabama’s need for more than 90,000 affordable homes for residents with extremely low incomes.

Quick overviews of Arise’s 2016 issue priorities

By Alabama Arise

Your time is important, and your voice for a better Alabama is essential. That’s why we’ve prepared these quick overviews to keep you up-to-date on what’s happening at the Alabama Legislature on Arise’s 2016 issue priorities. We’ll update this post as needed.

“Ban the box” legislation: ‘Ban the box’ law would help rebuild lives in Alabama — The “criminal history checkbox” on many standardized job application forms often keeps otherwise qualified employees from making it to the next stage of the hiring process, where they could explain their past face-to-face. This creates discouraging barriers to employment for people who are looking to rebuild their lives after serving their time and paying their debt to society. A growing national “ban the box” movement to remove those checkboxes from job applications is helping former inmates become productive members of society and provide for their families. It could do the same for thousands in Alabama. (The Senate Judiciary Committee on April 7 approved SB 327, which would “ban the box” on state job and license applications, but the Senate never voted on it.)

Death penalty reform: Death is different: Reforming Alabama’s capital punishment system — People accused of capital crimes deserve every possible safeguard to ensure the integrity of a conviction. This overview examines several bills that could lower the risks of errors and injustice and could bring Alabama law into compliance with U.S. Supreme Court rulings.

Health care: Medicaid RCOs: Better care, better health, lower costs — Medicaid’s promising new regional care organization (RCO) reforms are designed to keep patients healthier while cutting health care costs. Investing in preventive care now should pay off in fewer costly emergency room visits later. (The Legislature on April 5 overrode the governor’s veto to pass a General Fund budget that would force deep Medicaid cuts. Lawmakers may return later this year for a special session to address Medicaid’s funding shortfall.)

Housing: Home at last: The Alabama Housing Trust Fund — Alabama has a shortage of almost 90,000 affordable and available homes for residents with extremely low incomes. State funding for the Alabama Housing Trust Fund (HTF), created in 2012, could reduce this shortfall and make dreams of home a reality for tens of thousands of families, seniors, veterans, and people with disabilities.

Payday lending reform: SB 91: A step in the right direction for Alabama borrowers — Payday loans in Alabama carry astonishingly high interest rates: up to 456 percent a year. A Senate proposal would give payday borrowers a less expensive path out of debt by reducing the maximum interest rate and allowing borrowers to pay off their loan in installments over time. (The Senate passed the bill 28-1 on April 5. A House committee approved a different version of SB 91 on April 27, but the regular session ended without a House vote on either version.)

State budgets: Alabama’s education budget begins to rebuild, but General Fund struggles put Medicaid at risk — The usual contrast between Alabama’s starving General Fund budget and its slightly healthier but still inadequate Education Trust Fund budget is exceptionally stark this year. As education finally climbs back toward its 2008 funding level after years of enormous cuts, the latest General Fund shortfall threatens devastating Medicaid cuts with effects that could ripple through the state’s entire health care system. (The Legislature on April 5 overrode the governor’s veto to pass a General Fund budget that would force deep Medicaid cuts. Lawmakers may return later this year for a special session to address Medicaid’s funding shortfall.)

Tax reform: Cigarette tax for Medicaid: A win-win to improve health and fill Alabama’s revenue gap — The future of Alabama Medicaid is on the line as lawmakers confront yet another threadbare General Fund budget. Without significant new long-term revenue, Medicaid will continue to be at risk of cuts to vital services and doctor payments that could place the entire program — and Alabama’s entire health care system — at risk. A cigarette tax of 75 cents per pack could provide long-term revenue needed to avoid those cuts, while also reducing health care costs and saving lives in Alabama.

Voting rights: A menu of options to improve voting rights in Alabama — Our entire democratic system depends on how elections are structured and who can participate. When barriers exclude people from voting, they often lose faith in a system that doesn’t seem to value their voice in our society’s decision-making process. This overview examines several bills that would protect and expand voting rights, including proposals related to early voting, streamlined voter registration and voting rights restoration. (SB 186, which would expedite the state’s voting rights restoration process, has gone to Gov. Robert Bentley after passing the Senate on April 19 and the House on May 4. Different versions of HB 268, a bill to clarify which crimes are “crimes of moral turpitude” that permanently disqualify offenders from voting in Alabama, passed the House on April 19 and the Senate on May 3, but the plan died May 4 when the regular session ended before the House could vote on a proposed conference committee version.)

Posted March 7, 2016. Last updated May 5, 2016.

Alabama’s education budget begins to rebuild, but General Fund struggles put Medicaid at risk

By Carol Gundlach

The usual contrast between Alabama’s starving General Fund (GF) budget and its slightly healthier but still inadequate Education Trust Fund (ETF) budget is exceptionally stark this year. Nearly halfway through the Legislature’s 2016 regular session, both major state budgets have begun to move – in one case toward a predictable conclusion, and in the other with no settled end in sight.

State education support just now approaching return to 2008 level

The path forward looks easier for the ETF, which finally is beginning to recover from deep cuts during and after the Great Recession. The House ETF budget committee Wednesday approved an education budget that would bring K-12 funding nearly back to its 2008 peak. The committee’s budget includes a 4 percent teacher pay raise, a 3 percent increase for transportation, a 2.5 percent increase for universities, and a nearly 5 percent increase for two-year colleges.

Alabama’s K-12 cuts have been the nation’s second worst since 2008, and its higher education cuts have been the fourth worst. Even a return to 2008 funding levels would not be enough to account for the many needs that were still unmet then, especially in low-income rural schools.

The ETF has two primary sources of state revenue: income taxes (earmarked for teacher salaries) and sales taxes. Both are considered “growth taxes” because their revenues tend to increase during good economic times. As Alabama climbs slowly out of the recession, taxes that support the ETF are inching up. The Legislative Fiscal Office (LFO) projects the ETF will have $187 million more in available revenue in 2017 than in 2016.

Proposed Medicaid cuts would be disastrous for Alabama’s health care system

The picture is much bleaker and more uncertain for Alabama’s non-education services like health care, child care and public safety. All of the “big four” state agencies – Medicaid, the Department of Human Resources (DHR), mental health and corrections – would receive essentially the same amount of GF money next year as this year under the budget that the Senate passed last week. But “level funding” at the 2016 level would follow years of steady declines and failure to keep up with ordinary cost growth. Mental health and DHR, in particular, would find it difficult to serve the children, seniors, and people with disabilities who depend on their services.

For Medicaid, level funding would be a disaster. It would end the regional care organization (RCO) reforms designed to keep patients healthier by emphasizing preventive care and reducing the number of costly emergency room visits. Failure to implement the RCOs could cost Alabama more than $700 million in new federal money set aside for the changes. Without significant new revenue, Medicaid will be unable to launch the RCOs or maintain many vital services for the most vulnerable patients.

Level funding for Medicaid also would eliminate coverage of outpatient dialysis, hospice, and adult eyeglass services, and would reduce payments to physicians, Medicaid commissioner Stephanie Azar said. Advocates fear that lower Medicaid physician payments would lead many doctors, especially pediatricians, to leave the program – or possibly to leave Alabama entirely.

With no new money available and no new revenue measures on the move, Senate GF budget committee chairman Sen. Trip Pittman, R-Montrose, concentrated all GF reductions in one agency: Medicaid. Almost all other GF services would be level-funded under the plan. Public health, facing a tuberculosis outbreak and other potential infectious disease crises, is one of the rare services that, after years of cuts, would see an increase ($10 million, or 45 percent).

The GF has more than a dozen revenue sources, mostly small taxes that don’t grow with the economy. Nearly 8 percent of 2015 GF revenue was one-time money borrowed from the Alabama Trust Fund, which receives state revenues from oil and gas drilling. That money dried up for the 2016 budget year, fueling a funding crisis that took three legislative sessions to resolve.

The GF will have $95 million less available next year than it did in 2016, the LFO projects. Lost revenue includes the end of the borrowed money, lower oil and gas lease income, and lower interest on state deposits. Last year’s cigarette tax increase was not large enough to offset those revenue declines.

What lies ahead for Alabama’s 2017 budgets

Inadequate though they are, both budgets are moving forward in the Legislature. The GF budget passed the Senate last week. During the debate, Pittman said he would withdraw the budget if it returned to the Senate in the same form it passed. He predicted that “all-star” lobbyists representing health care providers would succeed in urging the House to find the revenue necessary to save Medicaid services while funding other vital functions like child protection, mental health and courts.

House action on both budgets is expected soon. The House could vote on the ETF budget as early as Tuesday. And House GF budget committee chairman Rep. Steve Clouse, R-Ozark, plans to unveil a substitute GF budget for the committee’s consideration this Wednesday.

By Carol Gundlach, policy analyst. Posted March 4, 2016.

A budget at last: What got cut, what didn’t, and what’s next for Alabama

By Carol Gundlach

Three times proved to be the charm Wednesday night as the Alabama Legislature finally passed a General Fund (GF) budget and accompanying revenue bills. Gov. Robert Bentley signed the budget Thursday morning, a mere two weeks before the start of the 2016 budget year.

Tax bills: What passed and what didn’t

Alabama faced a GF budget shortfall of nearly $260 million that was partially filled by a 25-cent-per-pack increase in the cigarette tax. Alabama Arise and health advocates had hoped for a much larger increase that would have raised more revenue and ensured a reduction in smoking, particularly among teens. Unfortunately, the tax approved was inadequate to meet either need.

The Legislature also passed two small provider taxes (each worth about $8 million) on pharmacies and nursing homes. These taxes were dedicated to the Medicaid program and helped save both promising new Medicaid reforms and Medicaid itself.

Facing opposition from ALFA, the Legislature failed to pass business privilege tax changes that would have raised $28 million by increasing taxes on the wealthiest corporations while cutting taxes for tens of thousands of small businesses. Separately, lawmakers also failed to eliminate the state income tax deduction for FICA (e.g., Social Security and Medicare) taxes, which would have raised nearly $200 million for education and other essential state programs.

Through a complicated linkage of bills, the Legislature transferred $80 million in use tax revenues (essentially a sales tax on out-of-state purchases) from education to the GF while also increasing the amount of education money available to public schools. Changes to the Rolling Reserve Act, which sets an artificial cap on annual education spending, replaced the lost use tax revenues by increasing the money available to schools for one-time infrastructure needs like books, building repairs, buses and technology. Alabama’s education funding still hasn’t returned its pre-recession 2008 level.

Altogether, the use tax transfer and the new taxes raised around $164 million. That was enough to prevent devastating cuts to crucial state services, but inadequate to truly fill the budget gap. The changes also were not nearly enough to solve the GF’s chronic shortfall.

Medicaid, DHR, mental health aren’t cut, but other important services are

Because new revenues were inadequate, not all state agencies received the money needed to maintain current service levels. The Department of Public Health was cut by nearly $10 million, of which $2.4 million came from AIDS medication assistance. The Alabama Department of Environmental Management was nearly zeroed out of the budget, endangering the state’s environmental protection and risking federal intervention.

The Department of Youth Services was cut by nearly 20 percent, which almost certainly will result in fewer community services for at-risk children and teens. Senior services also suffered a small cut, though it should not affect the Medicaid waivers that allow hundreds of seniors to live independently outside of nursing homes.

Other essential services survived without the devastating cuts feared earlier this year. The “Big Five” – Medicaid, mental health, corrections, trial courts and the Department of Human Resources – all were funded at or above 2015 GF levels.

Important reforms to Medicaid and the corrections system also will be able to continue. Lawmakers cobbled together additional money to support Medicaid’s transition to a regional care organization model designed to cut costs and keep patients healthier. The GF budget also funds new parole officers and community correctional services as alternatives to lengthy prison sentences.

The prison reform funding was good news on another front: It means Alabama will end its lifetime SNAP and TANF eligibility bans for people with a past felony drug conviction. Language ending the state’s bans on assistance under the Supplemental Nutrition Assistance Program and the Temporary Assistance for Needy Families program is included in the prison reform law that the Legislature passed earlier this year. With funding in place to allow the law to take effect, the SNAP and TANF bans will end Jan. 30, 2016.

Hope for the future

As the last late night of the session wrapped up Wednesday, there were some encouraging signs for the future. For the first time, the conservative supermajority in the Legislature was willing to consider raising taxes, and majorities in both the House and Senate actually voted to do so. Legislative floor debate included real, serious discussion of Alabama’s structural deficit and the need for comprehensive tax reform.

Most importantly, the organized voices of citizens and advocates for low-income Alabamians, seniors, children, and people with disabilities were loud – and effective – in their demand for new taxes instead of devastating cuts to life-saving state services. Constituent emails, telephone calls, postcards and face-to-face meetings with legislators helped to prevent those cuts. They also helped convince the Legislature, though reluctantly and inadequately, to raise tax revenue to support vital services that make Alabama a better place to live and work.

By Carol Gundlach, policy analyst. Posted Sept. 18, 2015.

Mental health, DHR, courts would face cuts under Alabama House’s General Fund budget

By Chris Sanders

Mental health care, trial courts and the Department of Human Resources (DHR) would be among the vital services suffering cuts next year under the General Fund (GF) budget that the Alabama House passed 59-37 Friday. A Senate committee is set to consider the GF budget Monday.

The House’s budget would fund new reforms of Medicaid and corrections and would prevent the closure of National Guard armories across Alabama. But mental health, public health, DHR and courts – which were funded at their 2015 GF levels under the plan that cleared a House committee Wednesday – would face 2.5 percent cuts under the House’s budget. Many other services would lose 10 percent or more of their support next year.

No business privilege tax bill means deeper service cuts

Cuts to mental health care, DHR and other services emerged Friday when lawmakers retooled the committee’s budget to account for the House’s failure to pass business privilege tax changes Thursday. The measure would have raised an additional $22.5 million a year by cutting taxes for tens of thousands of small businesses while increasing the tax for the largest corporations. The Alabama Farmers Federation opposed the bill, the Montgomery Advertiserreported Thursday.

Narrow majorities in the House voted Thursday for several other revenue measures, including a 25-cent-per-pack increase in the cigarette tax, two provider taxes dedicated to Medicaid, and tax increases on automobile titles and rentals. Together, these taxes would bring in an additional $107 million for GF services next year. But the package falls short of the amount needed to address the GF shortfall without cuts. It’s also well short of the $300 million in new GF revenue that Alabama Arise and more than 200 other organizations have urged.

The provider tax bills won approval from the Senate’s GF budget committee Friday. So did the cigarette tax bill, along with an amendment to dedicate the revenue to Medicaid. But committee members did not vote on the auto title and car rental tax proposals, and those bills’ future is unclear.

Bills would move revenue, expenses from education budget to General Fund

Senate committee members Friday also approved bills to revise the Rolling Reserve Act, which caps annual education spending, and transfer use tax revenues from the Education Trust Fund (ETF) to the GF. But Sen. Arthur Orr, R-Decatur, who chairs the committee, said he expects the bills will be “heavily amended” before a Senate vote.

The use tax measure would shift use tax revenue from the ETF to the GF starting in 2017, accompanied by a transfer of education budget obligations for traditional GF agencies. The use tax is equivalent to a sales tax on goods bought outside the state for use within Alabama. It is commonly discussed in the context of Internet sales and equipment purchases.

Many lawmakers strongly oppose moving money from education to GF services. Alabama’s education funding is still well below its 2008 level, before the Great Recession, and its K-12 cuts and higher education cuts since then are among the nation’s worst.

The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenues, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Without significant new revenue, Alabama will not have enough money to continue investing in vital services that make the state a better place to live and work.

By Chris Sanders, communications director. Posted Sept. 11, 2015.

Alabama Senate committee eases Medicaid cuts, approves budget that Bentley already vetoed

By Chris Sanders

Update: The Alabama Senate passed a no-new-revenue General Fund budget 19-15 Monday, but the House swiftly rejected it 92-2. The first special session ended without a budget, meaning Gov. Robert Bentley will have to call the Legislature back for a second special session.

Get ready for another special session. That seems to be the takeaway from Friday’s action at the State House, where an Alabama Senate committee rejected the House’s Medicaid cuts and voted 9-4 for a General Fund (GF) budget identical to the one that Gov. Robert Bentley already vetoed in June.

The budget, which includes no new revenue, would slash child care and mental health care. It also would end promising new reforms of Medicaid and corrections before they could get started. The full Senate likely will consider the budget Monday. Sen. Arthur Orr, R-Decatur, who chairs the Senate’s GF budget committee, urged lawmakers to amend the plan on the floor to prioritize funding for prison reform. (Read more about the Senate budget’s effects here.)

Lawmakers appear no closer to an answer on the GF than they were two months ago. With just two meeting days left before the current special session ends Tuesday, Bentley could reject any budget without giving the Legislature a chance to override his veto. Another special session would be needed to approve a GF budget before Alabama’s 2016 budget year begins Oct. 1, 2015.

‘Replacing a sorry budget with a crappy budget’

Senators gave a cold shoulder to the House’s budget, which would have gutted Medicaid with a 23 percent cut. A cut that deep could force Alabama to end its Medicaid program, State Health Officer Don Williamson said this week.

One in five Alabamians – mostly children, seniors, and people with disabilities – would lose health coverage if the state ended Medicaid. The effects also would be devastating for hospitals, nursing homes, pharmacies and the state’s entire economy. (Learn more about what the end of Medicaid would mean for Alabama here.)

Several committee members spoke passionately in favor of protecting Medicaid. Sen. Billy Beasley, D-Clayton, said Alabama must fund the program fully to protect the state’s entire health care infrastructure. “Without Medicaid, Children’s Hospital may have to close,” Beasley said. “Without Medicaid, doctors’ offices may have to close.”

Sen. Priscilla Dunn, D-Bessemer, asked lawmakers to ease the fears of Medicaid patients who are “scared to death” of losing coverage. “We need to put more of our hearts into Medicaid,” Dunn said.

Perhaps the bluntest assessment came from Sen. Cam Ward, R-Alabaster, who sponsored the prison reform law that needs funding before it can take effect. “We’re replacing a sorry budget with a crappy budget,” Ward said.

Revenue measures still face an uphill battle

The budget deadlock intensified when key parts of Bentley’s plan to raise new revenue to prevent massive GF cuts went nowhere in the House’s GF budget committee. The panel voted 8-7 Tuesday to reject a plan to increase the state cigarette tax by 25 cents per pack (from 42.5 cents to 67.5 cents). A bill to increase the business privilege tax on large corporations was on the agenda Tuesday but did not come up for a vote.

House and Senate committees have approved bills to transfer use tax revenues from the Education Trust Fund to the GF, but the measures face stiff opposition from many legislators. The use tax is equivalent to a sales tax on goods bought outside the state for use within Alabama. It is commonly discussed in the context of equipment purchases and Internet sales.

Many lawmakers strongly oppose shifting money from education to GF services. Alabama’s education funding is still well below its 2008 level, before the Great Recession, and its K-12 cuts and higher education cuts since then are among the nation’s worst.

The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenues, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Without significant new revenue, Alabama will not have enough money to continue investing in vital services that make the state a better place to live and work.

By Chris Sanders, communications director. Posted Aug. 7, 2015. Updated Aug. 11, 2015.