News from the Tennessee Valley State, Local and National news

Shortages around the U.S.
Alabama legislators not alone with budget troubles

By Phillip Rawls
Associated Press Writer

MONTGOMERY — The Alabama Legislature convenes today with a big hole to fill in the state budget that pays for Medicaid, state troopers and prisons, but Alabama lawmakers are not alone.

State legislaturs from the Atlantic to the Pacific are facing budget shortfalls — many of them bigger than Alabama's — even though most states, including Alabama, are experiencing an upturn in tax collections due to a stronger economy.

California leads the states with an $8.6 billion shortfall, followed by New York with $4 billion.

Alabama's shortfall is between $200 million and $300 million, depending on which official is doing the estimating.

In many states, including Alabama, one of the reasons for the shortfall is the rapidly rising cost of the Medicaid program, which pays for health care for about one-fifth of Alabama's citizens.

"Even though states have started to recover, they have not recovered fast enough," said Trudi Matthews, a health policy expert at the Council of State Governments.

Gov. Bob Riley says the Alabama Medicaid Agency needs an additional $129 million to maintain the status quo. That's the biggest part of the shortfall faced by legislators in the state General Fund budget, but Alabama is better off than some of its neighbors.

Mississippi is looking at a $268 million shortfall for Medicaid, and Georgia's is $279 million.

The Medicaid Agency receives money from the state General Fund budget, which appropriates money to non-education programs. Medicaid isn't the only cause of the General Fund's shortfall.

Legislative fiscal experts say next year's General Fund should take in $1.40 billion, which is $66 million less than is being spent this year. In addition, this year's budget was based on some one-time revenue that won't be repeated in fiscal 2006, and the Legislature and governor helped balance this year's General Fund budget by postponing one state payday until fiscal 2006.

Now the time has come to pay up.

Wants to hear ideas

Senate budget committee Chairman Roger Bedford, D-Russellville, said he's anxious to hear Riley's recommendations in his televised address to the Legislature at 6:30 p.m. today.

So far, the Republican governor hasn't unveiled any specifics, but he's hinted that it won't be a repeat of last year, when he and the Legislature enacted $155 million in new taxes and fees to balance the budget.

"So far I haven't seen any sentiment at all by any legislators to increase revenues," Riley recently told reporters.

'Additional sources'

House Speaker Seth Hammett, D-Andalusia, said legislators "are going to have to find additional sources of revenue for the General Fund," but none of the ideas he's seen floated — such as a soft drink tax or property tax — has had much support.

Last year, Alabama raised cigarette taxes by $88 million to help balance the General Fund budget. Alabama followed a national trend, with more than 30 states increasing cigarette taxes in the last three years to address budget deficits.

This year, there is no favorite tax proposal among states like the cigarette tax was, but several states are looking at increasing the taxes on gambling, Hammett said.

One proposal in Alabama would expand electronic bingo games from two dog tracks to all four and would place a state tax on the machines.

The governor said he will oppose that, like he did last year, when it first surfaced.

Alabama's other budget, the education budget, is in much different shape than the General Fund.

With the economic rebound, income taxes that flow into the education budget are increasing, and legislative fiscal experts predict the Legislature will have $554 million more to appropriate next year than the $4.6 billion being spent this year.

In the weeks leading up to the legislative session, some lawmakers discussed the possibility of transferring money from the education budget to the General Fund budget, but Paul Hubbert, executive secretary of the Alabama Education, said that won't happen now that the Democratic causes in the House and Senate have come out against diversion.

"Since they are the majority of both houses, it would be kind of foolish to try," said Hubbert, who wants to protect the new education revenue so he can get a 7 percent cost-of-living raise for education employees.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Subscribe for only 33¢ a day!

Leave feedback
on this or