News & Updates

June 27, 2012

Explaining the Compromise Budget Plan

Like most states, Alabama is facing a difficult budget situation. Applying fiscally conservative principles, Alabama Republicans have cut more than half a billion dollars out of the state budgets since gaining control of the Legislature in 2010. Lawmakers also passed a long-needed reform of the state’s employee pension system that will save more than $5 billion over 30 years. That’s a lot of fat-trimming. But spending cuts alone cannot prevent a looming crisis.

That’s because deeply-rooted structural problems with how the state allocates tax dollars have resulted in a drastic and disproportionate drop in funding for prisons and critical health care needs. It’s a long term problem that requires a long-term solution. Fortunately, the Legislature this year passed a plan that will help fix the problem over the long term by redirecting 25 percent of the state’s use tax and 75 percent of the internet sales tax toward the General Fund to pay for non-education state services. However, that fund isn’t expected to generate enough money to fill the gap for another three years, meaning the short-term financial cliff for these critical state needs is still here.

That’s why the Legislature agreed to a compromise plan that:
1.  doesn’t raise taxes;
2.  avoids teacher layoffs; and
3.  prevents cuts that would force the release of thousands of prisoners, as well as shut down
    nursing homes and hospitals.

This plan allows the state to bridge the financial gap over the next three years by utilizing our savings from the Alabama Trust Fund, which draws revenue from royalties owed to the state by oil and gas companies drilling of our coast.

Now some are saying we shouldn’t utilize the Alabama Trust Fund, and that’s certainly understandable because nobody likes to dip into their savings account. But doesn’t a savings account exist for situations just like this, when we are blessed to have a safety net for critical short term needs?  And, if we don’t utilize our savings account now when a crisis can be avoided, then when?

It would not be advisable to use our Alabama Trust Fund savings if there was nothing done to address the long-term problem. But because the Legislature passed a reasonable, fiscally-conservative solution to the greater budget problem, and because the state is on the right track toward getting the its financial house in order through other reforms like the pension plan overhaul, the Legislature has demonstrated the responsibility necessary to justify utilizing the savings to avoid this financial cliff.

Is it a perfect plan? No. And your legislators are open to ideas. But this is the best plan offered that doesn’t raise taxes, avoids teacher layoffs and prevents cuts that would force the release of thousands of prisoners and shut down nursing homes and hospitals.  And that’s why it is being offered to the citizens of Alabama.  Study it carefully.  Understand the alternatives.  It is important that you vote on Sept. 18th.

View All News & Updates