Update (Thursday, Sept. 17, 2015): This morning Gov. Robert Bentley signed a budget approved by both houses of the Alabama legislature late Wednesday night. The $1.7 billion budget is for the 2016 fiscal year, which begins Oct. 1. Legislators used a combination of sin tax increases and a transfer of $80 million from the Education Trust Fund to balance the $200 million shortfall blockading the passage of a budget. For now, the state government is safe from a shut down.
After a careful review, I signed the FY2016 General Fund Budget into law today. #alpolitics pic.twitter.com/T3XbMqvOWk
— Gov. Robert Bentley (@GovernorBentley) September 17, 2015For months, it has seemed an end to the fight over Alabama’s mounting budget crisis would never reveal itself.
On Tuesday, Sept. 8, the Alabama legislature returned to begin a special session convened by Gov. Robert Bentley. The emergency special session is intended to solve the state’s deficit in its general fund budget. A shortfall of over $200 million is looming over the 2016 fiscal year, which begins Oct. 1.
Republican lawmakers in the Alabama House of Representatives pushed through several bills last week in an attempt to repair the broken budget. The bills proposed would alleviate the deficit by raising state taxes and borrowing from Alabama’s Education Trust Fund, which provides appropriations for all state public schools and universities. Even with the new measures to increase revenue, the house budget plan would not balance the shortfall.
The Legislature approved the revenue bills in a late-night session Tuesday, Sept. 15.
Without the new taxes and budget reforms, millions of dollars in cuts would severely affect state programs. The constitution of the state of Alabama mandates a balanced budget, and without it the state government may be forced to shut down or implement austerity measures.
In an attempt to ease the shortfall, the senate approved a bill late Monday evening, Sept. 14, that would borrow $100 million from the Education Trust Fund to help cover the deficit. $100 million was double the amount approved by the house late last week. The senate’s plan was then returned to the house and reduced to $80 million.
Auburn University received more than $250 million in appropriated funds from the ETF last year. It is possible habitual borrowing from the education fund could affect its solvency in the future.
“We’re already behind when it comes to education,” said Calvin Wilburn, president of Auburn College Democrats. “Just the idea of taking money from education is a sign you shouldn’t be in leadership. Education is the moral priority.”
It took the house several attempts to pass a budget with any tax increases, but a bill was finally pushed through that would raise the cigarette tax from 42.5 cents to 67.5 cents. The cigarette tax increase is estimated to provide approximately $66 million in new tax revenue; however, most of the taxes that have been proposed are regressive, meaning they have a greater affect on low-income families.
“Alabama already has one of the lowest rates of expenditure and one of the most regressive tax systems in the nation,” said William Franko, assistant professor in political science. “I think that kind of shows you where their priorities are.”
Additional tax increases were passed by the house last week, including a $13 increase to the price of automobile title fees, a $400 provider tax on nursing home beds, a .5 percent increase to car rental taxes and a provider tax of 15 cents per prescription for pharmacies. The house plan would provide approximately $105 million to prop up the $200 million shortfall.
The votes in the house were divided, with many Democrats and Republicans opposing the tax increases for several different reasons. Some Republican members opposed based on libertarian principles, but many are bound by pledges to not raise taxes.
Although the new revenue measures have passed, the senate was still in session debating the General Fund Budget as of deadline Wednesday night.
“Virtually all of the Republican majority in the legislature has signed a ‘no new taxes’ pledge, which means they can’t raise taxes on anything without being attacked for violating the pledge,” said James Seroka, professor in the department of political science. “So, their attitude is that education isn’t hurting as bad as the general fund; therefore, we should borrow money – or they call it borrowing. The reality is that it will never be paid back.”
Wesley Stone, the president of Auburn’s chapter of Young Americans for Liberty, said misappropriation of taxpayers’ money is equivalent to robbery.
“There are major budgeting issues across the board,” Stone said. “Libertarians aren’t huge fans of taxation, but when taxes are funneled through the right channels, we don’t have a problem with them. Budget reform, in this case, we have a unique problem with. We don’t want to get behind a budget that is wasting money.”
Do you like this story? The Plainsman doesn't accept money from tuition or student fees, and we don't charge a subscription fee. But you can donate to support The Plainsman.
