A Tough Choicecomment (0)
July 19, 2012
By Jim Williams
On Sept. 18, Alabama voters will decide in a special election whether to approve a constitutional amendment proposed by the Legislature in May. It will not be an easy decision to make.
In the first place, you may ask why we are voting on this proposal in September when a regularly scheduled election will occur in November. Why not save the expense?
The reason is that this proposal would provide money to balance the state’s general fund budget for the fiscal year that starts Oct. 1. Without voter approval of the new money, that budget will be out of balance by $145 million. Since the law requires a balanced budget, significant cuts or new revenue would be required.
Why didn’t the Legislature balance the budget itself? In May, lawmakers approved a general fund budget of $1.7 billion for the coming year, down by about 4 percent from the year before. They did not believe that Medicaid and the state prison system, which together account for 58 percent of the budget, could be cut further and could not find sufficient cuts in other places. Although lawmakers did raise fees, they were unwilling to raise taxes. Thus spending exceeded the revenue available.
The Legislature has proposed in this constitutional amendment to take $145 million a year for the next three years from the Alabama Trust Fund. This is our state savings account that captures revenue from oil and gas production in the Gulf of Mexico and uses it to fund public recreational land, capital improvements and rainy day accounts for state budgets in hard times; ironically, it also gives money to the general fund each year. The fund has a current market value of about $2.5 billion; this proposal would reduce its value by about 17 percent. There will be no repayment. If the amendment is defeated, the budget will have to be balanced another way.
The original purpose of this amendment, which remains in the proposal, was to improve the way money is expended from the Alabama Trust Fund. A consulting report has shown that the current spending rules will deplete the fund over time. According to the consulting firm, the new rules contained in the proposal will, in conjunction with changes in investment policy, create a better chance of maintaining the value of the fund for the future. Clearly this is worth voters’ consideration.
EDITOR’S NOTE — Jim Williams is executive director for the nonprofit, nonpartisan Public Affairs Research Council of Alabama. Contact Williams at email@example.com.