MONTGOMERY – Gov. Kay Ivey is proposing a redistribution of some tax revenue — including more than $30 million from the Education Trust Fund to the General Fund — to help sell her initiative to raise more revenue for building roads and bridges.

At issue is that for the past 10 years, the state has redirected as much as $63 million a year from the road and bridge fund to help pay for public safety and the courts. Some lawmakers who will be asked, possibly as soon as this week, to vote on a 10-cent-a-gallon fuel tax increase, have said they can’t justify it while current tax dollars meant for the Alabama Department of Transportation are sent to other agencies.

Ivey recently told reporters her budget will propose cutting that number in half, then boosting General Fund allocations to the Alabama Law Enforcement Agency and the Alabama Judicial System and making up the difference by using Education Trust Fund dollars to pay for the Children’s Health Insurance Program.

“I have cut that amount of diversion in half in my budget,” the governor said. “But we’re still going to protect the courts and we’re still going to protect ALEA.”

It wasn’t clear what specific funds would be allocated to ALEA and the Alabama Judicial System, but Ivey indicated the transfer of CHIP to the Education Trust Fund would make it possible for both agencies to be fully funded through the General Fund.

Sen. Tim Melson, R-Florence, is vice-chair of the Senate education budget committee and chair of the Education Policy Committee. He said he’s not comfortable with the proposed transfer from the ETF, but he will support it if it’s a one-year occurrence.

“There has to be a way to make this a one-time thing, if at all,” Melson said.

He said he understands the rationale that healthy children learn better and therefore the funding from the ETF makes sense.

“I get it, but the bottom line is we set up two budgets, right or wrong, and need to avoid taking from one for the other,” Melson said.

Melson said the state has a history of robbing Peter to pay Paul and needs a long-term fix to avoid funding “shell games.”

“But I have to give (Ivey) credit, she’s trying to do the right thing and moving money is part of it,” Melson said.

The education budget in 2020 is expected to have a record amount of more than $7 billion. Its journey to passage will start in the Senate this year.

“Gov. Ivey deserves tremendous praise for working to stop the transfer from ALDOT,” Education budget committee chairman Sen. Arthur Orr, R-Decatur, said Monday.

“However, I do have concerns about using Education Trust Fund dollars to accomplish this when the General Fund has the capacity to end the transfers on its own.

“Gov. Ivey has always been good at trying to build consensus and I think this is something that will be worked out in the legislative process.”

Dipping Into the ETF

This is not the first time state leaders have looked to the Education Trust Fund to support the more revenue-flat General Fund. In 2015, $80 million in use tax revenue was transferred.

Meanwhile, education officials for years have complained about General Fund costs added to the education budget. In 2014, the Decatur Daily reported that educators had identified at least $150 million in such expenses.

About 178,000 Alabama children receive health care funded through the federal Children’s Health Insurance Program. Some of those children are on Medicaid and others are enrolled in All Kids, a program for low- and middle-income families.

Congress last year extended CHIP for 10 years, but states will have to start paying for a portion of the program in 2020. The increase for Alabama is expected to be about $30 million to $35 million, officials said early this year.

Rep. Lynn Greer, R-Rogersville, a member of the House General Fund budget committee, said the state is “in a bind” with CHIP and that its income requirements for All Kids enrollment may be too generous. A family of five earning between $42,955 and $93,262 can receive All Kids.

“I’m not sure a family making $90,000, that the taxpayer should be paying your insurance,” Greer said.

After her State of the State address Tuesday night, Ivey called the Legislature into special session beginning Wednesday morning to address her proposed 10-cent-per-gallon gas tax, the Associated Press reported.

Greer said the single-issue focus of a special session and different procedural rules could make passage of the gas tax easier and quicker. In a special session, the gas tax could be approved by early next week.

By law, the governor must submit her proposed budgets to the Legislature by the second day of the regular session.

 

This coverage of the 2019 session of the Alabama Legislature is provided by the Capitol News Service of Alabama Daily News, based in Montgomery. BirminghamWatch is publishing reporters’ news and analysis but not commentary, from this new partner.