Alabama legislators convened their regular session Tuesday facing some of the same problems that consumed them last year.

“The main thing for all of us is going to be the budget,” said Allen Treadaway, R-Morris.

The governor is recommending a $1.9 billion General Fund budget that is almost flat funding from this year, though he has said he was considering proposing a pay raise for state employees. His $6.3 billion proposed Education Trust Fund budget does not include a raise for education employees, who did get a bump in pay this year.

But the two biggest elephants in the budget conference room will once again be Medicaid and prisons.

The Legislature last year patched the state’s Medicaid budget hole using money from the BP oil spill settlement. But that’s a temporary fix, and, according to Alabama Medicaid Commissioner Stephanie Azar, an incomplete one. Medicaid is slated to get $105 million from the settlement money next year, but Azar said during budget hearings recently that Medicaid will need about $44 million more than that to continue providing services at current levels.

And after next year, the problem is even bigger because the state won’t have money from the BP settlement to fall back on.

If the Legislature doesn’t come up with the money Medicaid needs, “There’s a possibility we could be the first state to default on Medicaid,” said Rep. Patricia Todd, D-Birmingham.

Legislators also will need to decide whether to continue with plans to set up regional managed care groups, which supporters have said would save money and improve care in the long run but that would cost the state up front.

Alabama operates a bare-bones Medicaid operation, offering little more than the federal government requires, so cutting that budget is extremely difficult.

Medicaid funding could be one of the biggest issues affecting Jefferson County that the Legislature debates this year, said Rep. Slade Blackwell, R-Mountain Brook. The Medicaid budget is of special interest in the Birmingham area because of the hospitals in the region. Children’s of Alabama and the University of Alabama Hospital are particularly reliant on Medicaid funding because they serve people from across the state with severe illnesses and injuries.

Prisons

Also expected to resurface early in the session is Gov. Robert Bentley’s proposal to borrow $800 million to build four new prisons. The plan would allow the state to close its most dilapidated prisons and help ease crowding that is among the worst in the nation.

The bill failed last year amid concerns about the size of the project and the plan to award a bid for one company to design and oversee construction of all the facilities.

Senate President Pro Tem Del Marsh, R-Anniston, has said he expects the prison bill to get consideration in the Senate early this year, but there may be big changes made before it can be passed.

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Related: WBHM:  Governor Pushes His Prison Overhaul Plan Again 

Todd said she isn’t a fan of the bond issue because it addresses bricks and mortar issues but does not provide services to help rehabilitate inmates so they don’t wind up back in prison shortly after their release. But she’s not sure how she’ll vote on the issue in the end.

The state of the prisons is so bad, she said, that, “We backed ourselves into a corner and we don’t have many options.”

 Historical Renovation Tax Credits

Another returning issue will be a bill to renew the historical renovation tax credit.

Blackwell, who sponsored the original legislation several years ago, said he is making renewal of that program one of his top priorities for the year. The program allows the state to grant tax credits to people who are rehabilitating historical properties. So far, 39 projects have received tax credits and 13 have been approved but are on hold because the state had reached the cap set for how much it would grant in tax exemptions, according to a recent study conducted by the University of Tennessee Knoxville. The program has allowed up to $20 million in tax credits to be awarded per year for three years.

At least 17 projects in Birmingham benefited from the program, according to a BirminghamWatch report, including the renovations of the Pizitz building, the Lyric Theater and the Florentine Building.

Efforts to renew the tax credits last year stalled over questions about the program’s costs and benefits. But Blackwell said he thinks the bill has a much better chance of passage this year because of the UT study. That study gave the state’s program a B rating.

Many other laws that would have an influence on the lives of people in Jefferson County will be debated during this legislative session, which can run through late May.

Todd, for instance, said she will introduce a bill to set aside $5 million from the Education Trust Fund to provide child care for parents who are taking part in workforce development. Legislators also are expected to take up a proposal to raise gas taxes by three cents to fund bridge and road repairs. And the list goes on. About 160 bills had been prefiled before the session even started.

Jefferson County’s legislative delegations are expected to meet early in the session to discuss local priorities those groups might have.