Alabama Legislature

Senate Committee OKs $2.38B General Fund Budget

Senate Majority Leader Greg Reed, R-Jasper, and Senate President Pro Tem Del Marsh, R-Anniston, speak on the Senate floor recently as senators maintained a social distance. (Source: Todd Stacy, Alabama Daily News)

MONTGOMERY — An Alabama Senate committee on Tuesday approved a proposed 2021 General Fund Budget of $2.38 billion, an increase from the current fiscal year funding but less than what was expected before the coronavirus outbreak cut into tax revenues.

The funding increases were primarily for four agencies: Medicaid, mental health, corrections and public health. Raises that were anticipated earlier in the year for state employees aren’t in the budget.

“Right now, what we’re seeing is a decline in the growth of the General Fund,” committee Chairman Sen. Greg Albritton said.

“There are many parts of our economy that the Legislature cannot control, but we can control our budgets. To properly develop a reliable budget, we have turned to the current budget, the 2020 budget, which we passed last year, as a guide,” he said.

The Senate Finance and Taxation General Fund Committee voted 13-1 to send the budget to the full Senate next week. Sen. Clyde Chambliss, R-Prattville, was the lone “no,” saying he was not convinced the state could confidently project revenue levels matching the budget.

“I’m concerned that we get out ahead of our skis on this,” Chambliss said. “There are just a lot of things that we don’t know. What I would suggest, what I would hope that you entertain, Mr. Chairman, is that we come back with a bare-bones budget and then, if the monies are there, then we add that to where it’s needed. But once we put it on paper and adopt it, clawing it back is very hard to do. That’s the direction I’m headed.”

Not included in this proposed budget is the estimated $1.8 billion coming to the state from the federal government from the federal Cares Act, which was enacted last month. The committee did advance a bill allowing the Legislature to access and direct those funds for future expenses, and multiple lawmakers referenced expanding rural access to broadband internet as a possible use.

State finance director Kelly Butler told Alabama Daily News Tuesday that the state already has received $1.7 billion from the federal government.

“We’ve already gotten the bulk of that money and we’ve gotten some guidance from (the department of) Treasury on what we can use it for,” Kelly said. “We are sorting through that and trying to decide what’s allowed and what’s not allowed.”

The funds are to be used only for expenses directly resulting from the coronavirus outbreak, Butler said. Any unused money must be repaid to the federal government.

According to the U.S. Treasury Department’s online guidance, state and local governments cannot use Cares Act funds on budget expenses that were “already accounted for” as of March 27, when the law was passed.

“One of the key things is we can’t replace revenue. We can’t use it to replace existing revenue in the budget,” Butler said.

Under the budget approved in committee Tuesday, most state agencies will get about level funding from the current year, but there are a few notable exceptions.

Who Gets More and Less?

The Alabama Department of Corrections would get an increase of about $23 million to a total of about $544 million. It had requested a $41 million increase as the crowded, understaffed system tries to avoid a federal takeover.

One priority going into this session was additional funding for mental health services around the state, including $18 million for three crisis centers in yet-to-be-determined locations.

An increase of nearly $26 million is in the budget for the Alabama Department of Mental Health, including for the three new centers. Malissa Valdes-Hubert, a spokeswoman for ADMH, earlier this week said the agency has continued an assessment and planning phase for the centers despite not knowing the effects of the coronavirus on its 2021 funding.

Medicaid and the Alabama Department of Public Health also have increases in their budgets.

A notable decrease in the proposed budget was $21 million for the Board of Pardons and Paroles, dropping its funding to $27.8 million. Albritton said both pardons and paroles and corrections have carry-forward money that should replace what those agencies requested but don’t get from lawmakers.

“It shouldn’t affect their operations at all,” Albritton said.

Comments from those two agencies weren’t immediately available Tuesday afternoon.

Several lawmakers also raised concerns about funding lapses for district attorneys and courts amid ongoing law enforcement and judicial functions.

“Unfortunately, over the years we have funded our court system, district attorneys through a fee-based system,” Sen. Cam Ward, R-Alabaster, said. “You get to fund your budget, 65-70% based upon the fees that you collect.  Since we’ve been at a stay-at-home order, those fees can’t be collected. Both the courts and the DAs are facing a situation where they cannot collect those fees. That means their budget in the current 2020 cycle is going down dramatically. I think somewhere around the month of September, even the month of August, they are going to start having questions of whether or not they can make payroll.”

Sen. Gerald Allen, R-Tuscaloosa, said he received two calls on his way to Montgomery Tuesday from DAs in Tuscaloosa and Pickens counties.

“It’s a serious issue,” Allen said. “We don’t need to leave Montgomery without having some form of plan to assist those circuits.”

Sen. Linda Coleman-Madison voted to approve the budget but raised several questions, including where exactly coronavirus relief funding would be going in Jefferson County.

As the state’s only local government large enough to qualify for Cares Act funds, Jefferson County already has received funds directly from the federal government, Albritton told her, though he didn’t say how much. A recent analysis from the Tax Foundation shows Jefferson County is eligible for as much as $115 million.

Sen. Larry Stutts, R-Tuscumbia, voted in favor of the budget and echoed a common sentiment that lawmakers need to be as conservative as possible when budgeting in this crisis.

“There are quite a few things in there that are new expenditures and I just think we need to be very very conservative in what we pass because, as (Chambliss) said earlier, it’s a lot harder to take it back than it is to not give it to start with.”

Sen. Jim McClendon, R-Springville, said that while proration — cutting a budget across the board mid-year — is difficult, it can be done.

“Now it’s nothing to be proud of, nothing you want to do, but you know sometimes things go wrong,” McClendon said. “So it’s not an impossibility, if we have to adjust this budget, that’s not really a big deal. It’s agonizing but it’s not that hard to do.”

Education Budget Under Discussion

Before the General Fund meeting, Sen. Arthur Orr, R-Decatur, had an informal meeting of his education budget committee to discuss COVID-19-related changes to 2021 funding.

“We see a 2020 budget, plus a little,” he said. “But not the governor’s recommended budget.”

While legislative leadership said it wants bare bones General Fund and education budgets passed by May 18, the last possible day of this legislative session, Gov. Kay Ivey has told them it can wait, her spokeswoman told Alabama Daily News.

“The governor has expressed to the leadership that she is surprised they want to move forward in passing budgets without having a better understanding of revenue projections,” Press Secretary Gina Maiola said. “We will only have a full picture of our receipts after July 15, 2020, because of the extended state tax filing deadline due to COVID-19. The legislative leadership have informed Gov. Ivey they will proceed at this time to only address budgets and local bills, and, as they are a separate branch of government, they have every right to do so.”

Legislative leadership has said that state agencies and schools need to know now what their funding will look like Oct. 1.

“The urgency primarily is K-12,” Orr said. “They are looking for a budget, they need a budget to plan their school years. That’s the impetus for us to get a budget that best reflects where we are at the time.”

The governor must sign budgets passed by lawmakers before they go into effect. In 2015, a lack of revenue created the need for two special sessions before a General Fund budget was approved in September, just weeks before the new fiscal year began.

Ivey in February had proposed a nearly $400 million increase in education funding. Committee work on that budget is expected next week.