The Alabama Senate on Tuesday passed a General Fund budget totaling $2.389 billion. It includes modest increases for mental health, public health and state prisons, but no state employee pay raises that were expected earlier this year.

The fiscal year 2021 budget, which pays for non-education state agencies and services, contains $167 million more than the budget for the current fiscal year, but less than the record levels projected before the coronavirus outbreak impacted the state’s economy.

“This one was a bit of a monster,” Sen. Greg Albritton, R-Range, said during discussion on the Senate floor. He chairs the Senate General Fund budget committee.

“We are not accustomed to having to come in and take out portions of the budget mid-session, but I think it could have been far worse, and I appreciate the members of this body for contributing to this General Fund budget.”

Two months ago, lawmakers thought they would be approving the biggest General Fund and education budgets in the state’s history. The coronavirus outbreak and resulting economic slowdown have created uncertainty for budget writers.

The budget and its accompanying supplemental bills passed 31-0 and now go to the House of Representatives.

Minority Leader Bobby Singleton, D-Greensboro, told Albritton he appreciated Democrats having input in the budget process in the Republican-dominated Senate.

“This is a budget for all the people,” Singleton said. “In as much as we are a small minority on this side, you could do this without us. But I appreciate your openness in seeing all of us as one body and not just as Republicans and Democrats.”

Proposal for Panel to Decide on Spending of Federal Relief Funds Is Eliminated

Senators amended the budget to remove proposed language creating a panel of Gov. Kay Ivey and two lawmakers to decide how to spend the state’s federal coronavirus relief funds. Albritton told Alabama Daily News that no such law is needed because coronavirus-related fund expenditures, including those coming from the federal government, must be approved by the Legislature, per the state Constitution.

Ivey alone can’t spend that money, he said.

“Like any other money, this is going to have to come through the normal appropriation methods, as per the Constitution,” Albritton said.

Because the money needs to be allocated this year and next, he said it will likely be taken up in a special session later this year.

A supplemental budget bill made an exception for $100 million, which Albritton said accounts for federal relief funds already spent so far by the state. That bill also explicitly gives the Legislature purview over any future state relief funds approved by Congress.

The state has received more than $1.7 billion from the federal government from the CARES Act relief package passed by Congress in March. According to the Treasury Department, the funds must be spent on outbreak-related expenses and cannot go to replace lost revenue.

A spokeswoman for Ivey said the governor’s office worked with legislative leaders on these budget matters “and will continue to do so until they are passed.”

Senators Approve Move to Establish Reserve General Fund Reserve

In addition to the budget itself, the Senate passed a bill from Sen. Clyde Chambliss, R-Prattville, that would establish a General Fund “rolling reserve” fund to help avoid future shortfalls by not allowing over-spending in years of plenty. The Education Trust Fund has had a “rolling reserve” account since 2011, which many credit with helping state schools avoid mid-year spending cuts known as proration.

Senate Bill 129, the General Fund Reserve Fund, passed the Senate 31-0 and now goes to the House.

Sen. Del Marsh, R-Anniston, commended Albritton and the other budget writers for making the most of a “difficult situation.”

“Obviously this is not the budget we thought we would have when the session started, however this is a strong budget that gives state agencies a place to start as they work on their individual budgets for next year,” Marsh said. “If we determine that changes to this budget need to be made we can still do so next session without additional expense to the taxpayers in a special session.”

Sen. Tom Butler, R-Madison, called the budget “cautious.”  He said a special session in September or October is likely, once more is known about state revenues, especially the income tax and consumer-related taxes, including sales tax, when the state is fully reopened.

“I feel pretty good about what we passed, knowing we’ll probably be back later in the year,” Butler said.

Sen. Sam Givhan, R-Huntsville, highlighted the increase in mental health spending as being particularly positive.

“I am delighted that we were able to fund the mental health crisis centers that are so badly needed in our state,” Givhan said.

Sen. Garlan Gudger, R-Cullman said he felt “comfortable” with the budget and is particularly pleased to see the rolling reserve fund passed.

“To date, if our General Fund [growth] had flatlined and went to zero, we would still be positive $100 million, which proves the Senate is handling our financial affairs responsibly.

“Also, passing Sen. Chambliss’ bill establishing a rolling reserve for the General Fund was monumental. It will allow us to be prepared for the next financial crisis.”

Sen. Gerald Allen, R-Tuscaloosa, said the budget represented the best-case scenario amid an uncertain environment.

“I think overall, it is about the best we could do considering the circumstances our state is currently in,” Allen said. “Because of the virus issues our state has been dealing with the last six or eight weeks and the economic impact, we had to be very cautious. With that in mind, we basically level funded most state agencies, except for some that desperately needed increases.”

Allen also said Ivey would likely call a special session to develop a separate budget for federal coronavirus funds.

“What I think will develop is the governor will fix up a budget and when that special session is called, then we’ll come down and appropriate those funds.  Hopefully we can steer it toward health care, education, broadband and other things stemming from COVID-19,” Allen said.

Alabama Daily News reporter Mary Sell contributed to this story.