The Alabama House of Representatives on Thursday passed the 2021 state General Fund budget, which funds non-education state agencies. The 2021 SGF is $2,391,206,601, which is $168,860,692 more than the $2,222,345,909 in the 2020 budget.
The 2021 general fund budget goes into effect Oct. 1.
Alabama has an arcane budgeting system in which over 90 percent of the money is earmarked and the budget is divided into two major pots, the General Fund and the Education Trust Fund, which funds education.
There are also billions, most of it earmarked, outside of the budgeting process — gas tax money to fund the Alabama Department of Transportation being but one example. The General Fund is largely funded through insurance premium taxes, sales and use taxes, interest on the Alabama Trust Fund, utility taxes and other sources.
The House Ways and Means General Fund Committee is chaired by State Rep. Steve Clouse, R-Ozark. Senate Bill 157 is sponsored by State Senator Greg Albritton, R-Atmore, but Clouse carried the bill on the floor of the House. The version of the budget that passed the Senate was substituted on the House floor by a new version written by Clouse.
The General Fund budget passed on a bipartisan 76 to 1 vote. Most Democrats did not attend for fear of the coronavirus.
Clouse said that because income taxes are earmarked for the ETF and not the SGF that the General Fund is less affected by the current economic downturn. Clouse said that if the economic shutdown was to continue at length, business owners might stop paying their insurance premiums and the state could start losing insurance premium tax dollars.
If Alabamians were to stop buying things online then there could a drop in internet sales taxes for the general fund. The committee will be watching for that going forward.
One of the budgeting issues that has seen the most debate both in the Legislature and from the public response has been the fate of the state auditor.
In 2020 the State Auditor’s Office received $937,552.
Gov. Kay Ivey requested $960,000 for the auditor in her budget request back in February before the coronavirus crisis. Most of the budget increases that Ivey requested had to be downsized as revenue projections have dropped due to the global economic downturn.
While most state agencies were level-funded or received a modest increase, the auditor’s budget was slashed $437,552 by the Senate. Clause restored most of the auditor’s appropriation in his floor sub — giving the Auditor $853,172. That is an $84,380, or 9 percent, cut from 2020.
One of the key disagreements in this year’s budget, is not actually in the budget, but is rather in a supplemental appropriation bill, effective immediately for 2020, Senate Bill 161 by Albritton. That bill did a number of things including providing money to the district attorneys.
The state’s D.A.s are funded primarily from fines, fees and court costs. Courts are not meeting because of the coronavirus. Fewer people are not going to work because of the economic shutdown, thus they are getting pulled over less often by authorities for speeding and other motor vehicle infractions.
This has created a revenue issue for the district attorneys. The Senate version of SB161 gave them an emergency appropriation of $4.5 million to help them meet their June and July payrolls. The Clouse floor sub for SB161 bumped that to $5 million.
SB161 also addressed coronavirus relief sent to the state by Congress in the CARES Act. Congress sent Alabama $1.8 billion in CARES Act dollars. The CARES Act sent that money to the governors. The Senate version of SB161 let Gov. Ivey spend $100 million of that money at her discretion.
On Wednesday, the House Ways and General Means Committee version of the SGF raised Ivey’s portion to $600 million. The Clouse floor sub version of SB161 that passed the House lowered Ivey’s discretionary portion of that to $200 million. If the governor wants to spend the other $1.6 billion she will have to call for a special session.
If the money is not spent by December 31 it will go back to the federal government unspent. Clouse said that there are so many restrictions on how that money can be spent that we might not be able to use it anyway. The budget contains language in it that reaffirms the legislature’s authority over the spending of this money.
The supplemental appropriation is for 2020 through Sept. 30 and the budget from Oct. 1 moving forward.
The budget gave $544,148,167 to the Alabama Department of Corrections — a $23,258,325 increase over last year. The budget appropriates $3 million for the Alabama Law Enforcement Agency (ALEA) to hire 25 new state troopers.
This SGF budget also increased the funding for Alabama Medicaid and the Alabama Department of Public Health. Much of this increase is to absorb the cost of the Children’s Health Insurance Program as Congress is now requiring the states to provide 32 percent of the cost of insuring the children. The budget provides for an extra $25 million to the Alabama Department of Mental Health.
The economic downturn meant that a planned pay raise for state employees had to scrapped in this budget. Similarly, there is no bonus this year for retired state workers.
The Senate met on Thursday night and voted to concur with the House on the general fund budget bills and is awaiting the Governor’s signature. The House also passed the education budget package. That now goes to the Alabama Senate for their consideration.
The 2020 legislative session constitutionally has to end by May 18 due to a limit on the number of calendar days in a regular legislative session. Clause said that the legislature will be in session on May 18 to clear up any final business.
