Legislature’s first task is saving our sinking shipPublished 10:23am Wednesday, March 2, 2011
As the Legislature begins the first Regular Session of the quadrennium this week, they face the daunting task of crafting a state budget demolished by the Great Recession.
The new Republican legislature and governor have inherited a ship of state that is essentially sinking. It is analogous to walking onto the deck of the Titanic. They have been given the keys to a candy store that has no candy and the keys to a vault with no money. They will have the dismal task of drastically reducing state services. Then they get to go back to their hotel rooms and eat cold peanut butter sandwiches for supper because they passed laws in their first capacity as legislators disallowing lobbyists from buying their dinner. They will have to cry in their own beer.
It is no wonder that they also passed legislation in the Ethics Session that prohibits pass through pork in the budgets because there will not be any pork to pass through. It will be bare bones to say the least.
Former Gov. Bob Riley did not do Gov. Bentley or the new Republican led legislature any favors. During his entire last year in office he seemed preoccupied with peripheral issues and ignored the impending financial crisis that awaited our current governor and legislature.
Many lawmakers and fiscal experts suggest that our two state budgets are facing the most difficult challenge since the Great Depression. However, I submit that this current dilemma staring our legislative leaders in the face is the worst financial debacle in our state’s history.
During the Great Depression of the 1930s the income tax had just been created by our federal government. Many states followed suit and created their own state income tax. Alabama was one of those states. Concurrently, our state’s schools had become abysmally under-funded. Many times the state could not even pay the schoolteachers. These devoted teachers were being paid with IOUs and script by the state. Most school buildings were one room and dilapidated. A farsighted governor named Bibb Graves latched on to the new income tax theory and earmarked it for education.
Over the past 70 years the income tax has grown dramatically and is now the mainstay of the Education Trust Fund Budget, which was created at that time to insure that public education would be at least minimally funded in Alabama. Today the state income tax and state sales tax are the primary sources of revenue for education in the state. That is why it is often said that when the economy gets a cold, Alabama gets pneumonia.
The Legislative Fiscal Office is predicting a $125 million short fall in the Education Trust Fund Budget. Longtime Chief Legislative Fiscal Officer, Joyce Bigbee, is forecasting an identical $125 million shortage in the General Fund Budget. This combined $250 million deficit is exacerbated by a loss of $1 billion of federal stimulus money that has now dissipated. In addition, last year’s legislature overspent the amount that the fiscal office said was available and Riley’s administration left the cupboard completely bare by spending the state’s entire rainy day fund.
In short, the state is broke. Besides being broke, we are $250 million short of last year’s budget. We are in proration. There are no federal dollars to bail us out. Our state unemployment rate hovers around 9%, which stymies any growth in the sales and income tax dependent Education Fund. Interest rates, which bolster the General Fund, are historically low.
On the optimistic side, the economy will eventually pick up. We will probably see a couple of lean years in the Education Budget. However, things look bleak for the smaller General Fund Budget. That fund has received very little attention or new revenue for the last three decades since George Wallace’s last term as governor.
The budget chairmen face a Herculean task in this Session. Senators Arthur Orr of Decatur and Trip Pittman of Baldwin County, along with Representatives Jay Love of Montgomery and Jim Barton of Mobile, have been given the unenviable task of chairing the Budget Committees in the House and Senate. They deserve our respect and need our prayers.
See you next week.
Steve Flowers is Alabama’s leading political columnist. His column appears weekly in 72 Alabama newspapers. Steve served 16 years in the state legislature. He may be reached at www.steveflowers.us.