Budget Funds Essential State Services

The Alabama Legislature is nearly two-thirds of the way through the 2016 regular session. While the Legislature is considering a number of bills, the only constitutionally required duty of the Legislature is to pass budgets for both the Education Trust Fund and the General Fund (the budget for all non-education state spending). 

The Legislature fulfilled part of its constitutional obligation by passing a $1.8 billion General Fund budget. There has been some criticism leveled at the budget, which I will address, but first I want to describe how the General Fund budget was put together.

Before the session began, lawmakers held a series of intense, public budget hearings with every major state department. We were determined to take a new approach to budgeting your taxpayer dollars. This new approach, called zero-based budgeting, requires state agencies to prove from the ground up each line-item request, and forces legislators to ask hard questions and carefully examine each department’s spending habits. 

It established a sound financial precedent for future Alabama legislatures. Requiring each agency to make a rigorous, line-by-line, case for their budget means agencies must prove to lawmakers that the agency’s mission and programs are still an essential function of government. In other words, the pressure is now on the state agency to prove why it should continue to receive taxpayer money. 

The reform and downsizing of government can only happen by focused intentionality. Left to its own devices, a state agency will drift from year to year, treating its budget request as a birthright owed instead of a case to be proven. 

So, here are some details on the Legislature’s $1.8 billion GF budget. The budget slightly increases funding for Public Health, National Guard units, Corrections, and the Department of Human Resources. Most other state agencies were level funded, while the budgets for some like the Department of Labor and the Department of Finance were cut. A massive outbreak of tuberculosis in rural west Alabama meant Public Health needed every bit of its $10 million increase..  

By far, the most difficult challenge for state lawmakers continues to be the behemoth of Medicaid, the federally-mandated health insurance program for children, the elderly, the disabled, and the pregnant. More than one million Alabamians are on the Medicaid rolls, and the program consumes nearly 40% of the budget. For the upcoming fiscal year alone, the Legislature allocated $700 million for Medicaid, an increase of $15 million over last year.  

Many have said Medicaid’s funding must be increased even more so that Alabama can access additional federal matching dollars and finish implementing the reforms we passed a few years ago. Yet the options for increasing Medicaid’s budget by an additional $85 million – via new taxes, or moving money from the Education budget- are not palatable to most people or the Legislature.  

The Legislature has done its duty in passing an austere General Fund budget that avoids new taxes and prioritizes funding for the agencies that need it most. Medicaid still is a problem but we have to reign in where the money will come from to pay for it. 

 

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