Cameron Smith | cameron@smithstrategies.org
Cameron Smith | cameron@smithstrategies.org
Increased Medicaid spending to implement reforms - ($60 million)
The Alabama Legislature created Regional Care Organizations (RCOs) as part of their Medicaid reform effort. Governor Bentley is requesting $60 million to ensure their implementation. While the reforms responded to Medicaid's ever-increasing price tag, legislators have privately expressed doubts that they will have as significant an impact on containing Medicaid costs as initially hoped.
Cameron Smith | cameron@smithstrategies.org
Prison reform - ($26 million)
In case you missed it, Alabama has prison capacity and condition issues that may mean serious expenditures for the state in the future. To immediately address those concerns and relieve some of the fiscal pressure, the Alabama Legislature wisely enacted a series of reforms. Governor Bentley is asking for $26 million to ensure they're properly implemented. If the measures have the desired impact, the amount of money the Governor seeks may prove to be a bargain for the state.
Cameron Smith | cameron@smithstrategies.org
Capital spending for Department of Corrections - ($6 million)
Prison reforms alone aren't enough to address the corrections issues facing Alabama. Governor Bentley seeks $6 million to address capital outlays for Alabama's prison system. Again, failing to address prison issues isn't an option for Alabama. Even with the reforms and capital spending, this issue isn't going away anytime soon.
Cameron Smith | cameron@smithstrategies.org
Domestic Violence Reform - ($5 million)
Domestic violence reforms have been a focal point for Alabama's First Lady, Dianne Bentley. She's sought to "modernize domestic violence laws, increase state funds toward lifesaving services for victims and their children and strengthen victim protection through law enforcement and judicial provisions." No question that this is a worthwhile goal, but with such a tight budget, every dime will receive scrutiny.
Cameron Smith | cameron@smithstrategies.org
Level funding for most departments and agencies - ($230 million)
Governor Bentley intends to reverse the cuts that the Alabama Legislature imposed across the board in the General Fund budget it passed in the regular session. This is the largest spending item he's proposing and also the most general. At this point, most state agencies are trained to paint horror stories that will unfold if their budgets are cut. Most legislators aren't buying it, and voters aren't sympathetic either. Without specific, compelling and credible information about services Alabamians actually stand to lose without continued funding, this spending could face the greatest opposition of any in Bentley's proposal.
Cameron Smith | cameron@smithstrategies.org
Gulf State Park Project - ($50 million)
Alabama has been approved for $85.5 million in oil spill recovery funds to rebuild the Gulf State Park, including a lodge destoryed by Hurricane Ivan in 2004. The bond money will supplement those funds. The Gulf State Park project has proven a controversial use of funds intended for environmental restoration. Regardless, $50 million in debt isn't an insignificant ask given the state's budget challenges.
Cameron Smith | cameron@smithstrategies.org
Business Privilege Tax Changes - $38 million
The Business Privilege Tax is one of the oddest taxes in Alabama because the state taxes businesses for simply existing. All businesses pay a minimum of $100 even if they don't make any money. At the same time, the state caps the amount of the tax at $15,000, effectively targeting the smallest businesses as a revenue source. According to Acting Finance Director Bill Newton, 90 percent of businesses pay the minimum tax. Bentley is absolutely right to raise the minium threshold for paying the tax, but he's going to face tough sledding from other businesses who don't want to see the cap raised to $25,000.
Cameron Smith | cameron@smithstrategies.org
Removing FICA Deduction - $182 million
Governor Bentley intends to remove the FICA deduction for Social Security taxes. To be blunt, the move would impose a tax on income that never makes its way into workers' bank accounts. So far, the best argument for doing so is that the majority of states don't have the deduction. That rationale won't play well with Alabama's conservative voters...at all. (photo courtesy of Internal Revenue Service)
Cameron Smith | cameron@smithstrategies.org
Soft Drink Tax - $182 million
While Governor Bentley isn't pushing a soft drink tax, he included it in his special session call to give legislators some flexibility in raising taxes under his plan. This tax is yet another example of social engineering through the tax code. If enacted, soft drinks would join tobacco and alcohol in Alabama's "sin" bin.
Cameron Smith | cameron@smithstrategies.org
Tobacco Tax Increase and New Vapor Product Tax - $70 million
Taxing "sin" is always in if you're a politician looking to increase taxes. Alabama's taxes on alcohol are some of the highest in the nation, but taxes on cigarettes are on the opposite end of the spectrum. Vapor products have the misfortune of being the new kid on the block in spite of the fact that the seem to be less harmful than their traditional counterparts. If the vapor tax proposed during the regular session is any indication, the vapor industry will take a serious hit with this tax hike.
Cameron Smith | cameron@smithstrategies.org
Fraud Prevention Act - $12 million
Bentley plans to repeal a provision allowing employees who claim they will have no taxable income to be exempt from state income tax withholding. This isn't really a tax increase so much as it is a law enforcement provision suffering from being included as a revenue increase. Politicians shouldn't have too much heartburn addressing this issue.
Cameron Smith | cameron@smithstrategies.org
Unearmark and Transfer Use Tax to General Fund - $225 million
This move is a little more complicated than just transferring revenue from one account to another. Moving the use tax to the General Fund would leave a significant hole in the Education Trust Fund. Governor Bentley proposes to backfill that hole by either removing the FICA deduction or imposing the soft drink tax. If one of those measure's isn't successful, the revenue transfer probably won't be either. This could prove to be a difficult lift unless the Education Trust Fund budget chairmen in the Alabama Legislature are in agreement with the proposal.
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