2015 legislative update: Committee breakthrough: Alabama House panel OKs General Fund budget, tax increases
An Alabama House budget committee Wednesday approved a set of tax increases worth approximately $130 million – and a General Fund (GF) budget that would cut $55 million from many core state services. The full House is set to consider the budget and many revenue measures Thursday.
The total revenue package falls far short of the amount needed to address the GF shortfall without cuts. Tax measures that cleared the House’s GF budget committee include:
The House’s education budget committee Wednesday approved a one-time transfer of about $50 million from the Education Trust Fund (ETF) to the GF. The transfer would have to be repaid by 2018 and would come from revenues above next year’s ETF spending cap under the Rolling Reserve Act. The committee also OK’d a plan to shift some use tax revenues from the ETF to the GF starting in 2017.
Winners and losers under proposed GF budget
There were clear winners and losers in the GF committee’s budget. Major reforms of Medicaid and criminal justice system would receive the funds needed to move forward. Other major services – including courts, mental health and the Department of Human Resources (DHR) – would be funded at their 2015 GF levels.
Many other state services would fare far worse under the committee’s GF budget. The Department of Senior Services would be cut by $2.4 million, with most of that money coming from home-based services for seniors who otherwise might have to enter nursing homes. The Department of Youth Services would be cut by nearly 75 percent, and the Department of Archives and History by almost a fourth.
Before the second special session began this week, Alabama Arise requested public hearings on all revenue and budget bills. Representatives of Arise, Voices for Alabama’s Children, the Children First Foundation and several state agencies testified before the House committee Wednesday in favor of new GF revenue.
Arise state coordinator Kimble Forrister told lawmakers that more than 200 advocacy groups, churches, hospitals and other organizations had signed an open letter to the Legislature calling for $300 million in new tax revenue to prevent drastic cuts to health care, child care, public safety and other vital services. “Our most vulnerable people depend on General Fund agencies to help them take care of their families,” Forrister said.
Forrister testified in favor of the business privilege tax changes. He also told lawmakers that failing to increase the price of a pack of cigarettes by at least 10 percent may not result in reduced smoking and improved health benefits for Alabama.
Senate committee doesn’t approve combined reporting bill
Not all tax proposals made it out of committee Wednesday. The Senate’s ETF budget committee did not approve a bill to required “combined reporting” on state corporate income tax returns.
The bill’s sponsor – Sen. Linda Coleman, D-Birmingham – urged her fellow committee members to consider the consequences of “nickeling and diming” the average Alabamian while enabling many large corporations and businesses to do business in Alabama while paying few or no taxes here. Closing corporate tax loopholes could bring an additional $30 million to the ETF each year, Coleman estimated.
Sens. Jim McClendon, R-Springville, and Jabo Waggoner, R-Vestavia Hills, were among committee members who said they were concerned about combined reporting’s potential impact on businesses and industrial recruitment.
Combined reporting would treat corporations and their subsidiaries as one entity for tax purposes. Most states have adopted such laws, and “combined reporting states are well-represented among the most economically successful states in the country,” the Center on Budget and Policy Priorities found.
By Carol Gundlach and M.J. Ellington, policy analysts. Posted Sept. 9, 2015.
2015 legislative update: Alabama Senate committee eases Medicaid cuts, approves budget that Bentley already vetoed
Update: The Alabama Senate passed a no-new-revenue General Fund budget 19-15 Monday, but the House swiftly rejected it 92-2. The first special session ended without a budget, meaning Gov. Robert Bentley will have to call the Legislature back for a second special session.
Get ready for another special session. That seems to be the takeaway from Friday’s action at the State House, where an Alabama Senate committee rejected the House’s Medicaid cuts and voted 9-4 for a General Fund (GF) budget identical to the one that Gov. Robert Bentley already vetoed in June.
The budget, which includes no new revenue, would slash child care and mental health care. It also would end promising new reforms of Medicaid and corrections before they could get started. The full Senate likely will consider the budget Monday. Sen. Arthur Orr, R-Decatur, who chairs the Senate’s GF budget committee, urged lawmakers to amend the plan on the floor to prioritize funding for prison reform. (Read more about the Senate budget’s effects here.)
Lawmakers appear no closer to an answer on the GF than they were two months ago. With just two meeting days left before the current special session ends Tuesday, Bentley could reject any budget without giving the Legislature a chance to override his veto. Another special session would be needed to approve a GF budget before Alabama’s 2016 budget year begins Oct. 1, 2015.
‘Replacing a sorry budget with a crappy budget’
Senators gave a cold shoulder to the House’s budget, which would have gutted Medicaid with a 23 percent cut. A cut that deep could force Alabama to end its Medicaid program, State Health Officer Don Williamson said this week.
One in five Alabamians – mostly children, seniors, and people with disabilities – would lose health coverage if the state ended Medicaid. The effects also would be devastating for hospitals, nursing homes, pharmacies and the state’s entire economy. (Learn more about what the end of Medicaid would mean for Alabama here.)
Several committee members spoke passionately in favor of protecting Medicaid. Sen. Billy Beasley, D-Clayton, said Alabama must fund the program fully to protect the state’s entire health care infrastructure. “Without Medicaid, Children’s Hospital may have to close,” Beasley said. “Without Medicaid, doctors’ offices may have to close.”
Sen. Priscilla Dunn, D-Bessemer, asked lawmakers to ease the fears of Medicaid patients who are “scared to death” of losing coverage. “We need to put more of our hearts into Medicaid,” Dunn said.
Perhaps the bluntest assessment came from Sen. Cam Ward, R-Alabaster, who sponsored the prison reform law that needs funding before it can take effect. “We’re replacing a sorry budget with a crappy budget,” Ward said.
Revenue measures still face an uphill battle
The budget deadlock intensified when key parts of Bentley’s plan to raise new revenue to prevent massive GF cuts went nowhere in the House’s GF budget committee. The panel voted 8-7 Tuesday to reject a plan to increase the state cigarette tax by 25 cents per pack (from 42.5 cents to 67.5 cents). A bill to increase the business privilege tax on large corporations was on the agenda Tuesday but did not come up for a vote.
House and Senate committees have approved bills to transfer use tax revenues from the Education Trust Fund to the GF, but the measures face stiff opposition from many legislators. The use tax is equivalent to a sales tax on goods bought outside the state for use within Alabama. It is commonly discussed in the context of equipment purchases and Internet sales.
Many lawmakers strongly oppose shifting money from education to GF services. Alabama’s education funding is still well below its 2008 level, before the Great Recession, and its K-12 cuts and higher education cuts since then are among the nation’s worst.
The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenues, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Without significant new revenue, Alabama will not have enough money to continue investing in vital services that make the state a better place to live and work.
By Chris Sanders, communications director. Posted Aug. 7, 2015. Updated Aug. 11, 2015.
Medicaid could end in Alabama under a General Fund (GF) budget that the Alabama House passed Wednesday. Medicaid would lose 23 percent of its state funding, or $156 million, next year under the plan. Lost federal matching money would increase those cuts significantly. Cuts that large could end the Medicaid program in Alabama, State Health Officer Don Williamson said Tuesday.
The House initially voted 46-45 to reject a budget amendment cutting Medicaid. But then, on a second vote, it approved the amendment 46-44. The House then passed the GF budget 53-40, sending it to the Senate. Several key senators have said they strongly oppose deep Medicaid cuts, but their solution to the GF shortfall remains unclear.
Medicaid is ‘health care infrastructure in this state’
If the Medicaid cut remains, about one in five Alabamians would lose their health coverage, including nearly half of Alabama’s children and about 60 percent of the state’s seniors in nursing homes. Those cuts likely would lead to the closure of Children’s Hospital in Birmingham, as well as dozens of other hospitals and nursing homes across the state. The results would be devastating for Alabama’s economy and quality of life.
During four hours of debate on the budget, House members decried the impact that the Medicaid cuts would have on their constituents and communities. Rep. April Weaver, R-Brierfield, said it was “shocking” to see lawmakers considering such cuts to Medicaid. “If anyone thinks that Medicaid is an entitlement, come see me,” Weaver said. “It’s the health care infrastructure in this state.”
Rep. Mike Jones, R-Andalusia, also spoke of the huge toll that a Medicaid shutdown could take on communities. Jones said the end of Medicaid could mean 600 job losses in his district and put two hospitals and several local nursing homes at risk of closing.
Without new revenue, the path forward is uncertain
The budget passed after key parts of Gov. Robert Bentley’s plan to raise new revenue to prevent massive GF cuts went nowhere in the House’s GF budget committee. The panel voted 8-7 Tuesday to reject a plan to increase the state cigarette tax by 25 cents per pack (from 42.5 cents to 67.5 cents). A bill to increase the business privilege tax on large corporations was on the agenda Tuesday but did not come up for a vote.
House and Senate committees have approved bills to transfer use tax revenues from the Education Trust Fund to the GF, but the measures face stiff opposition from many legislators. The use tax is equivalent to a sales tax on goods bought outside the state for use within Alabama. It is commonly discussed in the context of Internet or mail-order purchases.
Many lawmakers strongly oppose shifting money from education to GF services. Alabama’s education funding is still well below its 2008 level, before the Great Recession, and its K-12 cuts and higher education cuts since then are among the nation’s worst.
The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenues, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth.
If lawmakers do not approve a substantial source of new GF revenue in the coming days, it will be impossible for them to pass a budget that avoids devastating cuts to Medicaid or other vital services during this special session. Alabama’s 2016 budget year begins Oct. 1, 2015, and the prospect of another special session before then looms ever larger by the day.
By Carol Gundlach, policy analyst, and Chris Sanders, communications director. Posted Aug. 5, 2015.
Medicaid could end in Alabama under devastating cuts in a proposed General Fund (GF) budget that the Alabama House’s GF budget committee approved Tuesday, State Health Officer Don Williamson said. About one in five Alabamians would lose their health coverage, including nearly half of Alabama’s children and about 60 percent of the state’s seniors in nursing homes.
Medicaid would lose 23 percent of its state funding, or $156 million, next year under the budget that the committee approved Tuesday. Lost federal matching money would increase the loss significantly.
Those cuts likely would lead to the closure of Children’s Hospital in Birmingham, as well as dozens of other hospitals and nursing homes across the state. “If Alabama chooses not to have a Medicaid program, you will see an impact on the health care system that you can only begin to imagine,” Williamson said Tuesday.
Cigarette tax increase, other revenue bills fail to gain traction
The vote came after key parts of Gov. Robert Bentley’s plan to raise new revenue to prevent massive GF cuts went nowhere during a tense day in the House’s GF budget committee. The panel voted 8-7 Tuesday to reject a plan to increase the state cigarette tax by 25 cents per pack (from 42.5 cents to 67.5 cents). A bill to increase the business privilege tax on large corporations was on the agenda but did not come up for a vote.
The committee recessed for several hours after the cigarette tax vote. When it returned late Tuesday afternoon, a frustrated Rep. Steve Clouse, R-Ozark, who chairs the committee, offered an amendment to concentrate GF budget cuts in the Medicaid program. Committee members approved the change 10-4 and then OK’d the budget on a voice vote. The GF budget now awaits action in the full House.
Democratic committee members strongly condemned the proposed Medicaid cuts. “To take and use Medicaid as a pawn, I think is totally unfair,” said Rep. John Knight, D-Montgomery. “Other agencies should be on the chopping block.”
Knight urged legislators to be honest with the public about the need for new GF revenue to support vital services like health care, child care and public safety. The Legislative Black Caucus will not vote for tax increases without adequate long-term GF revenues, Knight told the Montgomery Advertiser.
Clouse criticized several Democratic lawmakers’ votes against the cigarette tax bill, telling the Advertiser that Democrats had supported a tobacco tax increase during the regular session. “I came with a fair budget that level-funded Medicaid,” he said. Clouse said he does not support deep Medicaid cuts but said Alabama needs to have a debate about the program’s future.
Lawmakers OK transfer of education revenues to shore up General Fund
Both the House and Senate’s GF budget committees approved bills Tuesday to transfer use tax revenues from the Education Trust Fund (ETF) to the GF. The use tax is equivalent to a sales tax on goods bought outside the state for use within Alabama. It is commonly discussed in the context of Internet or mail-order purchases.
The House committee voted to transfer both use tax revenues and some funding obligations to the GF, resulting in a net loss of $50 million to education and a net GF gain of the same amount. The Senate bill would transfer use tax revenues but not the accompanying obligations. That would reduce education revenue (and increase GF revenue) by more than $200 million.
Alabama’s education funding is still well below pre-recession levels. The state’s per-pupil K-12 spending in 2015 was 18 percent lower than in 2008, the second worst decline in the nation, according to the Center on Budget and Policy Priorities (CBPP). Alabama’s per-student higher education cuts from 2008 to 2016 are also the nation’s second worst, the CBPP found.
Bentley has proposed to “backfill” the ETF’s revenue loss by ending the state income tax deduction for FICA taxes paid to support Social Security and Medicare. But this bill has not yet been set for a committee vote, and many press reports suggest it is unlikely to pass.
Bill to ‘un-earmark’ mental health, DHR money advances in House committee
The House’s GF budget committee also approved a bill Tuesday to “un-earmark” revenues dedicated to five state agencies and shift the revenues into the GF. Nearly 90 percent of the transfers under HB 46, sponsored by Rep. Allen Farley, R-McCalla, would come from mental health and the Department of Human Resources (DHR). Other services affected would be public health, veterans’ affairs and forestry.
Bentley’s budget plan would provide additional GF money to help the agencies cover the un-earmarked amounts. But neither the current Legislature nor future ones would be obligated to do so under HB 46. Advocates for children and for people with mental illness are deeply concerned about this idea.
By Carol Gundlach, policy analyst, and Chris Sanders, communications director. Posted Aug. 4, 2015.
What makes a state strong? We likely all could agree on a few answers: healthy people, a dependable workforce, a stable government, safe streets and vibrant communities. But without new revenue to address a huge General Fund budget shortfall, Alabama will face devastating cuts to education, health care, public safety and other vital services that make shared prosperity possible.
If the Legislature can’t agree on new revenue to avoid these cuts, Alabamians would see thousands of lost jobs, a sharp decline in our state’s quality of life and a weaker future for years to come. Here’s a snapshot of what Alabama would look like if the cuts in a no-new-revenue General Fund budget become reality.
It’s over! But it’s not over yet. After approving a wholly inadequate General Fund budget that would jeopardize our state’s future, the Alabama Legislature ended the 2015 regular session Thursday. But Gov. Robert Bentley vetoed that budget, and he will call lawmakers back for a special session on the budget later this summer.
Arise members celebrated some big victories this year, but major challenges still remain. Here’s a quick review of how Arise issues fared:
Budgets and taxes: None of Bentley’s revenue bills passed. Without new revenue, vital services like Medicaid and public safety face devastating cuts that would hurt Alabama’s quality of life for years to come. Just a few examples:
But there was some good news, too. Lawmakers overwhelmingly approved a bill to save money and give Alabamians more choices in Medicaid long-term care services. The state will have a powerful new tool – a “tax expenditure report” – to determine if tax breaks are worth the cost. And a new prison reform law will help save money and reduce overcrowding – but it only takes effect if the state funds it.
Ending Alabama’s lifetime SNAP ban: Alabamians can celebrate a big win for second chances! The prison reform bill includes language ending the state’s lifetime SNAP and TANF eligibility bans for people with a past felony drug conviction. Thousands of people can regain SNAP eligibility on Jan. 30, 2016, if the prison reform law gets the money required for it to take effect.
Alabama Accountability Act: The Legislature approved major changes to the act. The new version allows more money that would have supported public education to go to private schools instead – but it also includes some of Arise’s recommendations for greater accountability and transparency.
Housing Trust Fund: A bill to fund affordable housing in Alabama encountered powerful opposition and did not emerge from committee. Supporters plan to meet with opponents to seek agreement before the 2016 session.
Payday and title lending reform: In a big win for consumers, the Alabama Supreme Court ruled the state Banking Department can create a single statewide database of payday loans. But much work remains in the drive for a 36 percent interest rate cap: No bills to regulate payday or auto title loans passed, but public pressure for reform continues to grow.
The regular session is over, but Arise’s work continues. Stay tuned for updates as we prepare for this summer’s crucial debates over our state’s future. Together, we can build a better Alabama for all!
By Kimble Forrister, executive director. Posted June 4, 2015. Updated June 12, 2015.
New information: Gov. Robert Bentley will not sign the bill, his health policy adviser Dave White said Friday, June 12. White attributed the decision to a technical error in the committee amendment and said Bentley supports the bill's intent.
Pharmacies that distribute HIV medications in or for HIV clinics could redistribute certain unopened drugs under a bill that won final approval Thursday in the Alabama Legislature and was sent to Gov. Robert Bentley.
HB 247, sponsored by Rep. Patricia Todd, D-Birmingham, passed both the House and Senate without a single “no” vote. The bill includes a Senate committee amendment protecting drug manufacturers from liability in the event of improper re-dispensing and excluding drugs that require patient registration with the drug’s manufacturer. Pharmacies serving correctional facilities and nursing homes already have the authority to redistribute unopened drugs.
Under current law, HIV clinics must destroy unopened medications if patients do not show up for treatment. Todd’s bill, if signed by Bentley, will allow pharmacies to redistribute those drugs to other patients and set controls on handling and oversight of the drugs. Arise recommended this policy change in 2013 to the governor’s Medicaid Pharmacy Study Commission, which sought ways to reduce costs in the state’s Medicaid drug assistance programs.
By Jim Carnes, policy director. Posted June 4, 2015. Updated June 12, 2015.
A bill that would expand tax credits under the Alabama Accountability Act (AAA) received final legislative approval Wednesday and went to Gov. Robert Bentley. SB 71, sponsored by Senate President Pro Tem Del Marsh, R-Anniston, is not the total repeal that Arise supported. But the bill would make significant improvements to the existing law (including some that Arise recommended), even as it allows more money that would have supported public education to go to private schools instead. Here are six changes to the AAA under SB 71:
(1) More tax credits would be available. Businesses and individuals can get tax credits for donations to organizations that grant scholarships to help eligible students attend private schools under the AAA. The original law capped the total amount of such credits at $25 million a year, but SB 71 would raise the cap to $30 million. The bill also would raise the current $7,500 annual limit on scholarship tax credits for individuals to $50,000 and let taxpayers claim credits against their 2014 taxes for donations made in 2015.
(2) Scholarship sizes would be limited. SB 71 would limit AAA scholarships to no more than $6,000 a year for elementary school students, $8,000 a year for middle school students and $10,000 a year for high school students.
(3) The income limit for scholarship eligibility would be lower. SB 71 would reduce the income eligibility limit for AAA scholarships from its prior level – 150 percent of the median household income, or nearly $65,000 in Alabama – to 185 percent of the federal poverty level (FPL), or about $44,000 for a family of four. Scholarship-granting organizations (SGOs) would have to re-evaluate students’ eligibility every other year. Students with existing scholarships could continue to receive them as long as their family income is no more than 275 percent FPL, or nearly $67,000 for a family of four.
(4) The definition of “failing school” would change. Another big difference under SB 71 is a change in the AAA’s definition of “failing school.” The bill would deem a public school to be “failing” if it is “listed in the lowest 6 percent of public K-12 schools based on the state standardized assessment in reading and math” or if the state school superintendent designates it as one. Schools that serve students with special needs are excluded from the act’s definition of “failing” schools. Students zoned for “failing” schools would have first priority for AAA scholarships until July 31 of each year, when any remaining scholarship money could go to eligible students living anywhere in Alabama.
(5) Participating schools and groups that grant AAA scholarships would face additional requirements. SB 71 would require SGOs to report quarterly on how many scholarships they give, as well as how many of them go to students who were zoned for “failing” schools or who already attended private schools. Participating schools now would have to give state achievement tests, be accredited within three years and disclose tuition rates online before each semester begins. The bill also would require an independent comparison of the test scores of students participating in the AAA scholarship program and similar students in public schools. A SGO now could be audited by the Alabama Department of Revenue (ADOR), and the ADOR would have the authority to bar a SGO or private school from participating in the tax credit scholarship program. All required annual and quarterly SGO reports would have to be made available to the public on the ADOR’s website.
(6) Unspent scholarship money must be returned to public education. SGOs would have to use any scholarship funds on hand at the start of a calendar year by the end of the following school year. Any such money not spent on AAA scholarships by then would go to the state Department of Education to help support “underperforming” schools.
By Carol Gundlach, policy analyst. Posted June 4, 2015.
Taxes pay for important things. Services like education, health care and public safety are the backbone of economic growth, and tax dollars support them. Alabama has a long, sad history of not raising enough revenue to fund these vital services adequately, and it’s all led to this: a looming 2016 budget shortfall that could undermine our state’s future for years to come.
With just four meeting days left in the Alabama Legislature’s 2015 regular session, lawmakers still have not passed a General Fund (GF) budget to fund essential services like Medicaid, child welfare and mental health care. Alabama must have new revenue to pay its bills and meet its obligations to future generations.
Deep cuts could do real damage to Alabama’s future
Unlike most states, Alabama has two major budgets: the Education Trust Fund (ETF), which supports services related to K-12 and higher education, and the GF, which supports everything else. Taxes that grow with the economy, like individual income and sales taxes, are earmarked (or set aside) for the ETF, while the GF relies on a hodgepodge of other revenue sources, most of which grow slowly even in good times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth.
Alabama’s temporary solutions to the GF’s persistent shortfall are gone. Faced with flat or declining tax revenues, the GF has relied on one-time money in 11 of the last 12 years. The sources have varied widely: state property sales, legal settlements, loans from the Alabama Trust Fund, transfers from the state’s road and bridge fund, and federal stimulus money under the Recovery Act. But none of that one-time revenue is available anymore, and that leaves the Legislature facing a 2016 shortfall estimated to be between $250 million and $300 million.
Gov. Robert Bentley has proposed addressing the shortfall with several tax measures, including higher state taxes on cigarettes and automobiles and the closure of some corporate income tax loopholes. But only one of the bills has escaped committee. Instead, the House proposed a different, and much smaller, package of tax increases. The bills have not yet received a floor vote and almost surely are dead for this session.
Without new revenue, the House and the Senate’s GF budget committee have approved a budget with deep cuts to core services like Medicaid, corrections and mental health care. The cuts would hurt Alabama’s economy and devastate our state’s quality of life for decades:
Legislators have floated ideas to try to solve the GF shortfall without tax increases in recent weeks. While the proposals may sound plausible on the surface, none of them would be adequate to address the current funding crisis.
Taking more money from education is not the answer for Alabama
The Legislature recently placed a cap (called the Rolling Reserve) on the amount of education revenue that can be appropriated each year. As a result, the ETF has a surplus that cannot be spent on everyday school operations under current law.
If this is the case, some argue, what would be wrong with using that “excess” education money to plug the GF hole? Several proposals this year seek to do just that, by “un-earmarking” taxes dedicated to education, by combining the ETF and GF budgets, or by transferring a portion of the money above the Rolling Reserve cap to the GF.
But these proposals don’t account for one big fact: Alabama’s education funding is still nowhere close to recovering from massive cuts during and after the Great Recession. The 2016 ETF budget will give K-12 schools only 92 percent as much money as they received in 2008, despite higher costs and population growth.
Alabama’s recent education cuts are among the country’s worst. The state’s per-pupil K-12 spending in 2015 was 18 percent lower than in 2008, the second worst decline in the nation, according to the Center on Budget and Policy Priorities (CBPP). Alabama’s per-student higher education cuts from 2008 to 2016 are also the nation’s second worst, the CBPP found.
The lingering cuts point to a need for Alabama to revise the Rolling Reserve Act to make more ETF revenues available to schools. The Legislature still could pass a bill sponsored by Rep. Bill Poole, R-Tuscaloosa, to allow a share of the excess ETF money to be spent for critical school construction and repair needs. Even in the face of the GF’s funding woes, taking desperately needed funding from our schools is not the right way to build a stronger Alabama.
State lottery, casinos at dog tracks would not solve Alabama’s 2016 shortfall
Some legislators have proposed an expansion of gambling as a way to raise GF revenue. Proposals include creating a state lottery and developing casinos at locations already approved as dog tracks.
Regardless of one’s feelings about those proposals (on which ACPP takes no position), they would not solve the 2016 budget crisis. Any legislative measure to expand gambling would require a statewide vote on a constitutional amendment. Even if voters approve, it would be a year before regulatory structures could be put in place to allow revenue to begin coming to the state. That would be much too late to prevent devastating cuts in 2016.
A state gambling compact with the Poarch Band of Creek Indians (along with a $250 million loan that the tribe has offered) could fill the 2016 shortfall. But the loan would be one-time money and therefore not a long-term answer for the GF’s structural deficit. Bentley also has said he does not intend to negotiate a compact before legislators approve new tax revenue.
Most states reported declines in gambling revenue between 2013 and 2014, a recent study by the Rockefeller Institute found. Total state gambling revenue nationwide increased by less than 1 percent in that time, according to the study. Adjusted for inflation, revenues actually declined.
Alabama needs new tax revenue to pay for vital services
Ultimately, the surest way to solve Alabama’s GF shortfall and invest in our state’s future is with responsible tax increases, sufficient to meet our needs. Bentley’s proposals – including raising the cigarette tax and taxing automobiles at the same 4 percent rate that our state applies to food and clothing – would be a good start toward ensuring long-term funding for Medicaid, corrections, child care and other important services.
Alabama is at a crossroads. The choices that our state makes this year will help determine what kind of state our children and grandchildren will inherit. Do we raise new revenue to protect vital services like health care and public safety? Or do we erode our state’s quality of life with savage cuts to those services? Whether in the remaining days of the regular session or (more likely) in a special session, it’s up to the Legislature to decide which direction Alabama takes.
By Carol Gundlach, policy analyst. Posted May 29, 2015.
Medicaid long-term care patients in Alabama would have more options about their care under a bill that passed the House 98-0 Thursday and went to Gov. Robert Bentley. SB 431, sponsored by Senate Majority Leader Greg Reed, R-Jasper, cleared the Senate 30-0 last week.
The plan would deliver comprehensive Medicaid long-term care services, including in-home and other community-based services and nursing home care, through one or more integrated care networks (ICNs). One goal is long-term cost control.
State Health Officer Don Williamson told legislators that the ICN system could lead more people to choose in-home care rather than nursing home placement. The legislation would remove caps on the number of Alabamians eligible to receive less costly at-home and community-based Medicaid services.
The plan would give patients more options for care while retaining the more costly nursing home option if needed. The bill would set up a managed-care health delivery system for seniors and for people with disabilities who have Medicaid coverage and meet the criteria for admission to a nursing home.
“As quietly as this bill passed, its historic significance is easy to miss,” ACPP policy director Jim Carnes said. “When these changes go into effect, it will be a new day in Alabama for patient choice and cost-effectiveness in long-term care.”
The ICN plan would be similar in structure to the regional care organizations (RCOs) into which other Medicaid patients will move. The state’s new RCO model is designed to keep patients healthier while cutting costs.
The long-term care plan was developed with input from the nursing home industry, health experts and advocates on the Medicaid Long-Term Care Workgroup, of which Arise is a member. The bill calls for each ICN to have a Citizens’ Advisory Committee that includes members nominated by Alabama Arise and a number of advocacy partners.
Pharmacy ‘privilege tax’ to help Medicaid budget approved by House committee
Most pharmacies in Alabama would pay an additional 15 cents in privilege tax on each prescription they fill or refill under HB 698, which won the approval of the House’s General Fund (GF) budget committee Thursday. Just four legislative days remain for the bill to clear the House and Senate.
Medicaid would gain about $8 million under the proposal. Rep. Elaine Beech, D-Chatom, the bill’s sponsor, said retail pharmacists agreed to pay the supplemental privilege tax as a way to help Medicaid avoid drastic service cuts. Beech’s bill excludes prescriptions for hospital patients and pharmacies operated by the state or state agencies.
Without more revenue, Williamson said, Medicaid will have little choice but to use a pharmacy benefits manager and mail-order prescription drugs to help cut costs. Many pharmacies, especially those in rural areas, depend on Medicaid prescription drug business. Pharmacies will continue to pay an existing privilege tax of 10 cents, bringing the total pharmacy tax to 25 cents per prescription if the legislation becomes law.
A similar bill sponsored by Sen. Rodger Smitherman, D-Birmingham, cleared the Senate’s GF budget committee Tuesday. SB 507 also would impose an additional privilege tax of 15 cents per prescription, but it would not exclude hospital pharmacies and state-owned pharmacies.
By M.J. Ellington, health policy analyst. Posted May 28, 2015.