Alabama governor's office predicts sunnier budget picture
by Tim Lockette
tlockette@annistonstar.com
Jan 15, 2014 | 2967 views |  0 comments | 28 28 recommendations | email to a friend | print
Alabama Governor Robert Bentley delivers his State of the State address in the historic Old House Chamber in the Capitol building in Montgomery, Ala., Tuesday, Jan. 14, 2014. (AP Photo/Jay Sailors)
Alabama Governor Robert Bentley delivers his State of the State address in the historic Old House Chamber in the Capitol building in Montgomery, Ala., Tuesday, Jan. 14, 2014. (AP Photo/Jay Sailors)
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MONTGOMERY — If Gov. Robert Bentley’s budget experts are right, Alabama's finances in 2015 may not be hurting so badly after all.

Two days after state officials released gloomy statistics on the state's General Fund budget, showing that non-school state agencies would have $83 million less to spend in 2015, Bentley’s budget office is predicting that the General Fund will grow in 2015.

Bentley's budget request, released Wednesday morning, asks the Legislature for $1.82 billion to pay for the state's non-school agencies, about 4 percent more than the $1.75 billion lawmakers budgeted last year. The Education Trust Fund, which pays for the state's schools, was also predicted to grow.

"The state's economy is growing," said acting finance director Bill Newton. "We're coming through the Great Recession."

Bentley's budget numbers seemed to come from a different planet than the one occupied by the Legislature's budget planners, who announced on Monday that the General Fund would bring in only $1.7 billion — $47 million less than the Legislature budgeted for 2014 and $83 million less than it actually spent, after unexpected windfalls. State agencies, meanwhile, asked for more than $2 billion.

Bentley's proposed budget would keep most state agencies at their current level of funding, but would provide a major increase for the state's Medicaid Agency. Bentley would give state-and-federal health care program $685 million in 2015 — $70 million more than the struggling agency got last year, but $15 million less than it requested. Bentley's budget would also give a $10 million boost to CHIP, the state's health insurance program for children.

It's not unusual for the two agencies — the Department of Finance in the governor's office and the Legislative Fiscal Office — to disagree on revenue projections, but the difference this year added up to more than $100 million.

"There's one certainty about this," Newton said. "Both of these estimates are wrong. Our goal is to be (only) slightly off."

Asked about the difference between the two numbers, Newton said he didn't know enough about the LFO estimate to comment. But he also said his office included money from several one-time sources of revenue. The refinancing of state bonds yielded about $20 million, he said. Audits by the Examiners of Public Accounts brought in $4.5 million. There were other one-time sources as well, Newton said. Some of that found money can be added to the General Fund only if the Legislature passes a law to do so, he said.

Norris Green, director of the Legislative Fiscal Office, said his $1.7 billion projection for 2015 didn't include certain taxes that can be moved to the General Fund at the governor's discretion.

He said money from the state's business privilege tax is typically held in an escrow account before going to the General Fund, a precaution in case a business successfully sues to get some of its tax money back. The LFO had expected the governor to draw $50 million from that account for the General Fund in 2015, he said, but the governor chose to draw more than $100 million.

The General Fund gets its money from an assortment of taxes that don't grow steadily, and in recent years the state has often used one-time funds to shore it up. A 2012 amendment to the state Constitution allowed the state to raid a state trust fund for $437 million to bolster the General Fund over a three-year period. Budget documents show that the proceeds from that raid constituted the biggest single source of income in the General Fund in 2014.

The state would have to bring in more than the projected $1.82 billion to pay for a 4 percent pay raise for state employees, something the governor called for in his State of the State address Tuesday. The raise, which would cost $22 million, is listed as a "conditional appropriation," which means it wouldn't happen unless revenues in 2015 exceed projections.

Bentley’s budget request includes

On the state's Education Trust Fund, which pays for schools, there was more consensus on how much money would be available. The LFO and Finance Department both predicted the education system, which gets its money from sales and income taxes, would have about $5.9 billion to spend — around $134 million more than last year.

Bentley's budget would increase funding for the state's pre-kindergarten program from $28 million to $38 million. Most aspects of Alabama's free pre-K program get high marks from education experts, but the program is open to only about 9 percent of the state's 4-year-olds. Bentley has been an advocate for expanding the program.

The governor is also asking lawmakers to approve a 2 percent pay raise for teachers.

Sen. Del Marsh, R-Anniston, said Wednesday that he hadn't seen the governor's proposal, but doubted there was enough money in the education budget for the pay increase.

"Based on the preliminary numbers I've heard, I don't think it's realistic," said Marsh, the president pro tempore of the Senate.

Marsh said he wants to "prioritize debt repayment," and the education trust fund does have about $162 million left to repay on money it borrowed from a state trust fund after the 2008 recession. Some of that money will be paid back with money leftover from the 2014 budget year, but state officials won't know how much until the fiscal year ends in September. That presents a challenge for lawmakers who have to pass budgets by April.

Jacksonville State University would get $35.9 million in 2015 in the governor's budget proposal, about $100,000 less than last year.

Attempts to reach JSU president Bill Meehan on Wednesday were unsuccessful. Meehan told The Star on Tuesday that the university was hoping for an increase of 5 percent, or about $1.5 million. Meehan said the university's trustees had already agreed that they would not raise tuition even if the Legislature "level-funded" the college, essentially keeping it at the previous year's level of funding. He said the trustees might consider a tuition hike if there were a major funding cut.

"It depends on the size of the cut," he said.

The budget has to work its way through both houses of the Legislature to become final. The House and Senate are in session until April.

Capitol & statewide correspondent Tim Lockette: 256-294-4193. On Twitter @TLockette_Star.

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