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Alabama State House
Budget Divide

Senator proposes new funding split to fix ailing General Fund

With a $250-million-plus budget gap looming and less than a month left until the legislative session, one Alabama lawmaker is making a long-shot attempt to solve the state's long-term General Fund budget woes.

Sen. Paul Sanford, R-Huntsville, has filed a bill that would would give 78 percent of the state's recurring revenue to the state's schools, while 22 percent would go to the General Fund, which pays for all other state agencies.

"We've got to do something different," Sanford said. "What we're doing isn't working."

Sanford's proposal may sound dry on paper, but it touches on the third rail of Alabama politics. For decades, Alabama has run its government on two budgets. The Education Trust Fund, expected to be the source of $5.9 billion in spending in 2015, is set aside for schools. Supported by sales and income taxes, the education budget tends to grow when the economy does.

Not so the $1.8 billion General Fund, which is supported by an odd assortment of other taxes — revenue which hasn't grown over time. Lawmakers have been shoring up that budget with one-time funds and borrowed money for the past three years. Now that money has run out, and come March, lawmakers will have nowhere to hide from a budget crisis.

Over the years, several Montgomery power players, including Gov. Robert Bentley, have proposed combining the two budgets into one, but the proposal has been a political non-starter. Two-budget advocates from both major political parties say a combined budget would inevitably take money from the school system.

Sanford's bill is a variation on that theme. Without combining the two budgets, it would take all tax money destined for both budgets and put them in one pot, then split the pot 78-22 between the two budgets.

Don't bother applying that math to the 2015 budgets. Sanford said this year's General Fund budget is shored up by one-time sources that wouldn't be go into that single pot of money. Still, Sanford said, the split would allow the General Fund to grow in the future.

"I'm just trying to come up with a common-sense solution to what's been a systemic problem for decades," Sanford said.

Senate leaders who spoke with The Star this week didn't give Sanford's proposal — which didn't make it out of committee in previous sessions — much chance of passing.

"It sounds like a roundabout way of going to a single budget," said Sen. Del Marsh, R-Anniston. "I don't think it would be very popular."

Sanford's plan is, however, one of the few budget-related bills filed in either house so far. House and Senate leaders have hinted at a number of possible solutions for the General Fund gap, but with little more than three weeks until the session begins, no one in the Republican supermajority has unveiled a budget plan.

"I don't want to talk about the details of it now, because that's still premature," said Sen. Arthur Orr, R-Decatur, chairman of the Senate committee in charge of the General Fund.

Orr and Marsh both said budget talks are likely to begin the way they usually do: The governor will release his proposed budget, and lawmakers will work from there.  That proposal typically doesn't get released until the first day of the session.

In the past, Bentley has said he'd consider budget cuts and possibly closing tax loopholes. Lawmakers have often spoken hopefully of the possibility of collecting sales tax on online purchases, something that requires congressional approval and doesn't appear likely to pass within the month. Attempts to reach Bentley's spokespeople for comment were not successful Wednesday.

Marsh said he has heard talk, among lawmakers, of a cigarette tax increase and the cancellation of various tax breaks, including one that allows state income tax payers to write off the money they pay in federal tax. Still, Marsh wouldn't talk specifics.

"Trust me, there will be no surprises," he said.

Democrats, meanwhile, are pushing what they call a "voluntary tax" plan. House Minority Leader Craig Ford, D-Gadsden, said his party supports a $1 per pack boost to the cigarette tax, a lottery to pay for education and a pact with the Poarch Band of Creek Indians that would bring some gambling revenue into state coffers.

Those taxes would be "voluntary" because no one's required to gamble or smoke, Ford said.

Ford said Alabama has some of the lowest tobacco taxes in the nation.

"Other states are looking at a lot more revenue," he said.

Orr said that no matter what is proposed in March, that budget will see plenty of changes.

"This is going to be a long and winding road," he said.

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