BIRMINGHAM — Gov. Robert Bentley announced Friday that he plans to seek a tax increase over the next four years as state leaders deal with dire budget conditions that include a deficit of more than $250 million.
“We have to face problems, and we have to face them with boldness,” Bentley told a crowd of hundreds at the annual meeting of the Public Affairs Research Council of Alabama.
The council is a nonprofit organization that provides nonpartisan data that will lead to the improvement of state and local government.
Surrounded by reporters after his speech, Bentley did not provide specific proposals for raising revenue. But he said lawmakers need to look at how they can raise the money fairly.
Citing a recent public opinion survey conducted by the council, Bentley said that Alabamians can understand the need for tax increases if they prop up important programs.
The PARCA survey found that respondents were willing to see tax increases for schools, healthcare and prisons. They were, however, unsure that state and federal lawmakers make the best use of the money.
The state’s fiscal problems were made evident by nearly three hours of presentations and panel discussions at PARCA’s meeting, held in downtown Birmingham.
Jim Williams, executive director of PARCA, explained to the crowd that Alabama works with less revenue than any other state in the country. According to Williams, Alabama would have $330 million in extra revenue if it taxed at the rate of the next lowest state — South Carolina.
Friday’s meeting focused on three areas of the state budget: education, Medicaid and prisons.
State Sen. Cam Ward, who headed Alabama’s Prison Reform Task Force, spoke about what would be necessary to keep the state’s prisons — at almost double capacity — from seeing a federal takeover.
Ward and Alabama Sentencing Commission assistant director Bennet Wright reviewed some proposals that would help bring down the prison populations with the least harm to public safety.
Those proposals included the creation of a Class D felony, hiring 100 new parole officers, using more split sentences and a focus toward more community-based corrections, drug rehab and mental health programs.
Ward said the proposals will be tied together in one bill. Separating them, he said, would only result in the survival of the most politically acceptable provisions.
According to Wright, the bill would drop the state’s prisons to 162 percent capacity by 2021. That would mean 4,500 fewer inmates, compared to the nearly 25,000 in state prisons today.
Ward said that including construction projects, the legislation would cost between $40 million and $50 million per year for five years. That’s compared to the $1 billion price tag that would come from state leaders building their way out of the problem.
Speaking about Medicaid on Friday was state health officer Don Williamson.
He said the joint federal- and state-funded healthcare program for the low-income and disabled patients has a poorly constructed funding mechanism.
Medicaid reimburses doctors on a fee-for-service model, in which more tests and procedures equal more money. There are no incentives for healthcare providers or state leaders to tamp down those services, Williamson said. Making matters worse, he said, Alabama Medicaid has one of the lower reimbursement rates in the country.
Despite the dent that Medicaid makes in the state’s budget, money from Alabama only makes up about one-third of Medicaid’s budget, Williamson said. The rest is propped up by sources such as taxes on nursing homes, hospitals and pharmacies.
That leaves the ratio of outside funds to state contributions at about 9:1, when it should be around 2:1, according to Williamson.
“It’s the best deal in the country,” he said.
To help the situation, state leaders have started developing a network of regional care organizations that will manage the care for Medicaid patients. They hope the result will be less health care costs for the state and better health outcomes for the patients.
Williamson said, however, that state leaders must prove to federal policymakers overseeing Medicaid that those regional care organizations can do all that Alabama lawmakers hope.
Williamson added that even with the restructuring, Medicaid would still require an appropriation that meets Alabama’s needs.
Friday’s meeting also included a presentation by state schools superintendent Tommy Bice, who spoke about the state’s Plan 2020. That proposal seeks to create a 90 percent graduation rate in the next five years and to have each of those graduates ready for college or a career.
Bice said state educators have made great progress toward that goal, moving from a graduation rate of 72 percent in 2011 to 86 percent in 2014.
He said those gains have been accomplished by investing in pre-kindergarten courses, providing services to help students at risk of dropping out and equipping each student with a plan for his or her career.
But Bice said the state will need a significant investment from state lawmakers to meet the goals of Plan 2020.
Bentley said he’s sure the Legislature will not approve precisely what he proposes this year, but he’s confident they will work together to do the right thing.
“We are going to do it because we are doing it for the people of Alabama,” he said.