Gov. Bentley signs bill creating "rolling reserve" - WSFA.com Montgomery Alabama news.

Gov. Bentley signs bill creating "rolling reserve"

Pictured are (L to R) Speaker Mike Hubbard, Representative Greg Canfield, Governor Bentley and Senator Bryan Taylor (Courtesy: Gov's office) Pictured are (L to R) Speaker Mike Hubbard, Representative Greg Canfield, Governor Bentley and Senator Bryan Taylor (Courtesy: Gov's office)

MONTGOMERY, AL - Governor Robert Bentley Friday signed into law the first bill passed in the 2011 Legislative Regular Session. The Responsible Budgeting and Spending Act, sponsored by Representative Greg Canfield, revises the budgeting process for the Education Trust Fund by allowing a "rolling reserve" process to make the Education Trust Fund resistant to proration.

"In passing this bill, the Legislature took a big step in working to make sure Alabama always budgets responsibly, Governor Bentley said. "By using a more sustainable budgeting process, proration in our Education budget will soon be a thing of the past. The bill which I signed into law today provides sustainable growth and spending for the Education Trust Fund."

The governor's office says the new law specifically will:

  • Provide a ceiling for appropriations that is based on sustainable 15-year average annual growth rate.  This ceiling will be raised in periods of healthy revenue growth and 40 percent of any revenues above the historical growth rate can be appropriated into the budget.
  • Service the debt owed to the Constitutional Rainy Day Fund as a first priority when revenues exceed the spending cap.
  • Create a planned system of savings through the Budget Stabilization Fund.  These reserves can only be used when actual revenues fall below expectations and can only be used for purposes of maintaining spending at a level no less than the previous year or to prevent proration.
  • Provide for a Capital Fund for education spending.  This fund will be used for school construction and maintenance, purchase of equipment and technology resources, or service debt incurred to fund these purposes.  

Democrats in both the Alabama House of Representatives and Senate attempted to filibuster the proposal but to no avail.

They contended that the idea was an unknown that had never been tested before on a budget of the Education Turst Fund's size.

"This needed more thought and consideration" said Paul Hubbert, the Executive Secretary of the Alabama Education Association.

Alabama will in fact be the first state to implement this sort of budget process.

Republicans contend it will be a way to be prepared for both prosperous and difficult economic times.

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