Ken Hare In Depth: Voters shift burden back to elected officials

MONTGOMERY, AL (WSFA) - Now the real work begins.

A strong majority of voters have agreed to allow the state to shift $146 million a year for three years from the Alabama Trust Fund to shore up the state's General Fund budget, which covers most of the non-education functions of state government.

But the governor and leaders of the Legislature risk political suicide if they think the budget battle is won. The voters essentially have given them a three-year window to solve the chronic funding problems of the General Fund -- something prior governors and legislators have talked about for a decade or more without coming up with any real solutions.

However, if after three years, the state still has to drastically cut Medicaid and other health care services, if it still has to release prisoners early, and if it still has to chop other services and lay off large numbers of employees, Alabama voters are likely to be sorely disappointed with their governor and their legislators. And since the current governor is a Republican and the Legislature is dominated by Republicans as well, the voters' political ire is likely to fall most heavily on the GOP.

But solving the chronic funding woes of the General Fund won't be easy, for many reasons. Among them:

-- Even with the infusion of cash from the Alabama Trust Fund, Medicaid still will fall short of needed funding to maintain services in the next few years. Dr. Donald Williamson, state health officer, has been clear from the beginning that even with the funding from the trust fund, the Medicaid program still will face serious funding issues. And cutting Medicaid services further will be difficult, since Alabama's program already provides few services for adults unless they are pregnant or disabled.

-- There will be pressures to live up to the promises made by many elected officials to repay the money diverted from the trust fund. If the repayment is made from money that now flows to the General Fund, it would make it that much more difficult to balance the General Fund budget in future years. And if legislators try to repay the money from revenues that now flow to education, they will face the political anger of the education establishment. But if the money isn't repaid, there will be less money in the Alabama Trust Fund to generate interest that would flow to -- you guessed it -- the General Fund.

But as House Speaker Mike Hubbard, R-Auburn, points out, the Legislature has made a beginning on addressing the General Fund shortfall.

"This temporary transfer will provide us the time needed to fully implement the commonsense, conservative budgeting practices, targeted spending reductions and fundamental government reforms necessary to put Alabama back on the path to prosperity without raising taxes," Hubbard said.

The speaker pointed to the elimination of the DROP retirement program, increases in state employee pension contributions and reductions in retirement benefits for newly hired state workers as some of the reforms that will save money.

Gov. Robert Bentley has pointed to another potential cost-saving measure now being considered -- incentives for veteran state employees to retire early. That would save state funds by allowing a reduction in the state government work force. And even if early retirees  have to be replaced, their successors would be new hires who would likely earn less and who would qualify for lower retirement benefits.

Still, the governor and lawmakers need to be careful with how they implement retirement incentives.  Although such incentives likely would save money in the long run, if not designed well they could run up costs in the short run.

Merely by talking about the possibility of incentives, the governor may have caused many state employees who were thinking about retiring in the next few months to decide to hang on until next year to see if they would qualify for the possible new incentives.

Another potential change that could be a big boost to the General Fund is the possibility that Congress at long last will address the issue of allowing states to collect taxes on Internet sales.  Alabamians already owe sales taxes on items they purchase via the Internet, but most sites do not collect them as part of the sales transaction. And many Alabamians do not pay those taxes when they file their annual income tax report, even though they legally should.

It is incumbent on the governor and the Legislature to work with the state's congressional delegation to ensure that Congress adopts a common-sense law that allows such states as Alabama to collect sales taxes that already are owed on purchases made on the Internet.

The governor and the Legislature dumped the issue of funding for Medicaid, prisons and other General Fund programs into the laps of the state's voters when they asked them to approve the transfer of $437 million from the Alabama Trust Fund.

By approving the transfer, the voters have dumped the issue back into the laps of the elected officials. And that is exactly where it should be.