The tough budget process gets under way

By By Rep. Ronald Grantland, Guest Columnist
The first third of the 2009 legislative session is over, and the Alabama House of Representatives has accomplished a lot of work.
We’ve passed many bills, started on many more, and we are on track to finish the people’s business by the time the session ends in May.
This week marks the beginning of the budget process, the most important task, and a constitutional duty for the Legislature. This economy makes the budgeting process all the more important, and all the more difficult.
In Alabama, there are two parts to the state budget: the General Fund and the Education Trust Fund. The Education Budget pays for 60 percent of all spending for K-12 and state colleges and universities. The General Fund pays for important services like public safety, healthcare, and child protection services.
Each side of the budget has earmarked revenue streams. All state income and sales taxes are dedicated to education. The General Fund revenue comes from the interest from the oil and gas trust as well as lease and production taxes in the gas fields, the state ad valorem tax, and Alabama Alcoholic Beverage Control Board profits.
Revenue for both budgets is down, way down from where we were a few years ago. In the last legislative session we cut education more than three percent, and proration has still been declared with a cut of another six percent coming. The cuts would have been double if there wasn’t the rainy day fund for education, a line of credit from the oil and gas trust that voters approved last year.
Revenue for the general fund has been limping along, while costs have skyrocketed for things like healthcare. We start the budget process looking at huge budget gaps for 2010, a 15 percent loss in education, and another large hole for the general fund.
Slashing budgets this much would mean devastation for everything from classrooms to nursing homes.
We haven’t seen such budget difficulties since the early 1980’s.
This week the governor will send us his revised budget. While he is obligated to send the Legislature a budget by the opening of the session in February, usually there is more information and a better developed economic picture by this time in the session, and he sends an altered spending plan. Then we get to work.
Since the beginning of the session, much has changed. Congress passed the economic stimulus plan known as the American Reinvestment and Recovery Act, which will provide a major shot in the arm for our state. Alabama is slated to get $3 billion over the next two years, with funds going to important transportation projects and other infrastructure upgrades.
However, the bulk of that stimulus money is targeted to our biggest budget holes in education and healthcare. The immediate impact will be enormous. Additional Medicaid dollars will help thousand of families and seniors maintain critical care, and provides the funds that keeps our rural health system functioning.
The federal education dollars, approximately $500 million for next year, will prevent thousands of teacher layoffs and help us preserve the hard-won gains we’ve made in our schools. There is no better stimulus than keeping a breadwinner in their job. Reducing the amount of layoffs in education will have a real impact on our state’s economy.
However, even with the federal help the budgets are in tough shape, which is a clear indication of just how tough the budget process will be this year.