North Jefferson News, Gardendale, AL

Opinion

January 31, 2013

Steve Flowers: 2013 is year of financial reckoning for Alabama

COMMENTARY — The state is now two months into the 2013 fiscal year. This is the year that all financial experts pointed to as the year of reckoning. It was postponed for three years because of the Obama administration’s federal deficit spending stimulus spree. This manna from heaven rained down on all of the states and allowed them to temporarily postpone the pain and suffering caused by the national recession, which has raged now for close to a decade.

The state legislature decided to punt and put off for three more years the impending budget shortfall. They asked you to trek to the polls in September and vote to withdraw some of the funds from the only remaining savings account that the state possesses.

The oil and gas trust fund, known as the Alabama Trust Fund, was set up in the 1970’s to preserve the corpus derived from the sale of our oil rights in the Gulf of Mexico. The State General Fund uses the interest from this savings account to live on. The legislature asked you to delve into the principal of this fund to the tune of $450 million over the next three years. Ironically, that is precisely when their four-year terms expire. That is convenient. You benevolently acquiesced to their plan to kick the can down the road and then let the next group of legislators pay the piper. At least the new legislators and any incumbents will be fresh into a new quadrennium before they have to approve of any new tax measures.

The state does not have the luxury of deficit spending like the federal government enjoys. Alabama’s constitution prohibits that folly. We have two budgets. The Education Budget is not in proration. It receives 70 percent of all state revenue as well as the growth taxes. The General Fund is where the train wreck is occurring. With the approval of the September 2012 constitutional amendment, Gov. Bentley and the legislature averted financial Armageddon for the time being.

It is uncertain what more can be cut from the General Fund. They have already slashed teachers’ and state employee’s salaries and benefits. Do you abandon Medicaid? Do you decide that we will be the only state that does not participate in this joint state and federal program? The federal government pays over two dollars for every one dollar Alabama spends. Seventy percent of our nursing home patients and 50 percent of our live births are provided for under this entitlement program. Do you do away with state troopers? Maybe they are a luxury. Do you close all the prisons and release all the convicts and hope they migrate to other states?

There have been a good many cost savings measures enacted by this group of legislators. One resolution was designed to save on the cost of prisons. In the 2012 session, the legislature created a 21-member nonviolent sentencing commission that sets punishing standards for nonviolent crimes that judges would have to follow. This commission will lessen prison time for nonviolent crimes. It is a step forward in reducing an acute prison overcrowding problem. It will yield significant savings.

With very little fanfare, the 2012 legislature passed a bill providing tax breaks for businesses that hire unemployed, recently discharged veterans. The law provides a tax credit of $1,000. It also gives a credit of up to $2,000 to help unemployed veterans cover small business start up costs.

The law applies to veterans who were deployed overseas and who have been discharged in the past two years. The bill was sponsored by Rep. DuWayne Bridges (R-Valley) and is called the “Heroes for Hire” bill.

This legislation continues a long standing devotion of Alabama’s legislature to give benefits to veterans of the military. This pronounced attention to vets goes back to the World War II era and has been continued to today.

It would be difficult to find another state in the nation that recognizes and extends more preferential treatment to veterans than Alabama. In fact, our state merit system is so weighted in favor of military service that if a veteran applies for a state job they will probably be placed first on the register. This military service deference is so ingrained into the rating system for state positions that I advise the political science majors I teach at Troy University that if they want to work for the State of Alabama it would be more advantageous to get two years of military experience than to get a masters degree in public administration.

See you next week.

Steve Flowers is Alabama’s leading political columnist. He served 16 years in the state legislature. He may be reached at www.steveflowers.us.

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