Mark the third Tuesday of September on your calendars and try to make up your mind about whether the state should raid the Alabama Trust Fund to keep the state’s General Fund afloat for the next three years.
The referendum was set for Sept. 18 so that the results would be known before the new fiscal year begins Oct. 1.
This is turning out to be a good year for tax collections overall in the state, but with a revenue stream largely earmarked for education the General Fund is lacking. One of the largest programs in the General Fund is Medicaid, and while most of Medicaid’s funding comes from the federal government, the state must fund a portion of the program. Other critical functions of state government, including state prisons, mental health and more could be cut even further than they already have been if the referendum fails.
Dire warnings have been given by Gov. Robert Bentley, State Health Officer Dr. Donald Williamson and others about the potential fallout from further cuts. They say there are risks of doctors leaving the state, even the possible closure of hospitals, if Medicaid is cut because so many Alabamians would be affected.
Even the language that will be on the ballot paints an urgent picture. It states, in part, that the proposal is being made “to prevent the mass release of prisoners from Alabama prisons, and to protect critical health services to Alabama children, elderly and mothers by transferring funds from the Alabama Trust Fund to the state General Fund…”, plus other provisions.
Approximately $146 million would be taken from the trust fund each year for the next three years — approximately 20 percent of the total amount in the corpus, built up from gas and oil royalties, dividends and interest since the early 1980s. The Alabama Trust Fund was set up to provide a permanent and continuous source of revenue for the General Fund, and was originally designed to continuously reinvest a portion of the money it earns to keep it growing. Since it was established, portions of the revenue have been diverted to also support Forever Wild, the Senior Services Trust Fund and municipal and county governments.
There is nothing in the bill requiring the fund be reimbursed, but Bentley has said the plan is to pay back the trust fund. He calls the proposal a bridge to get us through tough times. He also said there will be no new taxes, even if the proposal fails.
Groups as diverse as the Business Council of Alabama and the Alabama Education Association have expressed support for approval, and we expect to see it pass.
But we do hope voters will keep pressure on the Legislature to develop a long-term, sustainable plan for the future that will fund state services and smooth out some of the bumps in the budgeting road we’ve seen in the past. The current Legislature has already passed the “Rolling Reserve” budgeting process, which should go a long way toward accomplishing that.
We’re not thrilled with the idea of raiding the Alabama Trust Fund, but it seems to be a better option than facing the consequences of not doing it.