The start of the 2016 Legislative Session seems eerily familiar as the specter of a shortfall in the General Fund budget looms. Expected to exceed $200 million, the shortfall will be the primary concern of the Legislature again this year. Unlike last year, Governor Bentley will not be pushing a series of tax measures, leaving the Legislature to sort it out. It is unlikely that any significant revenues will be added to the General Fund during this session.
That being said, anything is possible. With crippling effects to hospitals possible if Medicaid is not funded and the threat of a federal takeover of Alabama's prison system, legislators may be motivated to find new revenue in the form of taxes, fees, and other "enhancements." Here is a look at some of those measures:
Casino Gaming
Less than a year ago, expanded casino gaming in Alabama seemed to have a fighting chance. At the time, one of the most powerful office holders in the state, Senate President Pro Tem Del Marsh (R-Anniston), was actively promoting a plan to allow Class III casino-style gaming at the state's four existing dog racing tracks, to create a state lottery for education, and to encourage the Governor to seek a gaming compact with the Poarch Band of Creek Indians. A powerful coalition, organized under a foundation called the Alabama Jobs Foundation, supported the plan. That coalition included prominent Alabama business people as well as Pat Dye, former Auburn football coach. According to a study conducted by Auburn University at Montgomery, Senator Marsh's plan would have created as many as 11,000 jobs in the state. It would also have generated as much as $400 million in revenue annually, nearly all of which would have come from the lottery.
Unfortunately for gaming proponents, Senator Marsh has decided that he will not champion gaming or lottery legislation this year. According to Senator Marsh, the plan lacks sufficient support in the Senate and would likely bog down the Regular Session, making it impossible to accomplish other important tasks. Thus far, no one else has picked up the casino issue and indicated that they will sponsor legislation this year. Although it seems likely that some form of casino gaming bill will be introduced, its chances of passing seem fairly remote.
Lottery
Another possible source of revenue for the state would be a lottery. Almost 17 years ago, voters in Alabama rejected then-Governor Don Siegelman's proposed education lottery by a margin of 54% to 46%. With the General Fund now in dire straits, Representative Alan Harper (R-Northport) and Senator Jim McClendon (R-Springville) have introduced bills that would allow the people to once again vote on a lottery. The bills that have been introduced have been criticized by some for their lack of specificity. Both bills merely provide that, if approved by the people, the Legislature could establish a lottery. What sort of lottery games would be permitted (Powerball, scratch-off games, etc.) and how the money would be used by the State are left open.
Because the creation of a lottery requires an amendment to the State's Constitution, and because the proposed amendments thus far would require significant additional legislation if approved by voters, any new revenue from a lottery would take some time-most likely two or more years-to be realized. After passage by a three-fifths majority in both houses of the Legislature, the measure would be put to a vote of the people, probably at the November 2016 general election. If approved, the state would then have to pass enabling legislation setting up a lottery corporation to run the games.
The corporation, once established, would then have to ramp up operations and select vendors for the operation of the lottery itself and vendors for the tickets. In Wyoming, the most recent state to adopt a lottery, the time between the passage of legislation and the first ticket sold was approximately fifteen months. Furthermore, in order to create its lottery, Wyoming did not have to go through the additional step of amending its Constitution as required in Alabama. Thus, even if a lottery were approved, it could take a number of months to come on line.
Gas Tax/Infrastructure Improvement
A significant effort by business and community leaders in Alabama is underway to increase the State's gas tax, with the additional revenue to be earmarked for infrastructure improvement at both the state and local levels. According to proponents, Alabama's tax is one of the lowest in the region, and the current low price of gas creates an opportunity to increase the tax without unduly burdening the public. In fact, Alabama's gas tax was last increased in 1992-twenty-four years ago. Because vehicles are increasingly fuel-efficient, the average car on the road today provides less to the state in revenue from the gas tax than it did 20 years ago. These factors, along with a 17% increase in the state's population, have left Alabama's roads in difficult shape.
Under the proposal being discussed, the price of gas would increase next year by $0.12 per gallon. An early version of the proposal would have added the initial increase, and then stepped up the tax over several years before finally being set at a fixed percentage of its market price. It is not clear, however, whether the current proposal includes this indexing feature.
There are a number of other measures that are likely to be considered. The HBAA has not taken a position on any of the revenue bills.