After a regular session of the Alabama Legislature and two special sessions, Gov. Robert Bentley signed a General Fund (GF) budget Thursday, bringing an end to almost six months of sometimes contentious debate about taxes, spending and the budgeting process.
The $1.7 billion GF budget, which passed the Legislature Wednesday night, includes $166 million of additional revenue from tax increases and reallocation of funds. Medicaid, Corrections, Mental Health, Human Resources and the court system were level funded under the plan, while other non-education state agencies will face cuts of 5.5 percent or more.
"We appreciate the legislators who stood with the farmers, businesses and taxpayers of Alabama in opposing tax increases," said Alabama Farmers Federation President Jimmy Parnell. "We appreciate their commitment to the conservative values that voters expressed in trusting our state's future to their leadership."
The Education Trust Fund (ETF) budget transferred about $80 million of use tax to the GF, which was hailed as a significant reform by legislative leaders. The move will allow the GF to benefit from growth in use taxes as the economy improves. Additional new revenue came from taxes on cigarettes, prescription drugs and nursing homes.
The cigarette tax of 25 cents per pack is expected to generate $70 million. A 15-cents-per-prescription pharmacy tax is projected to contribute $8 million, as is a $400-per-bed nursing home tax increase.
Proposals to increase the business privilege tax, car rental tax and car title transfer fees were defeated.
Alabama Farmers Federation was instrumental in stopping the business privilege tax increase, which would have doubled the tax for some businesses.
"Raising taxes on businesses - including many small businesses and farms - would discourage investment in the state and stifle job creation," said Federation House Legislative Programs Director David Cole. "We appreciate the representatives who opposed this tax in the House and kept it from coming to a vote on the House floor."
Throughout the Regular Session and both special sessions, a large group of senators opposed raising taxes in any form, while the House leadership supported a variety of small tax increases. Federation Senate Legislative Programs Director Matthew Durdin said the transfer of use tax was key to winning enough support in the Senate to pass the budget.
"The use tax transfer was seen as a compromise to bring some degree of reform to the budgeting process," Durdin said. "Surveys indicated the cigarettes tax was the least objectionable with voters, and the pharmacy and nursing home taxes were supported by those industry groups."
The $80 million transfer was offset by changes to the Rolling Reserve Act, which limits spending from the education rainy day account. Those changes free up a greater portion of those funds for current needs.
Despite cuts in the GF budget, the Alabama Department of Environmental Management (ADEM) received $280,000 to offset registration fees for Concentrated Animal Feeding Operations. However, with ADEM facing an almost $1 million cut, it was unclear how farmers would be impacted. The Federation is meeting with ADEM officials to make sure poultry and livestock producers benefit from the funding, as the Legislature intended, but CAFO permit fees could be implemented by the department.
The Federation also was successful in preventing changes in property taxes, sales tax exemptions for farmers, premium tax credits for insurance companies that invest in Alabama and lubrication oil taxes.
While the $166 million in new revenue includes some additional taxes, it's far less than the $700 million Gov. Bentley originally proposed in March.
Click here to view a copy of the General Fund Budget:
