A year after Amendment 1, state still faces financial woes
Published 12:00 am Thursday, September 9, 2004
Last year, Gov. Bob Riley stood before television cameras and microphones and said the Alabama public had sent a clear message, saying more accountability was needed in Montgomery before any more money would be sent.
One year after the defeat of the $1.2 billion accountability and reform package, called Amendment One, put forth by Riley, many of the state’s problems remain, with only a few governmental changes made.
“We still earmark 92 cents of every dollar, more than any other state in the nation. We still need more state troopers, and we still need to increase funding to the Alabama Reading Initiative for children in every classroom K-12,” Riley spokesperson Jeff Emerson. “Many of the problems that were there before last Sept. 9 are still there and are still in need of addressing.”
The package would have worked to help fund a projected budget shortfall and, in Riley’s words, “help solve the state’s funding problems for good.”
In the past year, the nation’s and state’s economy has slightly improved, which in turn has sent more tax revenue into the state’s coffers, which Rep. Betty Carol Graham, D-Alexander City, said, has staved off another year of proration, state budget cuts, in public schools.
“We have been fortunate – lucky if you will – that the economy has improved,” Graham said. “If sales taxes and income taxes had not improved we would be in the middle of another proration.”
Both Graham and Sen. Ted Little, D-Auburn, while happy with the improvements to the Education Trust Fund, say there are serious problems facing the other portion of the state’s budget, the General Fund.
“The outlook is very gloomy,” Little said. “We are still facing a number of problems – problems that are going to be hard to fix without some kind of revenue enhancement.”
Mending health insurance costs
From the governor’s office to the Legislature, everyone sees rising health insurance costs as the main problem facing the state’s economic stability.
“If Gov. Riley calls a special session, I am sure he will focus its attention on the health insurance costs being faced everywhere, both in the private and public sector,” Little said.
Emerson said the amount facing the state to provide insurance to its employees is quickly increasing.
“In 1998 costs were $363 million compared to $818 million this year,” Emerson said. “And we are projecting costs to be over $1 billion. We just cannot keep up with the growth.”
Emerson said the rising cost of insurance, along with other costs, have put strain on the state’s General Fund that simply cannot meet the growing demands.
“With the amount of earmarking forced upon us we are unable to move money from somewhere we may have a surplus to an area that needs attention,” Emerson said. “The General Fund is not growing, but the demands are.”
Working on a solution
If the Amendment One defeat had a positive side, it was the attention the state’s financial problems received from each and every citizen, Graham said.
“The level of awareness has been raised on the business level, the education level, the economic development level, everyone,” she said.
“Everyone is trying to be more sensitive and draft a compromise, a solution.”
But Little said any solution needs to have one group of people in mind – the voters.
“The voters sent a very clear message last year in their overwhelming vote against Amendment One,” Little said. “When 68 percent of the people go against a plan, I don’t see anyone in public office having the courage to unveil a new revenue package.”
Little said the politics involved make addressing the problem tough.
“We have to find a feasible approach, designed to help the General Fund agencies, that the voters will support,” Little said.
He added that in the short term, “Band-Aid” approaches could be the solution.
“The General Fund is going to have problems, and all I see at this point are Band-Aid solutions here and there fixing the problem,” Little said, also adding that Band-Aid approaches are how the state got into this financial problem in the first place.
As for the state’s executive branch, Emerson said the governor has taken the message sent by voters to continue efforts to revamp state government.
“We have cut $501 million from the budget – that’s half of a billion dollars saved, and there is still more needed,” Emerson said. “Our state government is running more efficient than ever, and the governor is committed to making the state more transparent and accountable to the citizens.”
Graham added that one year later is still too soon to see the impact of work done by the Legislature over the past year or to develop other ideas.
“It took a lot more than one year to get into the problem we are in,” Graham said. “It’s going to take a lot longer than one year to get out.”