Inside the Statehouse

By Steve Flowers

As the third regular session of this quadrennium begins, the paramount focus once again will be on the budgets. Even more specifically, it will be about the General Fund Budget.

Alabama is one of five states that has two budgets. Our Education Budget now receives over two-thirds of our tax revenue due to the fact that our growth taxes, income and sales, are earmarked for Education’s coffers, whereas our General Fund gets the remaining one third of revenue and that will continue to shrink because it has no growth taxes.

The General Fund also has to feed the most expensive expenditure of state government – Medicaid. This Great Society program created by Lyndon Johnson in the 1960s is a money eating monster that grows exponentially and now eats up over half of the General Fund Budget. This problem is not unique to Alabama.

Every state would name Medicaid funding as its most significant financial nightmare.

We are affected more adversely than most states because we have a much higher indigent population. It is this long term problem that eventually will have to be addressed.

Those who are closest to the problem are aware that it is an elephant in the room that will not go away. Rep. Steve Clouse (R-Ozark), who chairs the House Ways and Means General Fund Committee, sees it as does Gov. Robert Bentley.

Governor Bentley, being a former physician, is sympathetic to the needs of the less fortunate. He treated all patients during his 35 years of practicing medicine.

He also wants to see his compatriot pediatricians paid to take care of poor sick children.

Initially many of the Republican House and Senate members were saying enough is enough. We cannot continue to absorb 10% annual increases in this social program, even if the federal government matches Alabama’s contribution about three to one. However, once a crisis seemed imminent, they realized that it not only affected the poor but also the middle class Alabamians they represent.

In medium sized towns and cities throughout the state it is imperative that Medicaid be funded in order for their hospitals to exist. In Birmingham, it would cripple our crown jewel, Children’s Hospital. It would also be devastating for Alabama’s and Birmingham’s largest employer, UAB. Most respected economists say that Alabama should have taken the Expanded Medicaid Program offered by the Federal Government. It would have been a financial boon for that state if for nothing else than the windfall to UAB.

A good many of the Republican legislators’ constituents rely on Medicaid to care for their parents and family members and probably a good many of their parents reside in nursing homes. Approximately 70% of nursing home residents in the state depend on Medicaid to pay their nursing home expenses, which by the way is very expensive.

In short, Medicaid is here to stay. It is not going away. Legislators cannot bury their head in the sand like an ostrich and hope the problem disappears.

The legislature and governor have come up with a short term fix to our Medicaid problem. They appropriated $120 million of the one-time BP oil spill settlement funds and gave it to Medicaid. This was about 20% of the one-time BP windfall.

Ironically, it will be disbursed over the next two years, 2017-2018. Guess what, folks – that is when the quadrennium ends. Therefore, the proverbial can has been kicked down the road. The next governor and legislature will inherit this baby to take care of the following four years.

Legislators may be faced with yet another issue in this overladen regular session. It may be imminent to raise the gasoline tax in the state, which has not been increased in fifteen years. The reason being is that the Trump administration will probably come with a massive federal infrastructure plan to rebuild the nation’s highways and bridges. More than likely states will have to come up with some matching dollars.

It will be imperative that we take advantage of this once in a lifetime opportunity. The last major federal highway initiative was the Eisenhower Federal Interstate Program.

We are behind the eight ball when it comes to political capital and attaining federal dollars. Governor Bentley is blackballed and laughed at by the Trump administration, as are our Congresswomen Martha Roby and Terri Sewell. We also have a freshman Senator who will be ranked 100th in seniority. However, we have quite an ace in the hole. We have Richard Shelby to protect us. When Shelby speaks, folks in Washington listen and that includes Trump. Richard Shelby is unquestionably one of the five most powerful members of the U.S. Senate.

See you next week.

Steve Flowers is Alabama’s leading political columnist. His weekly column appears in over 60 Alabama newspapers. He served 16 years in the state legislature. Steve may be reached at www.steveflowers.us.