Inside the Statehouse
July 29, 2015:
During the press conference three weeks ago announcing the historic BP settlement and windfall for the state, Gov. Bentley repeatedly said, “The $55 million a year to the General Fund is fantastic but it will not solve the state’s long term financial woes. It only accomplishes about 12 percent of what we need. We’re still going to have a Special Session to address the need for new revenue and we will call it for late summer.”
Bentley and the Legislature were unable to agree on a General Fund budget during the Regular Session. During the interim the House Budget Committee has been meeting and really working on the budget problems. They have been looking into each department of the state meticulously. They have met extensively with department heads and they have determined that these agencies have been cut to the bone.
The Budget Committee was set to finish their evaluations and offer a solution by mid-August. While legislators were working diligently trying to craft a plan, the Governor back pedaled on his initial $541 million tax package. He said, “Congress’ vote to fully fund the Children’s Health Insurance Program reduces the amount of money needed to balance the General Fund Budget.”
Gov. Bentley totally reversed field and said, “I’ll probably take the budget passed by the legislature and just add items to it and not really change it at all. Just add the spending items to it and then I will probably put in some conditionals to take care of other things like debt payments,” as though he had any say in the budget.
Then out of nowhere the Governor decided to call a Special Session for Monday with no forewarning or plan. It caught legislators of both parties by surprise to say the least. “I’m just flabbergasted. I just can’t believe it,” House Ways and Means Chairman Steve Clouse said. Democratic House Leader Craig Ford said, “I just met with the Governor last week and he said we were going to have a Special Session in mid-August.” Bentley also told Senate Majority Leader Del Marsh and Speaker Mike Hubbard the same thing. These two Republican leaders of the legislature were livid. They expressed their disdain and disregard for the Governor by quickly ignoring the governor and adjourning until August 3.
It appears that the Governor’s only participation in the legislative process during the Special Session will be that he called it. The Governor’s behavior as of late can only be described as bizarre. It is a though he seems distracted. His ability to have any input into the legislative or budget process for the remainder of his term has been diminished significantly. He is essentially been rendered irrelevant in the legislative process. In fact, the custodian in the House of Representatives probably has more legislative influence than Bentley. The legislature will work alone crafting a budget for the coming fiscal year, while Bentley will be relegated to being a lame duck comedic sideshow to amuse them as they try to address the perceived problems of the General Fund.
However, a recent study revealed that Alabama’s financial picture and future is much brighter than most states. The Mercatus Center at George Mason University, the nation’s leading policy research group, stated that most states face uncertain financial futures, a good many states do not have constitutional balanced budget provisions like we do and most do not have as prudently and properly funded public employee retirement system programs.
The study revealed that the top five states are Alaska, the Dakotas, Nebraska and Florida. The Dakotas, Nebraska and Alaska are flush because of natural resources like oil. Florida rakes in sales tax from tourism.
The states in the worst condition are California, New Jersey, New York, Massachusetts and Illinois. The worst ranked state was Illinois. There the government has used funds set aside for future pensions to pay for current expenses.
Alabama is ranked the 13th best state in America when it comes to fiscal soundness, planning and spending. In comparison, with surrounding states, Georgia is ranked 26th and Mississippi is 33rd. Louisiana and Kentucky are even worse at 35th and 45th, respectively. The only sister southern states doing better than us are Tennessee at number 8 and Florida at number 5.
July 22, 2015:
The week leading up to the Fourth of July had a lot of fireworks. In fact, my guess is that when we look back at the year 2015, we will look to that week as the most momentous of the year. It was like bang, bang, bang.
The declaration by the Supreme Court that same sex marriage is the law of the land may be one of the most monumental court decisions in decades and unquestionably the landmark ruling by the high tribunal this year.
The same week we saw a settlement of the BP case. It was expected and predicted that this verdict would not come down until late 2016 or early 2017. It will be a boon to Alabama’s General Fund, but not a panacea.
Also, the same week Gov. Robert Bentley took down all the confederate flags around the Capitol. This decision may not play well with some arch conservatives around the state, but they cannot retaliate against Bentley. He cannot run again anyway. He did it because he thought it was in the best interest of the state. Gov. Bentley said removing four confederate flags from around the Capitol was “the right thing to do.” He continued, “It’s important that we present an image in Alabama that things are different today than they were in 1963.”
Bentley, who has hung his hat on luring new industry into the state during his time as governor believed that the confederate flag issue could be a determent to potential industrial recruitment. He said he wanted to head off controversy about the flags that might distract from our image and put us in an unfavorable light with corporations around the nation or globe.
Hours after the flags came down, Bentley announced that Google plans to convert an old coal burning power plant in rural Jackson County near Huntsville into a $600 million data center. Ironically, Bentley’s decisive move to remove the flags may be looked on in future years as one of his legacies as governor.
The BP settlement the week of the Fourth of July will go down as a legacy for Alabama. We will reap $55 million a year into our General Fund over the next 18 years. The total settlement will be $2.3 billion for our state. About $1.3 billion will go to environmental restoration along Alabama’s coastal area and $1 billion will go to the state for economic damages.
Although most of the economic loss came in the area of income and sales taxes that would generally go to the Education Trust Fund, legislators have passed legislation to earmark the money to the General Fund. The $1 billion will be paid out over 18 years, which will come to about $55 million per year.
It has been five years since the explosion at an off shore well and subsequent oil spill that killed 11 men and devastated the economy of the Gulf Coast. Alabama was one of five states affected by the BP tragedy. A total settlement of $18.7 billion will be paid out to all of the five states.
Attorney General Luther Strange did a yeoman’s job on the settlement. He headed the entire legal legwork. By foregoing outside legal counsel, he saved the state millions. Other states, like Louisiana, spent over $10 million on outside counsel. The presiding judge, U.S. District Judge Carl Barbier, early on made Strange the lead counsel on the case.
Attorney General Strange and Gov. Bentley held a joint press conference announcing the historic settlement. Strange said, “I think Alabama has received the very best settlement possible. I think it will benefit future generations of Alabamians.” Gov. Bentley said emphatically and repeatedly that the BP settlement will not solve Alabama’s General Fund shortfall. “This will not solve the problem,” Bentley said, “Does it help some? Yes, absolutely.” When asked if the new money might give lawmakers the excuse to avoid raising taxes or seeking solutions, Bentley said it should not. He emphasized that the BP windfall is not the golden parachute that legislators are hoping for.
“There is a $400 million gap in the General Fund so $55 million would only be 12 percent of that amount and it may not even start this year,” Bentley said. He continued, “I’m always afraid that anyone can make the excuse to take some one time money given in one-time fashion and not solve the real problems of our state.”
A Special Session was called last week even with the BP windfall.