By Brandon Moseley
Alabama Political Reporter
Wednesday, January 10, 2018, Alabama Finance Director Clinton Carter met with journalists at the Capitol to discuss the state’s budgets. Carter briefed the press on Gov. Kay Ivey’s General Fund and Education Trust Fund budget proposals.
Carter said, “We are really excited about this budget.” Carter said that state revenues, “Are historically great by all measures.” “The economy really is booming.” Carter said that state income tax revenues and sales tax revenues, which are earmarked for the education trust fund (ETF), are at all-time highs. The revenues funding the general fund, primarily insurance premium taxes,
Carter said that this is, “One of the best budgets we have seen in years.” However Carter said that the Ivey administration is advising, “Proceeding with caution.” “It would be unwise to get drunk and spend based on a false sense of positive momentum.”
Carter warned that there are some issues that could affect the budget. The first is if Congress changed how Medicaid is funded and passed more of the costs on to the states. The second is Corrections. A federal judge has found that the state needs to upgrade the mental healthcare that Alabama’s prisoners receive. That is addressed in the budget. If the court rules that the state needs to further address corrections that could be a problem. The third possibility is if Congress switches from funding the children’s health insurance program (CHIP) from fully funded by the federal government to 80 percent federal and 20 percent state funded. Carter said that this budget has a $50 million buffer, so that if any of these worst case scenarios happens the state can deal with it. The worst case scenario would be if all three happened. That would be a problem.
Carter said that 2020 Medicaid budget increases $50 million. The good news is that the booming economy means that fewer people are going on Medicaid. Once people go on Medicaid they generally remain there; but the rate of going on Medicaid has decreased and pharmaceutical costs have improved.
Carter said that the state is increasing funding for prisons to address staffing and deteriorating facilities. That is being phased in over a three-year period. The Department of Corrections would have the option of either having across the board pay increases or offering signing and retention bonuses. Corrections has a new healthcare contract that combines health care services with mental health services. $30 million a year of that is for the healthcare services and the other $20 million is for mental health services for a total of $50 million a year. Corrections will have funding for adding another 100 corrections officers.
Carter said that CHIP is funded through the end of February; but that he anticipates that the Congress would vote to continue funding 100 percent of CHIP costs and even if the state did have to pick up 20 percent of the cost of CHIP that would not affect the state immediately. There would be time to address those needs so that the children will still be insured.
“We don’t believe there is much risk of a change in CHIP,” Carter said. “We estimate the cost of going from 100 percent federal funding to an 80:20 match at $30 million in 2020 and $75 million in 2021. “If Congress made a change it would not be in this budgets. There really is no rik of the entire program disappearing.”
Carter said that there is money in the budgets for cost of living adjustment (COLA) to both state employees and to teachers and education employees. There will be 3 percent in general fund and 2.5 percent for education. This is “Without raising taxes on the people of Alabama. The money for the COLA’s is being funded separately so even agencies that are level funded are not being asked to fund the COLA out of their line item appropriation.
Carter said that there is additional funding for ALEA (Alabama Law Enforcement Agency) to hire 100 new officers.
The Department of Human Resources (DHR) is getting additional money to replace outdated software.
“With a few exceptions we are fully finding the Alabama Reading Initiative,” Carter said. There is some money in there for transportation and buses. The EFT has increased by $216 million, $60 million of that is for the COLA. Carter said that the budget is funding an additional 130 teachers.
Carter said that the state funded PEHIP at $800 per person last year and they have asked for $800 this year. There is discussion around the lawsuit the AEA has filed. There is money in escrow they would reimburse $75 million to individuals if PEHIP loses the suit. Carter said that he does serve on that board. “Personally speaking it seems like there is a consensus opinion that there would be a compromise.”
The Alabama Political Reporter asked when the general fund budget was being cut the state Auditor’s office took a disproportionate share of the cuts. Is there any plans to restore that funding to the Auditor’s office?
“We have had discussions with the state Auditor,” Carter said. “We are working with them to alleviate some of their cost and burden.” “I would not say that it was disproportionate.” “The cuts to the Governor’s office has been greater.” The Governor’s office was cut 50 percent, the Attorney General’s office was cut, the Secretary of State’s office does not even get a general fund appropriation any more. There is no restoration of the funding for the Auditor in this budget. The Auditor’s office is losing an employee and the Comptroller’s office has taken over some of the duties and responsibilities of that person.
Reporters asked about the legislature making changes. “We are more willing to negotiate on a number of areas. It is there budget too,” Carter said.
APR asked: Because Governor Robert Bentley did not expand Medicaid expansion, there are a number of people who do not make enough money to get even subsidized health insurance. The Republicans in Congress had promised to repeal Obamacare; but the Senate did not do that, so Obamacare is still in place. Is there any sort of plan in place, not necessarily to expand Medicaid, but to provide some sort of a subsidy or a plan to help those uninsured people get coverage?
Carter answered, “That is outside of the purview of the Finance Director.”
The Governor’s proposed budget now goes to the legislature who will decide whether or not to pass the budgets.