Alabama senator explains how 'surplus' of state money discredits calls for tax hikes

(Audio above: State Sen. Phil Williams interview by Cliff Sims on Yellowhammer Radio)

During an interview on Yellowhammer Radio Thursday, Alabama State senator Phil Williams (R-Rainbow City) told host Cliff Sims that contrary to what many state government officials have said, there is a “surplus” of money in state government that could be used to meet Alabama’s obligations, rather than raising taxes.

Governor Robert Bentley and House Republican leadership have been pushing various tax plans, ranging from tobacco and soda tax hikes to the elimination of the FICA tax deduction that currently keeps Alabamians from owing state taxes on the amount of federal taxes they’ve already paid. But Senate leadership, along with rank and file Republicans in both chambers, have remained staunchly anti-tax.

“This comes down to the fundamental question,” Sims began. “Do you believe Alabama’s government has enough money to function right now?”

“I do, absolutely,” Williams replied. “It is apparent we have enough money in Montgomery to do all the things the governor says he wants to do. All those executive branch departments and agencies, there’s enough money in Montgomery to bring us back to level funding — where we were last year — without any loss of services. There’s enough money to keep the court systems moving, and the AG’s office doing what it does and state troopers on the road. But the fact that we can’t access existing funds is infuriating.”

Sen. Williams said the reason the money is not currently accessible is because of Alabama’s dysfunctional budgeting process, which was implemented at the behest of the teachers’ union when the state was under Democratic control.

Alabama is one of only three states in the country that maintains two separate budgets. Roughly $6 billion per year flows into a budget earmarked for education. That leaves only about $1.8 billion flowing into the General Fund earmarked to fund everything else. Alabama “earmarks” over 90 percent of its revenue, mandating certain taxes be spent on certain programs, no matter what. That is by far the highest percentage of any state in the country, leaving legislators very little flexibility to set spending priorities.

The “surplus” Sen. Williams identified is hundreds of millions of dollars currently earmarked to go into a savings account.

“Right now it is predicted that with the budget we just passed for education, which was one of the largest budgets for education ever in the history of Alabama — almost $6 billion — that by the end of next fiscal year, they will have a $350-400 million surplus in the Education Budget,” Williams explained. “Now, I don’t mind government not spending every penny it has, I like having a savings account. But truth be told, on the General Fund side, we are anywhere from $180-265 million short of last year’s spending… So, yes, there’s a surplus in Montgomery. And we have some departments who have what they call ‘rollover accounts’ that at the end of the Fiscal Year they have a surplus and they’re not required to put that back in the General Fund… We’ve fixed some of that, but some of them still have their ‘golden calf’ rollover budget… Everyone’s willing to let someone else shoulder the burden.”

Sims pointed out that the “surplus” is the result of reforms made by Republicans. The “Rolling Reserve Act,” passed in 2011, capped the growth of the Education Budget and sent surplus money into the reserve account to be used in lean years when tax revenue is down. He then asked Williams to respond to critics who say using some of that money to patch the General Fund would roll back one of Republicans’ key reforms.

“My answer to that is, we’re not breaking the reserve. We’re not in any way reopening the Education Budget or diminishing their current spending levels or breaking the reserve program,” said Williams. “What we’re saying is some of the growth revenues that are only allowed to be used for education should to some degree be allowed to be shared with the General Fund because you can give a kid the best education in the world, but if the state they live in does not have good infrastructure, safe streets, mental health programs and court systems that are not clogged up, then they’re going to take that education and move somewhere else… So my argument is you don’t break the reserve program. You still do it. We’re not taking away so much that it would kill the reserve they have now. What we’re asking for is a component of that to get put in… But again, the golden calf. ‘Don’t touch my stuff.’ That’s the argument we constantly hear. ‘Don’t touch my stuff.’”

Williams said he is certain the legislature will come together to pass a budget before the Oct. 1 deadline. And in spite of the differences between the House and Senate, he believes more attention will be paid to the Montgomery “surplus” during the upcoming second Special Session.