Bentley signals more tax increases, reforms could be on agenda next year

MONTGOMERY, Ala. — After a months-long battle over tax increases, Governor Robert Bentley revealed last week he will push once again for revenue increases in the 2016 legislative session.

Between November 2014 and September 2015 the amount of revenue from new taxes and budget reforms the governor pushed for dropped from $541 million to $250 million, and the legislature ended up passing approximately $100 million.

Though Bentley ultimately signed the General Fund budget into law, he told a group in Jasper that it won’t be enough long term, and he will work for more tax increases and reforms in 2016.

“I think we’re going to have to have some more revenue,” Bentley told the Times Daily’s Mary Sell. “If we’re going to provide for the essential services of government, if we’re going to provide for our hospitals, if we’re going to immunize our children, if we’re going to have troopers on the road, if we’re going to do all of those things, we have to have funding, we have to have adequate funding. But we’ll wait and see.”

The $100 million in new revenue this year came from a $0.25 per pack tax on cigarettes, a provider tax on pharmacies and nursing home beds, and moving proceeds from the Use Tax to the General Fund. The rest of the budget was balanced on cuts.

Those cuts have resulted in the closure of state parks and part-time satellite Drivers License offices, the latter of which has drawn national attention.

As the economy has grown, bringing in increased revenue, so have the government programs for which tax dollars pay. State expenditures for Medicaid, in particular have increased significantly over the last several years, growing from $244,624,007 in FY2000 to $685,125,607 in FY2015.

The inability to control these expenses, which are often mandated by the federal government, is a perplexing part of the process for legislators.

“That’s what’s so frustrating about the whole budgeting scenario, the uncontrollable cost of Medicaid, this federal program that we have very little say in how it’s run and the expenditures of it,” said Senate General Fund budget committee chairman Arthur Orr (R-Decatur) last month.

The growth of Medicaid, state pensions, and other programs will continue to be a driving factor in funding shortfalls until significant reforms can be accomplished—reforms that have historically been ardently opposed by special interests, the federal government, and the status quo.

Additionally, the dearth of growth revenues—tax sources whose revenues increase as the economy grows—in the General Fund will continue to hamstring the amount of new revenue available for Alabama’s non-educational programs unless taxes are increased.

The Alabama Legislature will convene for the 2016 Regular Session in February, but budget planning meetings generally begin in November.