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August 14, 2015 Group Watch: News & Views from the State House

Special Session Update

The Alabama Legislature returned to start work in the first special session of 2015 on August 3. The issue STILL at hand is the $200 million shortfall in the FY2016 general fund budget and how to best close this gap. The governor and the legislature remain at odds when it comes to a solution, as do the House and Senate, and the first special session ended with no consensus, meaning another special session will soon be called.
Here’s what was introduced only to die in the first special session:

  • On August 4, the Senate Tourism and Marketing Committee approved a bill 6-2 that would create a state lottery and regulate casino-style gambling at four sites across the state. The measure would be a constitutional amendment and require a vote of the people and potentially generate meaningful revenue for the state. Although the bill cleared the committee, its future was described as unclear. The measure was never debated again and thus died at the end of the special session.
  • The Alabama Senate passed a bill to redirect Forever Wild funds to fund the financially struggling state park system. The bill passed the Senate on a 32-1 vote, but later died in a House committee.

There were three key bills starting in the House to raise revenue and address the budget shortfall, together an attempt to spread the pain equally across individuals, businesses and education:

  • Raise the amount of business income taxable under the business privilege tax and eliminate the deduction of FICA taxes paid the federal government on state income tax returns.
  • Shift some money from education to the General Fund.
  • Increase the tax on cigarettes by 25 cents.

The cigarette tax was defeated in committee on an 8-7 vote, which included four Democrats voting “no.” A bill to transfer education monies to the General Fund died on the House floor earlier, and the business privilege tax was subsequently never considered by the House committee. The House passed a General Fund budget which dramatically cut Medicaid. The Senate passed a budget that funded Medicaid but dramatically cut agencies, which was rejected overwhelmingly by the House. Click below for the status of bills.

The Bloom Group, Inc

So What Happens Now?
FY 2016 begins promptly on October 1, and what began as a budget problem could turn into a crisis if the three parties involved — the House, the Senate and the governor — can’t come together and find some common ground and find it pretty fast. A second special session will be called soon. Some expect it as early as September 1, while others believe that in an effort to push the legislature to pass a budget — and one he agrees with — quickly, Bentley will wait and call the next special session closer to the end of September. We’ll be watching it all and will bring you all the updates in future issues of Group Watch!

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