SB257 and SB236 were introduced last week; both play a role in Governor Bentley’s package to balance the 2012 budgets. Projected revenues for 2011 continue to decline, as evidenced by the Governor’s current dilemma with an anticipated 15% proration in the 2011 budgets (please remember, the 2011 budgets were passed in the 2010 legislative session – the 2012 budget will be the first passed by the current legislators and administration).
Following are my thoughts on SB257 and SB236:
As I understand these bills, they represent a piece of the puzzle in the Governor’s plan to balance the state’s budget. SB257 attempts to repeal longevity pay, subsistence allowance and daily expense allowances for state employees. If enacted, SB257 results in an annual savings of $32 million to the state’s general fund. According to the Governor’s office, that savings would help keep over 700 state employees working. SB236 authorizes the Governor the option to furlough state employees during times of economic distress in the future. I encourage readers to view SB257 and SB236 both linked in PDF format.
There are two sides to the budget equation; revenue and expenditures. There are very few options left on the revenue side. At most, I’ve heard from 1 in 1,000 who desire that we raise taxes; that is not an option. As discussed below, we are working to close the corporate tax loopholes which will help the budgets some but, by law this revenue is earmarked for the Education Budget.
On the expense side, we can only cut services or benefits to state employees. Cutting services equals cutting positions - layoffs - and that impacts state employees who are laid off and the general public as we will also see the reduction in state services. Cutting benefits is what SB257 is attempting to accomplish state wide. It saves jobs - it keeps people working. From the emails I’m receiving it appears the state employees would rather not see the cuts in benefits, which is understandable. I'm concerned that even if we cut benefits this year, saving jobs, we will still need to find cuts in the 2013 budget...what then? We are as concerned about the 2013 budgets as the 2012 budgets. Certainly no easy choices for any of us.
Corporate Tax Loopholes
Governor Bentley has announced plans to begin working to close the corporate tax loopholes as a way to ensure Alabama receives its share of taxes owed by corporations operating in Alabama. You can read the press coverage here. I've submitted a letter to the Commissioner of the Alabama Department of Revenue requesting her support in identifying areas of the Alabama Code that can be legislatively addressed to close these loopholes.
Interesting to note, this has become the battle cry of the Alabama Educators Association (AEA) as I’ve received numerous emails from membership on the topic. My question - as these loopholes have been around for a long, long time - why didn’t the legislative body, controlled by democrats for decades, attempt to move legislation forward on this in years past? AEA has included a brochure on their website that some might find interesting. Surely they have vast amounts of data to help the new legislature close these loopholes. I look forward to working with my friends across the aisle to tighten things up, ensuring what is owed to our state by corporations is paid.
Impact of Recession on Public and Private Sector Jobs
The State Director of Finance gave a presentation to legislators in February during initial budget hearings. The entire slide show can be viewed at the Dept of Finance Website. One of the most telling slides with respect to the recession is shown below - job losses in the private sector versus the public sector since 2008.