By: Kellie Jones, Posted by: Kellie Jones
MONTGOMERY, Ala. (AP) - Gov. Robert Bentley said he wants to be upfront with voters. The state is facing a budget crisis and fixing it the right way will require changes that some people probably won't like.
"It's going to require more revenue. Is everyone going to be happy? No, they're not" Bentley said.
The governor said taxes are a last resort, but he believed the state would reexamine current tax deductions. That includes a tax break that only Alabama and a few other states give. Residents can now deduct their federal income taxes and FICA (Social Security and Medicare) taxes that they pay when calculating their state income tax.
"We're one of the only states in the country that allow FICA to be deducted off of your state income tax. We're one of the only states in the country that allows the full deduction of your federal income tax off of your state income tax," Bentley said. However, he noted that was just one of many ideas being considered.
Bentley said he wants people to be aware of a dire budget situation and the choices facing lawmakers next year as they begin the budget-writing process.
"Do we do things right or do we piece mill it and do it the way we've been doing it forever and push back and not pay? Or do we bite this all off and say we are going to solve this thing for a number of years in the future," Bentley said.
Money taken from a state trust fund to prop up the $1.8 billion General Fund budget, that fuels non-education agencies, over the last three years will run out at the end of the fiscal year.
Bentley said the true picture of the need in the General Fund is around $700 million, if you consider what the state has taken from various places to shore up the General Fund, $125 million owed to the federal government for Medicaid overpayments and an additional $140 million in increased funding for the two largest state agencies, state prisons and Medicaid.
"If you did things right, it would be $700 million," Bentley said.
Bentley is also including $160 million that then-Gov. Bob Riley borrowed in 2010 from a state rainy day fund to prevent General Fund agency cuts. The money has to be repaid by 2020
"Now, I could leave it for the next governor. I think that would be irresponsible," Bentley said
Bentley and legislators say have been meeting on possible solutions ahead of the 2015 legislative session that begins in March.
"I've made a promise that taxes would be my last resort on issues," Bentley said.
Legalized gambling -- through a state lottery or a compact with the Poarch Band of Creek Indians -- is one of the ideas being considered, and one that could be unpopular with some GOP constituencies who have traditionally opposed gambling.
The Alabama governor said legalized gambling, "is not my favorite way either because it's an inexact thing."
"The way we've been looking at it, we're really not going to get that much money out of a compact. We're really not going to get that much money out of a lottery for a small state like Alabama. I say not a lot. The two of them together might add up to $200 million," Bentley said.
The chairmen of the legislative budget committees were hesitant to estimate the needs of the General Fund before hearing requests from state agencies.
"I would describe it as a year where the can can't be kicked down the road any farther. We've done that for a lot of years," Rep. Steve Clouse, R-Ozark, said.
Sen. Arthur Orr, R-Decatur, said much will depend on the needs of state agencies and the political will of legislators. Will lawmakers want to address the yearly minimum need or the bigger picture of perpetual General Fund shortfalls?
"Our first obligation is looking at state government and changes we can make," Orr said.
Alabama politicians, like their counterparts, across the country, had hoped Congress would approve internet sales tax legislation.
Bentley estimated the state would get more than $150 million annually if sales taxes were collected on purchases made through the internet.
"This is a tax that is already owed. You are supposed to be paying it anyway if you order on-line," Bentley said.