Lt. Gov. Kay Ivey to Hoover chamber: Alabama needs long-term fixes to budget challenges

The state of Alabama needs to get serious about addressing its long-term budget challenges and quit finding temporary solutions to squeeze by from year to year, Lt. Gov. Kay Ivey told the Hoover Area Chamber of Commerce today.

“Each year, we’re doing the same thing and getting pretty much the same results,” Ivey told the 200 people gathered at the luncheon at the Hyatt Regency Birmingham — The Wynfrey Hotel.

For the most part, legislators have not raised taxes and lived within their means, if you count using non-recurring funds to fix problems, she said.

From 2009 to 2011, the state used federal stimulus money to prop up state funds, and from 2013 to 2015, legislators borrowed money from the Alabama Trust Fund to get by, Ivey said.

For fiscal 2016, lawmakers transferred use tax money out of the Education Trust Fund to help the general fund, and for fiscal 2017, they’re going to use money from the BP oil spill lawsuit settlement, she said.

It’s getting harder and harder to find these temporary solutions, and the problems aren’t going away, Ivey said.

The cost of Medicaid has risen from $345 million in 2011 to $700 million today, and most everyone agrees that Alabama needs new prisons due to overcrowding and deteriorating structures, she said.

The Senate passed an $800 million bond issue to build four new prisons, but an amended plan got reduced to $550 million for three new prisons in a legislative conference committee, Ivey said. Then, the whole plan failed to pass due to procedural delays by Democrats, she said.

“It’s a serious need and situation, and it’s got to be addressed,” Ivey said.

Alabama also has an increasing burden of funding health insurance and retirement benefits for state employees, she said. The state is providing $1 billion a year to prop up shortfalls in the Retirement Systems of Alabama and $1.2 billion a year to subsidize rising health insurance costs, she said.

Everyone wants to provide a sound retirement program to protect future retirees’ pensions, but there needs to be a plan to accomplish that, Ivey said.

“We don’t talk about it because people that are affected by it get all up in arms and concerned” whenever the topic is raised, she said. “We must consider alternatives of how we can change our budgets or we’ll be in the same situation we are today for years to come.”

One issue is the earmarking of revenues, Ivey said. Sixty-four percent of Alabama’s state government revenues are earmarked by law for specific expenditures, which is the highest percentage of earmarking in the country, Ivey said.

Earmarking does provide guaranteed money and predictability for certain programs, but it also ties the hands of legislators and doesn’t give them much discretion to use good judgment as needs arise, she said.

Ivey also today touched on the problems facing leaders of all three branches of state government.

House Speaker Mike Hubbard is about to go on trial for 23 ethics charges, Chief Justice Roy Moore was suspended while he faces charges of violating judicial ethics in his opposition of same-sex marriage, and Gov. Robert Bentley is facing articles of impeachment that accuse him of “corruption in office” and “willful neglect of duty.”

“The world is watching, folks,” Ivey said. “All eyes are on Alabama for all the wrong reasons.”

Ivey said public officials must ask themselves why they serve in the first place. She referenced a quote from the German composer Johann Sebastian Bach when he was once asked why he wrote music. “I write music for the glory of God and the good of mankind,” Bach replied.

Those same principles were demonstrated by the founding fathers of the United States and continue to be a common thread in all efforts to sustain and create democracy for the past 239 years, Ivey said.

“I’m hopeful that we can restore faith in government, not only in Alabama but also in the nation as well,” she said. “The darkest hour is just before the sunrise … I truly believe that our finest days in Alabama are ahead of us. These clouds are going to break. The sun’s going to shine.”

Alabama is a great state because its people are good, honest and hard-working, Ivey said.

“I am committed that if we the people continue to work together to write programs to make this state a better place to live and work and raise our families and on and on, we will be achieving our full potential,” Ivey said. “I’m proud of Alabama, and I believe in Alabama.”