BRADENTON, Fla. - Alabama Gov. Robert Bentley vetoed the state's fiscal 2016 general fund budget after warning the GOP-led Legislature that the plan cut too deeply into essential government services.
Bentley, a Republican, rejected the spending plan late Thursday after lawmakers sent him a budget that plugged a $200 million hole with an 11% spending reduction from the current year.
Alabama's fiscal year starts Oct. 1, and a special session is expected to be called to iron out differences that stem, in part, from lawmakers' refusal to enact $541 million in revenue and tax increases proposed by Bentley.
"The governor's goal is to resolve the budget issues long term - to really address the dysfunctional way state government budgets," said the governor's spokeswoman, Jennifer Ardis. "He's looking for a long-term solution to the budget issue."
Before the end of the legislative session last week, Bentley warned about the consequences of severe cuts to government services in a series of public appearances across the state and in press releases.
On Thursday, the governor used social media to announce his decision on the budget.
"This general fund budget is unworkable & does not adequately fund the essential services of gov't," Bentley
Across the state prior, Bentley said that severe cuts proposed by the Legislature would impact every Alabama county.
"For decades, we have failed to address the way our non-education state services are funded," he told the Alabama League of Municipalities on May 16. "With no one-time money available to support the general fund and debts that are owed, we have a real crisis on our hands."
Bentley said cuts being considered by lawmakers would "put the state in a position incapable of providing many of the essential services of government."
The Legislature rejected the governor's revenue-raising measures, which included: changes in corporate income tax reporting, removal of several tax credits, removing a public utility license tax exemption, increasing the vehicle sales and automobile rental tax rates to 4%, and increasing the cigarette and tobacco tax to $1.25 per pack.
The Alabama budget is composed of two separate funds - the general fund and the education trust fund.
The general fund relies on revenues from more than 40 sources, including insurance company premium taxes, interest on the Alabama Trust Fund and other state deposits, oil and gas lease and production taxes, cigarette taxes, ad valorem taxes, and Alabama Alcoholic Beverage Control Board profits.
Those revenues have not kept pace with funding needs, particularly programs such as Medicaid and corrections.
"The general fund needs new revenue," Ardis said. "The governor is 100% confident that to provide the essential services of government that new revenue is needed for the general fund."
Ardis said that the governor has not yet determined what revenues and tax increases he will recommend for legislators to consider during an upcoming special session.
"Everything is sort of on the table as he begins to make the call for what lawmakers will address," she said.
Alabama has a few months to take action on the budget because the state's fiscal year begins later than most states, an advantage Ardis said "may be the only silver lining."
On June 2, Bentley signed the $6 billion education budget into law saying that it provided for increased funding for textbooks, classroom supplies, pre-kindergarten education programs, dual enrollment programs, and transportation needs.
Alabama had $610.8 million of general obligation bonds outstanding as of Sept. 30. The GO bonds are rated AA-plus by Fitch Ratings, Aa1 by Moody's Investors Service, and AA by Standard & Poor's.
