Senate leadership Thursday largely shrugged off Gov. Robert Bentley‘s threat to veto any education budget without a teacher pay raise or full funding for insurance.
Senate President Pro Tem Del Marsh, R-Anniston, said he saw “no way” to meet the governor’s budget goals without overspending in the Education Trust Fund budget. The Senate on Feb. 27 approved a $5.9 billion budget that replaced Bentley’s proposed 2 percent teacher pay raise with a 1 percent bonus, and eliminated additional state funding for teacher insurance.
“I’m not going to be a budget buster,” Marsh said. “Unless you want to mess up the Rolling Reserve Act, there’s no way to do what the governor’s asking us to do.”
Senate Finance and Taxation Education Committee chairman Trip Pittman, R-Daphne, has expressed repeated pessimism about the state’s short-term economic future, a theme that notably contrasts with Bentley’s re-election message of recovery, and like other Republican lawmakers in the Legislature has prioritized repayments to the state’s Rainy Day Account, which must be made whole by July of next year. Bentley, with more optimistic budget forecasts, allocated $27 million in next year’s ETF for Rainy Day repayments, assuming most of it would be paid off this year. The Senate budget increases that to $62 million.
Lawmakers stressed last week that the budget was a work in progress. The House Ways and Means Education Committee is scheduled to bring out its own version of the budget this Wednesday.
“There are a lot of discussions going on,” he said. “I hope to work with the governor to come to a consensus.”
Bentley sent his budget threat out via Twitter; Pittman said Thursday, “I don’t tweet.”
With Medicaid expansion a major theme for Democrats in the upcoming elections, fights over the impact of the expansion were inevitable. The first skirmishes began last week.
On Monday, Scott Beaulier, a professor of economics and director of the Johnson Center at Troy University, released a study that questioned the economic impact of expansion, as outlined in a 2012 University of Alabama Birmingham piece. The UAB study found that the expansion, which would extend Medicaid eligibility to anyone making less than 138 percent of the poverty level, could generate up to $935 million in net tax revenues between 2014 and 2020 — an average of $155.8 million per year — due to increased economic activity from expansion.
The UAB study got there by taking the estimate of state tax burden from the Federation of Tax Administrators — 8.6 percent — and multiplying it into projected new direct and indirect economic activity of $20 billion from the Medicaid expansion. The Troy study factored out direct impact like increased physician and hospital revenues, “because simply possessing government health coverage does not directly contribute to the economy,” according to the study, which also suggested the primary care physician shortage in the state could limit the impact of growth.
The study also used a lower tax estimate of 5.4 percent; Beaulier said the 8.6 percent figure included local revenues, which would not have an impact on the budget, and noting that medical expenses are exempt from sales taxes.
Using those figures, the Troy study came up with a cost to the state of $469 million.
Beaulier said last week that expanding insurance “is a goal worthwhile to consider,” but said he and co-author Phillip Moxon had been “bothered” by UAB’s tax revenue estimates.
“The issue that Phillip and I realy have with what’s being sold to Alabamians is it’s oversold,” he said. “They could have simply taken the moral high ground and said, ‘Health care is really good.’”
David Becker, who co-authored the 2012 UAB study, issued a statement last week standing by the study’s methodology, noting that the Troy study left direct impacts aside.
“Although the health care services are exempt from sales taxes, this health spending does generate taxable income,” the statement said. “Despite these critical differences in methodology, the studies both conclude that expansion of Medicaid would provide economic development to Alabama far in excess of the state’s investment in expansion.”
Many hospitals in the state rely on Medicaid to keep their doors open, and the Troy study said “institutions that have a vested financial insterest” in Medicaid expansion have funded them. The Johnson Center has received funding from David and Charles Koch, two billionaire brothers who have funded vociferous attacks on the Affordable Care Act, which authorized the expansion.
“UAB supporting a study to benefit UAB hospitals is not surprising,” Beaulier said. “If people want to look at it and say, ‘Look we’re biased,’ fine.”
– posted by Brian Lyman