Senate committee approves cigarette tax

An Alabama Senate committee on Friday approved a cigarette tax and other revenue bills as legislators try to broker an agreement to minimize cuts to state services when the fiscal year begins Oct. 1.

Legislators have 19 days to get a general fund budget in place or risk a shutdown of state government services. The first week of a special session on the budget brought progress, but not a solution, on how to handle a $200 million fiscal shortfall.

The Senate Finance and Taxation General Fund Committee approved a 25-cent cigarette tax, the largest component of a House-passed revenue package; Medicaid provider taxes on pharmacies and nursing homes, and a transfer of $50 million in education funds. However, the chairman said he was uncertain when the bills would see a floor vote.

"The bills we moved today were moved ... in good faith with negotiations with the House that are going on over the weekend," said Committee Chairman Arthur Orr, R-Decatur. "We're still a long way from being finished in this process."

Senate President Pro Tem Del Marsh, who was previously pessimistic about the outlook for new revenue, said he was hopeful that lawmakers could avoid cuts to the most critical state agencies, including Medicaid and the Department of Human Resources, which provides child welfare and other services.

"We're close now, if you look at what happened today, to level-funding the big four — Medicaid, prisons, mental health and DHR — and have, maybe, as little as a 4-5 percent cut to other agencies," Marsh said.

The negotiations, Marsh said, will hinge on satisfying Senate Republicans who want to see more tax dollars that now go to the better-situated education budget, moved to the perpetually cash-strapped general fund. Marsh said some senators believe that shift should be more than $50 million.

"Our thoughts are that should be closer to 80 or 100 (million.) I think that is where the discussion is going to come in," Marsh said.

Education groups have fought efforts to shift large sums from the state's Rolling Reserve Fund, an education savings account, or other education dollars, saying the transfer would threaten efforts to stabilize classroom funding.

Cuts will still be required to state agencies under any of the plans moving in the Alabama Legislature.

The House of Representatives voted 59-37 for a general fund budget that provides level funding to Medicaid and prisons, plus money to continue reform efforts in those agencies, but cuts other state government services.

The Department of Mental Health, the Department of Human Resources and the court system would take a 2.5 percent cut under the approved plan. Other agencies would see cuts of up to 8 percent.

"It's not a great budget. It's not something we wanted to do, but it's the reality of the revenue that we have," said Speaker of the House Mike Hubbard, R-Auburn. "We had no choice but to go through and make cuts."

Democrats continued their opposition to the budget, arguing the state should look at comprehensive tax reform, Medicaid expansion under the Affordable Care Act or legalized gambling.

"We're not opposed to all the taxes. We're opposed to the way they did it. We wanted to let the people have the right to vote on a lottery," said House Minority Leader Craig Ford, D-Gadsden.

The special session resumes Monday.

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