Time to dip into ‘rainy day fund’
by Jack Mcneely
Aug 19, 2012 | 1167 views | 0 0 comments | 6 6 recommendations | email to a friend | print
Jack Mcneely
Jack Mcneely
As we ponder our choices in upcoming municipal and general elections, much will be said in coming weeks about the state referendum vote sandwiched between the aforementioned elections.

On Sept. 18, Alabamians will be asked whether the state should take $437.4 million from the Alabama Trust Fund over the next three years to balance its budget and stave off massive cuts to state-funded programs.

The Alabama Trust Fund was set up in 1982 under former Alabama governor Fob James as a “rainy day fund.”

Under current law, 90 percent of the interest and dividend income each year from the ATF is transferred to the state’s General Fund to support prisons, mental health care, elderly support and Medicaid. The remaining 10 percent is paid into the Forever Wild Land Trust Fund.

The trust fund now has about $3 billion in invested assets and collects most of the natural gas royalties paid to the state by companies that pump natural gas from offshore. Therefore, the state is only asking for less than five percent from your trust fund.

If passed, the referendum will allow money in the Alabama Trust Fund to close large shortfalls in the state General Fund for the next three years.

Proponents of the $145.8 million annual funding injections, including Gov. Robert Bentley, claim the money is needed as a “bridge” to support General Fund spending for Medicaid, prisons, mental health and other areas.

Hospitals throughout the state including our own Walker Baptist Medical Center (see guest commentary by WBMC Administrator Bob Phillips below) face significant Medicaid funding woes if the referendum is not approved next month.

The Alabama Education Association (AEA) also urges its members to vote “yes” on Sept. 18. If the referendum fails and help is withheld from the beleaguered General Fund, the AEA fears that pressure will grow to raid the Education Trust Fund (ETF) to fill budget gaps.

Raiding the ETF for non-education purposes is known as diversion. Diversion is a key threat to education funding for Alabama schools.

Last legislative session, Gov. Bentley proposed diverting millions from the ETF to prop up the General Fund. He now backs using the oil and gas savings account to avoid diversion, as does AEA.

With 104,000 members, the AEA is one of the largest associations in the state. Therefore, rallying its troops is a great way to influence the outcome on Sept. 18 since referendum votes are notorious for low voter turnout.

Failure to pass the referendum may not lead to gnashing of teeth, but it will hurt Alabamians and a state that is still reeling in the wake of a recession. Now is the time to dip into our “rainy day fund.”

I will vote “Yes” on Sept. 18, and I encourage you to do the same.

Jack McNeely is Publisher of the Daily Mountain Eagle and can be contact by phone at 205-221-2814 or via email at jack.mcneely@mountaineagle.com.