Issue: Health

Alabamians’ quality of life would suffer for years to come if the no-new-revenue General Fund (GF) budget that the House’s GF budget committee approved Thursday becomes reality. The House is expected to vote Tuesday on the budget, which would slash vital services like health care, child care and public safety. The state’s promising new reforms of Medicaid and prisons would end, and services for low-income children could face devastating cuts.

With the Legislature’s regular session nearing an end, talk of one or more special sessions is running rampant, and the threat of deep cuts to services that make our state a better place to live and work is real. Here is a look at a few of the ways Alabamians would feel the cuts in their everyday lives:

Proposed budget cuts would end new Medicaid reforms and impose severe cuts to other health care programs. The proposed GF budget would reduce Medicaid funding by 5 percent. While the Medicaid agency has not specified what services would be reduced or eliminated, State Health Officer Don Williamson has said the cut would force Medicaid to abandon its new regional care organization model, designed to keep patients healthier while cutting costs.

Williamson said last month that a smaller 3 percent cut would force the agency to end coverage of outpatient dialysis, forcing kidney patients to be admitted to the hospital to receive routine dialysis. Medicaid also would have to eliminate hospice care coverage and stop paying for adult eyeglasses and prosthetics.

In addition, Medicaid would reduce reimbursement payments to doctors, which could mean fewer physicians treating Medicaid patients. Medicaid also would contract with a single provider of prescription services, likely forcing many local, independent pharmacies to close.

The committee’s budget would cut home health services for the elderly and disabled by more than 9 percent. Patients losing these services could be forced to enter much more expensive nursing homes, reducing patients’ independence and increasing costs to the struggling Medicaid program. Funding for life-saving HIV and AIDS medications also would be cut by 50 percent.

Proposed budget cuts would reduce community mental health services. In recent years, the Department of Mental Health responded to budget cuts by closing nearly every public mental health hospital. Many advocates applauded the new focus on less restrictive (and less expensive) community-based services.

But the 2016 GF budget proposal would reduce funding for those very services by 5 percent. Patients unable to receive mental health treatment may be forced into private hospitals, or they may end up incarcerated in local jails without access to needed counseling and medications.

Proposed budget cuts would devastate social services for low-income families and children. Together, the committee’s GF budget and the education budget awaiting House committee approval would reduce Department of Human Resources (DHR) funding by 14 percent.

DHR commissioner Nancy Buckner last month outlined draconian service reductions in the event of major budget cuts. These could include the elimination of the Temporary Assistance for Needy Families (TANF) program, which provides cash assistance and services for extremely low-income families, including more than 30,000 children.

Other cuts could include major reductions in child care assistance for thousands of working families, the elimination of adult day care services, and the elimination of child support collection services for more than 200,000 Alabama families. Because much state DHR funding is matched by federal money, the agency’s total cuts would be much larger than the lost state dollars alone.

The House committee budget would eliminate GF support for the Department of Youth Services (DYS), which provides supervision and services for youthful offenders and their families. The total reduction would be 12 percent, accounting for DYS funds in the education budget.

Like mental health, DYS has moved in recent years toward less expensive and more appropriate community services and has closed expensive residential beds for low-risk offenders. These community services would be cut under the proposed GF budget. With fewer residential beds, juvenile offenders would be left unsupervised or incarcerated in county facilities instead.

Alabama’s network of Community Action Agencies provides nutrition, housing, Head Start and energy assistance services to low-income people. The proposed GF budget would cut state funding for these services by 50 percent.

Proposed budget cuts would end prison reform and could risk a federal takeover of the state prison system. The committee’s GF budget would make devastating cuts to Alabama’s civil and criminal justice system, ensuring that the recently passed (and highly praised) prison reform legislation could not be implemented.

The state’s already reeling trial courts would face a 16 percent cut under the budget, leading to hundreds of layoffs. The budget also would cut juvenile probation services by nearly 40 percent and forensic sciences by 22 percent. These cuts could force courts to close at least two days a week, delay trials and hearings, and delay criminal cases that require DNA and other forensic evidence. The deep cuts also would result in more unsupervised juvenile offenders even as youth services are slashed.

Alabama’s prison system, already operating at nearly twice its designed capacity, would absorb a 5 percent cut under the proposed budget, increasing the risk of federal intervention. The budget also includes major cuts for the very programs needed for prison reform to succeed. The state’s drug court program would be cut nearly 40 percent. Community corrections, the alternative to imprisonment, would be cut by half. And parole services, essential for reducing recidivism, would be reduced by 14 percent.

Bentley has said he plans to sign the prison reforms that the Legislature passed last week into law. But before any of those reforms can be implemented, the governor’s office must certify that the Department of Corrections and the Board of Pardons and Paroles have enough money to move ahead with the changes. The proposed GF budget would derail prison reform by making this certification impossible.

Our state needs new revenue to avoid these cuts. Overall, the committee’s $1.64 billion GF budget falls more than $200 million short of the amount needed to prevent deep service cuts and invest in reforms. Lawmakers thus far have not considered Gov. Robert Bentley’s proposals to raise revenue and avoid those cuts, including increasing the state cigarette tax and automobile sales tax. Other tax bills that won House committee approval last week have stalled.

Alabama faces an important choice that will help determine what kind of state our children and grandchildren will inherit. Do we raise new revenue to protect vital services like health care and public safety? Or do we erode our state’s quality of life with devastating cuts to those services? The House committee’s budget would side with the latter option, and Alabama would suffer the consequences of that choice for years to come.

By Carol Gundlach, policy analyst. Posted May 15, 2015.

We all want to live in a healthy, secure and prosperous state. Alabama is taking important steps toward that goal now, but deep General Fund budget cuts could undo that progress.

Medicaid’s new regional care organizations will keep patients healthier while cutting costs. Prison system improvements will protect Alabamians while lowering costs and helping former inmates transition back into their communities. Investing in these changes now will save money later.

We’re at a crossroads in Alabama. Cutting vital services is the wrong path.

The devastating cuts in the no-new-revenue General Fund budget proposal would force us to abandon our Medicaid and corrections improvements. And without new revenue, Alabama faces deep service cuts that could make the state a worse place to live for years to come.

Cuts to Medicaid, which covers one in five Alabamians, would top $300 million. That would force the program to end coverage of vital services like adult eyeglasses, prosthetics, hospice care and outpatient dialysis. It also likely would lead to even fewer doctors serving Medicaid patients, most of whom are children, seniors, and people with disabilities.

The costs for Alabama’s children would be real. Cuts to the Department of Human Resources (DHR) would make Alabama the first state to end its Temporary Assistance for Needy Families (TANF) program. That would eliminate cash assistance for more than 30,000 children living in deep poverty, as well as uniforms, car repairs and other job readiness assistance for their parents.

DHR cuts also would end child care benefits for 15,000 children. That could hurt our state’s economy by forcing thousands of working parents to quit their jobs. More than $340 million in child support payments would be risk if DHR ends collection services, and hundreds of seniors would lose adult day care services that allow them to live independently.

Mental health funding cuts would harm more than 25,000 Alabamians by reducing or eliminating community-based mental illness and intellectual disability services. That would reduce independence for thousands of Alabamians. The cuts also could cost hundreds of people their jobs by forcing them to stay home to care for family members who lose crucial support services. In addition, severe mental health cuts could land Alabama back in federal court.

Deep General Fund cuts would have serious public safety implications as well. Nearly a fourth of Alabama’s state troopers would be laid off. The prison system, which already operates at nearly twice its designed capacity, would close two facilities. That would mean even more overcrowding and an even greater chance of a federal takeover of the state’s prison system.

More than 1,100 state workers would lose their jobs, including more than 600 court employees. That likely would force courts to close at least two days a week, meaning longer wait times for criminal trials or restitution cases.

This is no way to invest in our state’s future. Alabama needs new revenue to end the chronic budget shortfalls that are holding us back. The General Fund needs a sustainable revenue stream to support Medicaid, corrections, mental health care and other vital services. Raising the cigarette tax and raising the state sales tax on automobiles to 4 percent – the same as we pay on groceries – would be two good places to start.

If we want a better Alabama tomorrow, we need to start building it today.

By Kimble Forrister, executive director. Posted April 23, 2015.

It’s the latest verse of a decades-old song: Alabama faces yet another funding shortfall next year for vital services like Medicaid, mental health care and corrections. Here are four things to know about the budget challenges facing the Legislature during the 2015 regular session that began Tuesday.

(1) Alabama’s revenues for the budgets that fund education, health care and other services still haven’t returned to pre-recession levels.

Alabama has two major state budgets: the Education Trust Fund (ETF), which pays for K-12 and higher education, and the General Fund (GF), which provides a major chunk of the support for vital non-education services, including Medicaid, mental health care, corrections and public safety. The picture that revenue officials painted for each on Tuesday was bleak.

Economic struggles during and after the Great Recession hammered both budgets, and neither has seen revenues return to pre-recession levels. GF receipts last year were down 15.5 percent since 2008, according to the Legislative Fiscal Office (LFO), and ETF appropriations this year are down 12.2 percent from their 2008 level. Alabama’s K-12 cuts since 2008 are the nation’s second worst, while our higher education cuts are the nation’s fifth worst. Alabama’s unemployment rate is improving, but revenues still aren’t growing nearly enough to undo the damage wrought by the Great Recession.

(2) The General Fund shortfall is persistent, and it’s not going away on its own.

The picture is especially bleak for the GF. Alabama’s education budget draws most of its money from state sales taxes and individual income taxes, which grow as the economy improves. But the GF relies on a hodgepodge of other revenue sources, most of which are slow to grow even during boom times.

That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth for vital services like Medicaid, mental health care and corrections. Without new GF revenue, these services continually will remain at risk of massive cuts.

(3) Alabama needs new revenue to avoid devastating cuts to vital services like Medicaid, mental health care and corrections.

How bad could the cuts for Medicaid, mental health care and other GF services get without new revenue? Perhaps most dramatically, failure to address the GF shortfall could spell disaster for Medicaid, which provides health coverage for one in five Alabamians and already has been cut to the bone of federally required coverage provisions. Even small further cuts could endanger lives.

GF cuts could mean even shorter staffing for the state’s overcrowded prison system, which operates at nearly twice its designed capacity. It also could mean fewer state troopers on the highways, more trial delays, longer lines to renew a driver’s license, or long waiting periods for many families seeking ALL Kids health coverage for their children.

Next year’s GF shortfall will be $264 million, according to Executive Budget Office (EBO) estimates. That would be a 14 percent drop in a perennially underfunded budget that already struggles to fund barebones service levels.

But the funding challenges don’t end there. EBO’s Bill Newton said Tuesday that Alabama also needs an additional:

• $155 million to maintain current service levels for Medicaid and corrections,
• $63.5 million to cover public safety costs that now are being covered by a transfer from the state’s road and bridge money,
• $26 million to pay for expanded community corrections and other recommendations of the state’s Prison Reform Task Force, and
• $32.5 million to begin repaying the $161.6 million that the state borrowed from the GF’s rainy day account and must restore by 2020. (So far, Alabama hasn’t repaid a dime.)

Add it all up and it comes to $541 million in new GF revenue needs. That’s the amount that Gov. Robert Bentley proposes to raise with a mix of tax increases and loophole closures. “We must break the cycle of budget shortfalls year after year after year,” Bentley said Tuesday night during his State of the State address. “We must have adequate means.”

(4) Taxing low-income Alabama families deeper into poverty is not the way to cure our funding woes.

Alabama’s tax system is upside down. Low- and middle-income families pay twice as much of their income in state and local taxes as the top 1 percent of earners do. It’s an imbalanced structure that makes it harder for low-income families to escape poverty and leaves them with less money for the consumer spending that fuels economic growth. The main driver of this upside-down tax system? High sales taxes, especially on groceries and other necessities that account for a big share of low-income families’ household budgets.

Significantly, Bentley’s plan would not increase taxes on food, clothing or over-the-counter drugs. Instead, the governor proposes to raise more than $400 million by increasing the state’s cigarette tax and sales tax on automobiles. Bentley’s proposal would boost the cigarette tax from 42.5 cents per pack to $1.25 per pack and would increase the state sales tax rate on automobiles (now 2 percent) to match the 4 percent rate that applies to other consumer goods.

The rest of the new revenue would come from a mix of business tax increases and loophole closures. (One proposal is for Alabama to adopt combined reporting, which would treat corporations and their subsidiaries as one corporation for tax purposes. You can learn more about combined reporting here.)

Strong investments in services like education, Medicaid and public safety promote economic growth and improve our state’s quality of life. By funding those investments without raising taxes on necessities like food and clothing, Alabama can give everyone a better opportunity to get ahead in life.

By Chris Sanders, communications director. Posted March 4, 2015.