Economy is state story of yearPublished 12:00am Wednesday, December 26, 2012
As the end of the year approaches the story of the year has to be the state of the economy. Therefore, the political story of the year has to the sad financial state of the state.
The legislature and governor spent 2012 wrestling with the state of the general fund of Alabama. It has been an uphill battle that does not appear to dissipate or subside as we approach 2013.
The financial woes facing the state are almost as devastating as a plague. This financial plague is not unique and limited to the borders of Alabama. Most states are dealing with hard times due to the prolonged national recession.
The difficult fiscal decisions being dealt with by the governor and legislature are not their doing. They had nothing to do with the national economy ravaging our state coffers. The storm clouds were on the horizon for several years before they arrived in January of 2011.
Many observers predicted the impending financial crisis. It was obvious that a train wreck was about to occur. The state had been living on one-time federal stimulus money for the last two years of Gov. Bob Riley’s term. However, Riley ignored the impending financial crisis and chose instead to play cowboys and Indians with the electronic bingo issue. His only contribution to the looming financial Armageddon was to spend all of the State’s savings accounts and rainy day funds as the State’s revenues dropped precipitously and the federal manna from Heaven ended. Riley left town and the new kid arrived just in time to take over a ship of state destined to sink. Bentley’s walk into the governor’s office in January of 2011 was analogous to walking onto the deck of the Titanic.
This financial dilemma was foreseeable. In fact, I posed the supposition three years ago when all of the horses were lining up to run for governor that because of the inevitable financial debacle awaiting the new governor, that whoever won would be a one term governor. However, as is always the case, you are wiser and more perceptive than folks give you credit for being. The average Alabama voter realizes that Bentley did not create or cause the mess he is in with the state budget. They believe he is doing all that he can to get the state back in shape. The people trust him and are convinced he has their best interests at heart. Indeed, Bentley has put his money where his mouth is. He has adhered to the promise he made Alabamians when he ran. He has not taken one red cent in salary during his first two years in office.
Bentley has adamantly clung to the premise that he will not ask the legislature to raise any new revenue or taxes. It might be added that the legislature is on the same page. They are not inclined to raise taxes. Therefore, they are having to work to balance the state budget with cost saving measures.
Gov. Bentley points to a litany of cuts that have saved the state over $600 million in his first two years in office. Almost all of the savings have come from a reduction in the number of state employees and cuts to public employee benefits. Bentley says $180 million has been saved by having 3,000 fewer state employees. Another $180 million was saved by changing the pension plans for new state hires and another $180 million by requiring teachers and other public employees to pay more toward their pension plans and $60 million was saved by reducing the amount the state pays toward health insurance for state employees and teachers.
Obviously the governor and legislature have placed the burden of the belt tightening on the backs of teachers and state employees. This may not be enough. The 800-pound gorilla in the room is Medicaid. It is a money-eating monster that may eat the state out of house and home.
2013 looks to be more of the same. We will see. Happy New Year!
See you next week.