Sen. Jimmy Holley, R-Elba, opposed a version of the General Fund budget approved by the legislature Wednesday, that the governor plans to veto.

“The bill that passed did not adequately fund Medicaid,” Holley said. “It could have caused the most needy and the elderly to not have healthcare, and I wasn’t going to support that,” he said.

The $1.8 billion budget gave the Alabama Medicaid Agency $85 million less than the agency said it needed to maintain current services. But the actual cost to state services would be greater, as state dollars are matched at the federal level.

About one fourth of Alabama’s residents rely upon Medicaid for health care.

Holley was one of four Republican senators who joined eight Democrats and independent Harri Anne Smith of Slocomb in opposing the budget in the Senate.

Rep. Mike Jones, R-Andalusia, acknowledged the budget has shortcomings, but he supported it because it isolates the real issues with the General Fund, which is Medicaid.

“I don’t see any way around a special session to address Medicaid funding,” Jones said. “It makes us have to focus on the big issue.”

Citing inadequate funding for Medicaid and for the Department of Corrections, Bentley announced Thursday his decision to veto the budget, and send it back to the legislature when it returns from spring break on April 5.

“The proposed appropriation falls short of what the Medicaid Agency will require to provide services for the over one million Alabamians, most of them children, covered by Medicaid,” he said. “In addition, the Medicaid reform measures put into place in 2013 by the Alabama Legislature will be unsustainable under the budget passed this week. The state has already made great progress to remodel and streamline the Medicaid model to a regional managed-care system. That progress will be lost without adequate funding from the General Fund.”

“The Department of Corrections must also be adequately funded in order to address the prison crisis long-term. We have made strong reforms in the prison system; however, insufficient funding hinders the department’s efforts for further reform. We have witnessed the dangerous conditions inside our state-operated prisons, and the Alabama Legislature must prioritize prison system safety with adequate appropriations.”

Bentley said the legislature is using millions in BP settlement funds to pay for recurring annual expenses, and called the action “fiscally irresponsible and shortsighted.”

But leaders in both the House and Senate said they won’t cut funding to other agencies to fully fund Medicaid, which means new revenue measures will be necessary for a compromise.

Speaker of the House Mike Hubbard told reporters on Thursday the House has the votes to override the veto.

Earlier this week, the governor said a statewide lottery is the only logical way to get new money into the General Fund budget.