Last Tuesday (Sept. 18), the people of Alabama will have decided the fate of the constitutional amendment that would allow our state government to borrow $437 million from the state’s Trust Fund. I recently wrote about why I believe voters should vote no on the constitutional amendment. Today, I would like to offer three proposals that legislators and the governor should consider if the amendment failed.
There has been a lot of division on this issue; and both Democrats and Republicans have been split in their support of the amendment. But one area where we all agree is that Medicaid and other essential state programs must be funded. Medicaid especially is crucial not only to our healthcare system, but also to our economy.
Democrats and Republicans also agree that the issue is a lack of revenue. The Republicans in the state legislature have not shown any hesitation in the past about voting to cut spending. Just ask the educators, firefighters, law enforcement officers, and other public employees who have seen their pay get cut, or the state’s health officer, Dr. Don Williamson, who has been warning for months what would happen if the Republicans cut funding for Medicaid.
So if it were possible to avoid raiding the Trust Fund with cuts alone, surely the Republicans would have chosen that option.
So the question is: how do we find the revenue for Medicaid and other essential state functions if the constitutional amendment failed?
In my opinion, there are three reasonable options to consider if the amendment failed. I have already begun having these proposals drawn up for a special legislative session should the constitutional amendment fail.
The first, and in my opinion the best, option is to raise the cigarette tax by one dollar. State officials estimate that by raising the cigarette tax by a dollar, the state would collect $227.5 million a year in additional revenue. That would provide more money for Medicaid in just two years than the amendment would provide over three. Raising the cigarette tax might also motivate some smokers to quit smoking, which could save lives and healthcare costs.
A second option is to institute a state lottery. Recent estimates have suggested that a lottery could raise $250 million annually in revenue, and neighboring states have raised considerably more. Should the constitutional amendment have failed, the lottery bill I would propose would split the revenue raised from the lottery, with half going to Medicaid and half going to education.
The half that would go to education would increase the amount given to teachers for classroom supplies from $300 to $1,000.
The remaining amount for education would go toward a scholarship program for students who make AB honor roll.
A third option would be to close certain corporate tax loopholes that allow corporations like ExxonMobil to pay little or no state income tax. Closing these loopholes would not raise as much revenue as the lottery or cigarette tax increase, but it would raise a significant amount and level the playing field for Alabama businesses that do not get the benefit of these tax loopholes.
Supporters and opponents of the constitutional amendment agree that we have a revenue problem, and budget cuts alone will not solve the problem.
If the amendment passes, we will still have to address this issue in three years.
If the amendment fails, then we must be prepared to do what is necessary to save Medicaid and other necessary state services.
We have better options that raiding the state’s Trust Fund, and I have offered three of them here.
If the constitutional amendment failed, Gov. Bentley should call a special session of the legislature and we should consider all of our options.
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