State proposes dipping into rainy day fund
Published 4:03 pm Friday, August 24, 2012
Alabamians will go to the polls Sept. 18 to vote on a proposal by the state’s lawmakers that would provide a boost to the state’s General Fund budget by transferring approximately $435 million from the Alabama Trust Fund to the General Budget.
Under the proposal, the state would shift $145 million a year for three years from the Alabama Trust Fund, which is an account funded by royalties from offshore drilling and is known as the state’s rainy day fund.
The money would be used to help fund programs such as Medicaid, the Department of Corrections, the state’s health departments, public safety, the Department of Mental Health and many more.
Email newsletter signup
According to Rep. Charles Newton, the Alabama Trust Fund currently has approximately $2.4 billion in its account.
“The question that we put before the people is asking whether they would approve for the state to withdraw about $145 million (each year) from a trust fund,” he said.
The fund was created when the state started receiving revenue from the sale of oil and gas in the Mobile Bay area.
However, with the proposed legislation, Sen. Bryan Taylor has pre-filed a bill that would require the funds be returned to the Alabama Trust Fund over a 10-year period.
“The bill would require full repayment over 10 years if voters approve a Sep. 18 ballot measure to take $435 million out of the Alabama Trust Fund in order to avoid what some state officials say will be drastic cuts to essential government services, such as public safety, nursing homes and hospitals,” Taylor said in a written statement.
The concern stems from individuals worrying if a precedent would be set in withdrawing money from the fund in future years.
“I haven’t heard anyone suggest that we don’t need more revenue for the General Fund agencies,” Newton said. “Some people are saying that the problem is that their fear is if we take this money out for three years, would we be setting a precedent of taking more out in future years as needs appear?”
Taylor said his concern is making sure that any money that is borrowed, be put back into the account in a timely manner.
“Everyone seems to agree that every dime withdrawn from our state savings account ought to be paid back.” Taylor said. “So I decided, let’s put it in writing. That’s what this bill does. It’s not just a handshake. Every last dime will be repaid by law.”
The pre-filed bill states that if the funds were unpaid at the end of 10 years, it would automatically be paid back in one lump sum.