BRADENTON, Fla. — As the clock ticks toward Oct. 1 and Alabama's new fiscal year, lawmakers remain undecided about how to close what is now a $250 million to $300 million general fund deficit.
Gov. Robert Bentley, a Republican, has said that prefers a long-term fix to stabilize funding for the state's operating budget, which is separate from the state's education budget.
Bentley signed the $6 billion education budget for fiscal 2016 into law June 2. It is funded by dedicated tax revenues.
Closing the general fund gap, however, remains troublesome for the GOP-controlled Legislature, where lawmakers disagreed with $541 million in revenue and tax increases Bentley initially proposed.
Lawmakers ended the regular session in early June without a budget after Bentley vetoed their $1.6 billion spending plan, saying that it cut too severely into public services.
Bentley ordered the Legislature into special session last month to continue work on the budget. Both chambers adjourned after one day saying more time was needed to reach a consensus before bringing bills to the membership for a full vote.
The special session resumed on Monday with no clear consensus on revenue measures by either chamber.
Most lawmakers remain opposed to the tax and revenue bills that Bentley proposed, including those that the governor filed for the special session.
"These proposals are aimed at protecting against significant cuts in services in the general fund through a combined approach of budget reforms and revenue increases," governor's spokeswoman Jennifer Ardis said.
"This budget level funds most state agencies in the general fund and provides funding for the implementation of Medicaid and prison reforms passed by the Legislature," she said.
Bentley's most recent budget bills include one earmarking a major portion of the $1 billion in revenue from the BP oil spill settlement announced last month, which will flow to the general fund over the next 18 years.
The oil company's settlement with five Gulf Coast states is supposed to compensate them from the damage caused by the 2010 Deepwater Horizon disaster.
The governor proposes to use much of the BP settlement to repay amounts the state borrowed to balance the budget in previous years from its rainy day reserve and amounts borrowed from the Alabama Trust Fund, an account for oil and gas capital royalty payments typically used for economic development programs.
Bentley also wants to use BP funds to repay more than $100 million owed to the Centers for Medicare and Medicaid Services for overpayments the state received.
State Rep. Patricia Todd, D-Jefferson County, has said she is opposed to spending the settlement money to pay state debts and that the funds should be used along the coast for restoration.
Other measures Bentley proposed include removing earmarks from certain use taxes and appropriations, and transferring the money to the general fund as part of a long-term plan to stabilize the amount of revenues for operational support.
The governor also offered plans to increase revenues, including the discontinuation of allowing social security taxes to be deducted from state individual income tax filings.
He also proposes to eliminate the tax liability for small businesses while increasing the maximum tax for large businesses; increasing the business privilege tax to $25,000 from $15,000; raising the tax on tobacco and vapor products by 25 cents; and repealing the tax withholding exemption.
Just days into the special session, lawmakers remained far apart from reaching a consensus but have begun committee hearings on the governor's bills.
In addition to adopting the state budget, the Legislature is being asked to consider a package of bills filed by Senate President Pro Tem Del Marsh, R-Anniston, that call for instituting a state lottery and allowing other kinds of gambling.
In prior years, conservative Alabama lawmakers have adamantly opposed gambling.
Marsh has said that he proposed gambling as a way to fund education should lawmakers agree to redistribute some of that budget's more stable revenue sources to the general fund.
Bentley opposes a lottery and gambling, and has said that those funds will not be available in time to solve the current budget crisis.
North Carolina is another Southeast state where legislators are having difficulty resolving controversial budget proposals.
The fiscal 2016 budget is more than a month late, even though the annual session convened in January and is still under way.
A continuing budget resolution adopted in late July to temporarily fund state government expires on Aug. 14.
Budget conference committees are meeting to iron out differences, which include thorny issues such as a plan by the Senate to redistribute local sales taxes.
The Senate's sales tax plan has come under fire from municipalities and counties, as well as Gov. Pat McCrory, who has pledged to veto any change in the current distribution formula.
Lawmakers are also continuing to work on differences in plans to fund the state Medicaid program, and have yet to reach agreement on the $3 billion general obligation bond initiative proposed by McCrory.
Under the governor's plan, $1.5 billion would fund transportation projects and $1.5 billion would fund other state capital needs.
The House's version of the spending plan continues to include only $50 million for a debt service reserve, but that would support only half of the governor's initiative to finance transportation projects. No funds are set aside in the House budget for financing state capital projects.
The Senate's budget does not include any funds for the bond program.
Even if lawmakers agree to McCrory's plan in the budget, it must be passed in a statewide referendum before the GO bonds can be issued.
