Last Tuesday, it was thrilling to see Dr. Robert Bentley elected governor and the state legislature captured by Republicans for the first time since 1874. The voters sent a clear message that the malfeasance and corruption made evident this year from several federal investigations will no longer be tolerated in the state house.
Make no mistake, though, the votes cast were not a sign of complete trust in the Republican Party—which actually has lower voter affiliation than Democrats—but to see if the Alabama GOP can more responsibly steer the ship of state than the old guard that will soon be exiting.
The voters won’t have to wait long to see how sound their choices were.
At the start of the legislative session next year, Alabama will already be in dire straits.
While the last two years showed devastating deficits on the horizon, the Democrat-controlled legislature, abetted by Governor Riley, kicked the can down the road by plugging our budget holes with federal dollars rather than front-loading the pain. Now we are faced with a day of reckoning as the Legislative Fiscal Office has projected a $600 million deficit, roughly 40 percent of the budget. And unlike the federal government, Alabama can’t simply print money.
Since the nature of this shortfall is mostly structural—when receipts do not match necessary expenditures—most liberals would call for significantly raising income and business taxes.
But doing so in the middle of a recession is a guaranteed way to push jobs out of Alabama into neighboring states, especially since both Florida and Tennessee do not have an income tax. In addition, we have consistently seen that throwing money at the problem does not solve anything, as that only encourages a larger government and a larger deficit later on.
Rather, this crisis presents a great opportunity for a complete restructuring of state agencies by following the lead of Indiana’s governor, Mitch Daniels. Known as “The Blade” for his fiscal discipline, Daniels walked into office in 2005 facing a similar situation and turned it into a $300 million surplus by year’s end.
At one time, Daniels had built up a $1.3 billion reserve fund that has prevented his state from going bankrupt during this recession. While some of his policies included tax hikes, they were mostly mild, and are still low at 3.4 percent.
The overwhelming majority of the budget upside came from a voracious hunger for efficiency.
Daniels privatized the Indiana Toll Road, enacted merit pay for government employees, and introduced the Healthy Indiana Plan to provide healthcare for unemployed Hoosiers via health savings accounts, paid for with higher tobacco and liquor taxes.
Like Gov. Daniels, Dr. Bentley can take the same fiscally sound path. With a majority in the state House of Representatives and a supermajority in the Senate, he has an excellent shot at enacting key reforms that will take Alabama from being a consistent basket case to being perennially solvent.
First, he could pass some of the strictest government ethics laws that require disclosure of all lobbying expenses and employees’ conflicts of interest. This would serve as a sign of goodwill towards keeping the promises that he made to the people during his campaign, as well as make transparent the groups that vie for taxpayer dollars and target the legislators that are selling out their votes—and our Treasury—to these special interests.
Second, like Gov. Daniels, Dr. Bentley could push for the legislature to pass a bill decertifying all state employee unions while offering an opportunity for re-enrollment, getting rid of a huge problem in taxpayer money (from workers salaries) being used to lobby against them.
Finally, the state budget is too fat and needs to go on a diet. When previous legislatures used federal dollars to heal the budget gaps, they got to keep their favorite earmarks that brought the bacon home to their districts. Now we can’t afford them. Gone should be the allocations to things such as Guin’s MayFest, Winfield and Ider’s Mule Days, the Buckmaster’s Expo, and UFO Days (yes, you actually pay for that). If these cuts put those events in underwater budget-wise, then they should buy a snorkel.
Still, such small cuts only make up a tiny fraction of the austerity we need. A clear bulk of savings will have to come through reforms of the bidding process as well as state pension plans, Medicaid, transportation, and education. In the interest of maintaining brevity, I will expound on these reforms in upcoming columns.
Make no mistake. Next year will bring enormous challenges to this state, and pain may accompany tough decisions. But either we take our dose of pain now or amplify the hurting later.
For the first time in this generation there is a chance to set this state on a course of fiscal sanity and end some of the worst practices in Montgomery.
Gregory Poole is a graduate student in metallurgical engineering. His column runs biweekly on Wednesdays.
