The era of leaner state government

Published 11:00 pm Wednesday, October 3, 2012

Just shy of the two-year mark of my first term in office, this is a good time to take stock of the reforms we’re enacting in Alabama to make state government leaner and more efficient.

When voters put Republicans in charge of the State Legislature 22 months ago, we began the extensive process of rebuilding Alabama’s fiscal house brick by brick. The tsunami of economic recession had washed away the thin facade of federal “stimulus” money, exposing a gaping $1 billion hole in state budgets caused by decades of overspending and reckless budgeting.

The first brick of fiscal reform was passage of the Education Trust Fund Rolling Reserve Act. For the first time in Alabama history, the Legislature put a statutory cap on its own spending. This common-sense law requires that any surplus above the spending cap be retained for future needs and to replenish rainy day funds.

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At the same time, the education budget committee, on which I serve, worked with the governor’s office to craft a balanced budget for our schools — the first in four years to avoid proration. In fact, by budgeting responsibly, we achieved a surplus in the Education Trust Fund with our first budget (2011-2012). That allowed the state to make its first repayment to the ETF Rainy Day Account last week.

Democrats and the Alabama Education Association vehemently fought the enactment of the Rolling Reserve Act, assailing Republicans for putting constraints on future spending. But Alabamians know it’s just good fiscal discipline to save a little now for an emergency later.

This fiscally responsible strategy, now fixed in law, will help protect our schools, teachers and students from drastic cuts and proration in the next economic downturn.

But that was just the beginning.

Under Republicans, the Legislature has slashed its own budget by nearly 40 percent since fiscal year 2010, cutting legislative spending by more than $20 million.

In the last session, the Legislature passed my bill to constitutionally repeal the 61-percent pay raise resolution lawmakers enacted in 2007 and prohibit the Legislature from voting on its own pay ever again. If this amendment is approved by the voters, the result will be a pay cut of over $8,000 per lawmaker per year, saving the taxpayers over $1.1 million annually.

The Republican Legislature generated hundreds of millions in savings by enacting major reforms to the Retirement Systems of Alabama (RSA) in 2011 and 2012.

Taxpayers had been paying nearly $1 billion every year just to subsidize public employee pensions. That’s $1 billion in taxes that wasn’t going into the classroom or essential state services. Frightfully, that figure was projected to grow by another $745 million over the next 8 years. In fact, Alabama’s public employee pension plan was projected to go broke as early as 2023.

By reducing the taxpayers’ share of pension system contributions, we have saved $181.5 million a year and pulled the system back from the brink of bankruptcy.

By eliminating the state’s Cadillac deferred retirement program (which made millionaires out of highly paid administrators and lobbyists at taxpayer expense) we saved another $58.5 million annually.

And by changing the retirement eligibility criteria for new state employees, we have saved another $161 million a year.

We didn’t stop at budget and pension reform.

We consolidated two major state departments, saving hundreds of thousands a year through elimination of administrative duplication.

We increased criminal penalties for unemployment compensation (UC) fraud.

The number of state employees has been reduced by nearly 10 percent, primarily through attrition and a hiring freeze, saving the state about $181 million annually.

Moreover, the Republican Legislature has cut the state’s total operating budget–called the State General Fund–from over $2 billion in 2009 to $1.7 billion in 2013. That’s a 27-percent reduction in our first two legislative sessions.

Even with all these cuts, it’s still not enough. Budgeting for non-education agencies is the toughest challenge because the General Fund suffers from a “structural deficit.” That is, it simply doesn’t receive enough revenue each year to keep up with ever-increasing costs.

Alabamians know what it’s like to have a structural deficit: The cost of gas, groceries and health insurance has gone up while median household income has gone down, creating structural deficits in household budgets.

But Alabamians also know what to do in this situation: You re-examine your priorities, cut where you can, and focus on getting rising costs under control. That’s exactly what we are working to do in the General Fund.

In June, Alabama senators released the first report of our Streamlining Government Initiative, an extensive government restructuring plan estimated to save an additional $40 million a year by eliminating duplication and consolidating 21 state agencies into 7.

Governor Bentley’s Medicaid Transition Task Force is working diligently to reexamine the state’s Medicaid program to maximize efficiency.

Yet another task force is planning to implement the latest technology to automate processes that, amazingly, still occur on paper in state government.

While the record indicates we are off to a good start, we are not finished yet. I am working every day to help identify more ways to stretch taxpayer dollars farther and operate state government more efficiently. After all, we can’t afford not to.


State Sen. Bryan Taylor represents Pike County.