The only thing a governor and his legislative allies in Alabama can do — short of shifting money from one budget to another (which was rejected) or raiding the state’s Trust Fund (that will be voted on in September) — is to cut spending to match existing revenue.
Central to the “no new taxes” campaign was the argument that the state budget is already bloated with waste and perks that can be trimmed without hurting (and, in some cases, actually enhancing) state efficiency. Never mind that it’s a fallacy.
However, where to cut is often determined as much by politics as by economics or a quest for efficiency.
Consider this: Gov. Robert Bentley’s office announced last week his “Road to a Billion Dollars in Savings” plan. It is impressive. Already, according to the Alabama Department of Finance, Bentley and supporters in the Legislature have passed bills that will eventually save the state $675 million. These savings, the governor’s press release said, “have so far helped the state avoid hundreds of millions of dollars in reductions to essential state agencies and services.”
That raises the question: If agencies and services are being spared, where did the money come from?
With the exception of bond refinancing and less pay for lawyers who take on indigent clients, much of the savings comes from increasing the contribution that state employees make to their pension plans and their health insurance. State employees also lost the Deferred Retirement Option Program (DROP) designed to keep them on the job longer. Valuable employees now will stay around because most can’t retire until age 62. In addition, money was saved by cutting the state work force by nearly 9 percent.
In some cases, these changes are reasonable and often overdue. However, it would be hard to argue that these changes and cuts were not made easier by the fact that most of the people feeling this pain were represented by special-interest groups that did not support the governor and GOP legislators in the last general election — the Alabama Education Association, the Alabama State Employees Association, and trial lawyers.
As for the matter of efficiency, the consequences will be felt in the future, as well, because most of the cuts will come later on. Thus, it is too early to make a call on that.
Now comes the hard part. Where will the governor and legislative leaders cut to come up with another $325.6 million to reach the $1 billion goal?
Having taken a pound of flesh from “enemies,” will they take the rest from “friends”? State employees have been required to sacrifice to balance the budget. Who is next on the list?