Capitol News and Notes: Week 1 – Budgets and Special Session
January 18, 2022
Like the sporadic gusts that herald a storm, week one of the 2022 legislative session began in fits and starts. After kicking off to the fanfare of Governor Ivey’s State of the State address, the first week occurred mostly behind closed doors, as lawmakers negotiated the appropriation of federal relief dollars. At this point, 249 bills have been filed - 149 in the House and 100 in the Senate. Last week, two of 30 legislative days were expended, and only two bills passed through a committee.
As per state law, Governor Ivey prepared and submitted the two budget bills, used to appropriate funds from the general fund (GF) and education trust fund (ETF). Stated simply, the GF pays for most state agencies, while the ETF goes to K-12 and post-secondary schools.
Both funds appear to be in great shape for fiscal years 2022 and 2023. On Tuesday, lawmakers heard presentations from state financial experts on the financial position of the state and future projections. According to the experts, state Finance Director Bill Poole and Kirk Fulford, deputy director at the Legislative Services Agency, both funds are at historic highs for revenues and for growth. Fiscal Year 2021 revenues to the General Fund rose 11.4% over FY 2020, and revenues to the ETF rose 16.4%. For perspective, average growth from 2011 to 2019 was 4.71% for the GF and 3.7% for the ETF.
The main reasons for this growth are two-fold. One, some of the increase came from the legislature’s balancing of revenue streams between the GF and ETF in recent years to put more growth revenues in the GF. The other reason is the massive amount of federal money that flowed into the state. According to figures presented to lawmakers, over $29 billion in just federal non-grant assistance came into the state from 2020 to 2022. This amount only includes the monies going directly to people, like unemployment assistance programs, business disaster loans, the paycheck protection program, and stimulus payments.
Due to the short-term nature of the federal assistance, unsustainable growth is a common refrain provided to lawmakers by the financial experts. This has led state leaders to be cautious in expending these overages on recurring costs, as projections for fiscal year 2023 show more modest growth.
ARPA and Special Session
Legislators must also decide what to do with the over $580 million in federal funds appropriated to the state under the American Rescue Plan Act of 2021 (ARPA). Under ARPA, Alabama is set to receive over $2.1 billion dollars, half of which was received in June 2021 and the second half to be received in 2022. The $580 million is what remains unappropriated from the first $1.05 billion, after lawmakers allocated some to prison construction and other projects in a special session last year.
Over the past week, it has become increasingly clear that legislators could utilize a special session to isolate the issue. In a special session, only the items on the call, or the official proclamation from the Governor “calling” the legislature into a special session, can be taken up, with exceptions. So, legislators could focus only on the ARPA funds, if it is the item in the call as expected. While nothing has been officially confirmed at the time of writing this article, it is possible that the Governor will call a special session in the coming week. If called, the legislature will have 30 calendar days and 12 legislative days to meet. During this time, the remaining 27 legislative days in the regular session will be on hold.
The week ahead is unknown. The House convened at 2:00 pm and the Senate convened at 3:30 pm today, leaving 27 legislative days in the regular session. If a special session is not called, Wednesday will likely be a committee day.