One of the criticisms levied against this deficit-financing plan was that there was no requirement that the money be paid back — though supporters of the measure vowed that the oversight would be corrected in the next legislative session.
Sure enough, Rep. Jay Love, R-Montgomery, introduced legislation (HB6) that will require the state to repay $5 million this year, a figure that will increase in following years until the whole debt is paid by 2026. Both House and Senate leaders say that payback is a priority, and House Speaker Mike Hubbard, R-Auburn, says it this measure is on the fast-track.
In September, this page called on voters to hold their noses and vote for the transfer. If voters were allowed to vote on this solution, we would likely offer the same advice. However, we’ve got concerns.
The state is borrowing $437 million and paying back $437 million. Sounds fair until you realize that if that $437 million was in the Trust Fund, it would be drawing interest — a lot of interest. It follows that the state services funded by this interest will be short-changed in the bargain. True, those agencies might have been even worse off if the transfer had never been made, but still, interest lost is worth noting.
And don’t say that voters simply OK’d borrowing from themselves and therefore a no-interest loan is not improper. In a cash-starved state like Alabama, not paying back all you borrow means someone will have to do without.
That brings up another concern.
The $5 million a year figure doesn’t seem like much when seen in relation to the whole budget, but that $5 million has to come from somewhere. As the payback grows -- as it will have to in order to meet the target -- bigger hunks of revenue will be devoted to the repayment. So far there has been little talk about a payback schedule that will not cause problems with the budgets of other state agencies.
In transferring this money, Gov. Robert Bentley and his legislative allies pulled the old “rob Peter to pay Paul” that has so often been the way this state has balanced its budgets and provided meager state services. Now they promise to pay it back, at least most of it, and say they will pass a law that will make them do it.
Heaven forbid that they show legislative backbone and take this opportunity to reform the state tax system so there will be less need to “rob Peter” in the future. But that would take deep political courage and foresight, two things that this Legislature and this governor have lacked — so far.