State’s straightjacket

Earmarking in constitution ties Alabama’s hands

Editorial, The Birmingham News, January 31, 2001
Fourth of a series


   In a few days, Alabama lawmakers will convene again in Montgomery for their annual legislative session. And once again, they'll spend months arguing over how to spend a sliver of the money the state takes in.

   It's funny in a way. Lawmakers will pore over budget documents, looking for some hanging chad of cash that can be used to fund a new program or expand an existing one. Lobbyists, state agency chiefs and special-interest groups will plead with elected officials, hoping to slice off a crumb or two to help their causes or clients.

   The irony is, lawmakers have no control over the vast majority of the money the state actually spends.

   This year, lawmakers appear headed toward making agonizing cuts, instead of approving modest increases. With the economy cooling and sales tax revenues slipping, the state is suddenly facing proration, the dreaded, across-the-board cuts that automatically kick in when the money coming in doesn't match what lawmakers agreed to spend. As much as 8 percent - a devastating $344 million - may have to be slashed from this year's education spending plan. And the outlook isn't much better for next year's budget, the one lawmakers must deal with this spring.

   Meanwhile, county jails overflow with potentially violent inmates who should be in state prisons - except the state doesn't have the guards, the money or the space to keep them. At the Department of Public Safety, the trooper shortage is so dire there are only six patrol officers on the road across the entire state after midnight. And at the Department of Human Resources, a shortage of child support staff means some employees are trying to handle an impossible load of more than 2,400 cases each.

   It's a mess. Blame much of it on Alabama's constitution.

   Alabama has an out-of-whack fondness for earmarking - the practice of locking in revenues to fund a specific program. We earmark more money than any state, almost 90 cents of each dollar collected. No other state even comes close. (The No. 2 state, Nevada, locks in 65 cents of every dollar for specific programs; the national average is less than 22 cents, according to Fiscal Planning Services Inc., a Maryland-based research group.)

   Many of the most confining earmarks are embedded in the constitution. For example, a portion of state property taxes, most state sales taxes and most state income tax revenues must be spent on education. Income taxes go specifically to teacher salaries. Gas tax money and state motor vehicle registration fees go strictly to roads and bridges.

   Earmarking itself isn't necessarily bad. Sometimes it makes sense to put certain revenues in a "lock box" to be spent only on a specific program. But when too much of the state's cash flow is boxed in, it creates a fiscal nightmare.

   That's Alabama.

   Because of earmarking, legislators' hands are tied. Unless there's an extraordinary consensus, lawmakers can't shift sizable amounts of state revenues to where they're needed most. In the case of constitutional earmarking, lawmakers and voters must agree to reorganizing priorities. That's a tall order when voters are so leery about their elected officials.

   Much of the earmarking we have today came about because citizens learned not to trust the governor and lawmakers to make smart spending decisions, and with good cause. There are too many examples - especially with tax dollars promised to education - where elected officials broke their pledges. There are periods within the past 75 years when the politicians left public schools bankrupt or, as happened in the wake of the Supreme Court's 1954 school desegregation decision, they stripped from the constitution any mention of the state's obligation to fund schools.

   Earmarking tax dollars was the only way to make sure the politicians didn't spend frivolously or go back on their promises.

   In 1932, the respected Brookings Institution completed an exhaustive analysis of state and county government in Alabama. One of its key conclusions: that Alabama had a "gravely defective" budget system with an "excessive number" of earmarked appropriations.

   Since then, it has only gotten worse. Much worse.

   What's the result? The kind of inefficient, slow-to-respond government that Gov. Don Siegelman has at tacked. Yet he can't significantly change government for the better because of the straitjacketing constitution.

   Here's why it makes sense to loosen the constitutional ties that bind:

   Even in the fattest years, the money flowing into Alabama's General Fund and Education Trust Fund is so hogtied that lawmakers can't direct it to adequately fund important services. That has led, over the years, to costly lawsuits challenging the substandard resources Alabama has historically devoted to child welfare, to the physically and mentally retarded, to K-12 schools. Only now, 30 years after a federal judge declared the state's mental health system inadequate, is that case coming to a close. A case challenging the child welfare system is 13 years old. The decade-old K-12 case is still pending.

   Even in great economic times, Alabama's revenues are bundled so tightly that the state has had trouble coming up with money needed for incentives to attract new industry. In some cases the state has borrowed money to put together incentives packages. Other times the state has asked cities and counties to pitch in.

   Last fall, Siegelman and business leaders persuaded voters to divert some offshore gas lease revenues - locked up years ago in a trust fund - so they can be used for economic development, state docks improvements, road and bridge construction and other critical needs. But first, lawmakers had to approve the plan, then put it on the ballot.

   It worked. But the process was slow and cumbersome. In fact, the process can prove too slow for impatient companies weighing offers from other states.

   The upshot of the state's obsession with earmarking is a stagnating state - one that has posted slower economic growth than many of its Southeastern neighbors. Earmarking has kept Alabama from addressing critical needs and hurt its ability to recruit new industry. It has left the state's most important and most vulnerable citizens - its schoolchildren, the handicapped, the poor and the abused - with second-rate services.

   Alabama needs to spend more money on many things. But it also needs to unleash the full potential of the resources it already collects.

   It starts by examining Alabama's tangle of earmarked funds. It starts with a new constitution.

Next: Schools on the Cheap

Reprinted with Permission from The Birmingham News.
Alabama Citizens for Constitutional Reform Foundation, Inc.
P.O. Box 34
Montgomery, Alabama 36101-0034


E-mail: accr@constitutionalreform.org
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