As the citizens of Alabama sit and wait for the election on Tuesday to determine the fate of Medicaid, I am comforted by the fact that the Governor is at least worried. Well, sort of:

“Let’s believe the people of this state trust us and believe we need to get through this difficult time,” he said.

To recap, the state of Alabama elected a Republican governor and legislature to “put our fiscal house in order.” We are now in Year 2 of their reig
n and it has become clear that governing is hard work. The legislature managed to pass a budget on the last day of the legislative session. Well, really, they passed two budgets (found here), because the 1901 constitution set it up that way.
The educational budget is where the bulk of the income and sales taxes go and is set for FY 2013 at $5.4 billion.  It was reduced from previous years by 3.7%. This reduction allowed some money ($67 million) to be shifted to the general fund but by all accounts, education is OK.
The general fund budget is $1.67 billion and mostly goes to pay for governmental office functions, Medicaid ($603 million) and corrections ($365 million). Its revenue source is a little bit less clear:
Taxes from over 40 sources are deposited into the GF, with the largest sources being the insurance company premium tax, interest on the Alabama Trust Fund and other state deposits, oil and gas lease and production tax, cigarette tax, ad valorem tax, and Alabama Alcoholic Beverage Control Board profits.
This would be OK except the amount of money coming in (even with the transfer from education) is still just a little short. About $145.8 million dollars, to be precise, which is where the citizens of Alabama come in. The Alabama Trust, listed in the above list of revenue sources, would be broken into and 20% of the principle spent over 3 years if the citizens vote to approve Amendment 1 on Tuesday.
Wait, did I say 2 budgets? There are actually 5 other budgets. Although the money is allocated in either the general fund or educational outlay, the revenue is earmarked using 5 additional “funds.” The Public Roads and Bridges fund takes in all monies derived from car related activities and requires that they be spent on car related activities. The Alabama Medicaid Fund includes all of the tobacco settlement monies as well as the self taxes collected by health care providers (hospitals, nursing homes, and pharmacies) that are used to draw down the federal match. The Mental Health Fund takes receipts from public utilities, contractor gross receipts, whiskey taxes and insurance premium taxes. The Public Welfare Trust is where the rest of the whiskey tax goes. Then there is the Other category, where a lot of self-governing boards (such as the Board of Medical Examiners) put their fees for future use. All of the revenues from these funds must be used for the specific purposes outlined, making things very inflexible.
So, the reason the budget of the state of Alabama is set up this way is because the amount of mistrust of the Alabama citizens for those governing is very high. 84% of the revenue is targeted, giving our legislators very little leeway. Some think that the budget “crisis” is a ploy, an attempt to create a crisis to allow the creation of a consolidated budget to pull money away from some currently “paid for” services such as education. Alabama, as you can see here, relies very heavily on fees (#2 in the country) and not so heavily on taxes (#50 in the country). The amount of money the fight is over (less than $150 million) is not much when compared to the $20 billion in total spending the legislature directs. That being said, it looks like the legislature might pull out of Medicaid and close the prisons over that 1% .
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