News & Updates

June 2, 2012

Voters To Decide: Constitutional Amendment Would Prevent Medicaid Cuts

Proposed Constitutional Amendment Necessary to Protect Medicaid Funding

With the current concern over the lack of funding available to the Medicaid program in Alabama, the Alabama State Legislature has had to find creative ways to continue to sustain a sufficient level of funding for the program.  Medicaid is funded in Alabama’s General Fund which allocates money for all of the functions of state government except K-12 education and higher ed.  The legislature passed a $1.67 billion budget on May 16th for the upcoming fiscal year, which is about $67 million less than the current year.

In order to balance the state budget as required by the Alabama Constitution, lawmakers considered cutting Medicaid which currently receives about 40% of the budget.  However, this would obviously have serious consequences.  Together, Medicaid and Corrections take up about 65% of the General Fund.  Cutting funding for corrections and prisons was also considered, but would cause the release of an estimated 18,000 prisoners and could lead to a federal takeover of Alabama’s state prisons.  As an alternate solution, legislators discussed the possibility of a cigarette tax increase that would generate about $260 million for Medicaid in the General Fund.  Finally, lawmakers decided to give citizens the chance to vote on a proposed constitutional amendment which will be on the September 18th ballot which would authorize the transfer of $145.8 million from an oil and gas trust fund to the State’s General Fund, with the same amount being transferred in 2013 and 2014.

This proposed amendment will actually only change one aspect of The Alabama Trust Fund.  This fund operates basically like a savings account for the State of Alabama. It was created from oil and gas lease money generated from the gulf.  The money has never been touched and accumulates annually.  At the end of March 2010 the trust fund had accumulated more than $2.7 billion.  The interest from the money and the investment income is divided among several different entities including Forever Wild, the General Fund and others. However, there has been a significant drop in the investment income generated for the fund due to the stock market fluctuations of the past few years.  The proposed constitutional amendment, which will be on the ballot in September, will allow that number to be based on a three-year average, instead of a one-year annualized investment income.

If additional revenue is not found for the General Fund, many hospitals, clinics, doctors, pharmacies, nursing homes and other providers would not be able to continue services. In a recent article State Health Officer Donald Williams said failure of the constitutional amendment would wipe out about 10 percent of the revenue for state agencies, including Medicaid and this would be detrimental to our entire health care system.

Voters are encouraged to become informed on the issue, go the polls in September and vote for the passage of the proposed constitutional amendment as an alternative to raising taxes or making drastic cuts in Medicaid.

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Ballot Language will read as follows:

“Proposing an amendment to the Constitution of Alabama of 1901, to provide adequate funding for the State General Fund budget, to prevent the mass release of prisoners from Alabama prisons, and to protect critical health services to Alabama children, elderly, and mothers by transferring funds from the Alabama Trust Fund to the State General Fund beginning with the state’s 2012-2013 fiscal year and concluding with the state’s 2014-2015 fiscal year; to provide a new procedure for distributions made from the Alabama Trust Fund beginning 2012-2013 fiscal year; to create a County and Municipal Government Capital Improvement Trust Fund advisory committee; and to provide further for distributions made from the County and Municipal Government Capital Improvement Trust Fund.

“Proposed by Act 2012-490.”

This description shall be followed by the following language:

“Yes ( ) No ( ).”

For More Information Visit This Website: Alabama's Hospitals On Fragile Footing

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