Gov. Kay Ivey requests 2 percent pay raise for state employees

Gov. Kay Ivey has released her budget requests for next year, including a proposal for a 2 percent raise for all state employees.

The governor released her proposed General Fund and education budgets as the state Legislature resumed its regular session today. Lawmakers will take the governor’s proposals as a starting point and pass the budgets sometime over the next 13 weeks. State Finance Director Bill Poole went over Ivey’s proposals during a Zoom call with reporters.

For the General Fund budget, which pays for non-education programs, Ivey requested $2.97 billion in spending, which is $230 million more than this year, an 8.4 percent increase. It would be the largest General Fund budget ever, which was expected because of an unusually large increase in the tax revenues that support the budget. The proposal is for fiscal year 2024, which starts Oct. 1.

Poole said state agencies, like all employers, are struggling to recruit and retain employees because of a tight labor market. He said the “modest” 2 percent raise would help. It would be the third straight year for an across-the-board raise for state employees, following a 4 percent raise this year and a 2 percent raise last year.

The agencies that receive the largest amounts from the General Fund every year, the Alabama Medicaid Agency and the Alabama Department of Corrections, would both receive substantial increases in Ivey’s proposed budget. Medicaid would get an increase of 9 percent, to $863 million. The ADOC would get an increase of 10 percent, to $662 million.

Poole said a main factor in the Medicaid increase is that the federal government’s share of the cost will decrease when a special matching rate put in place for the COVID-19 pandemic expires. That will increase the state’s share of the cost for Medicaid, which provides some form of service to about one million Alabamians.

For the ADOC, Poole said a main factor in the requested increase is a rise in cost of medical care for inmates. The contract to provide that care is ending and the new contract, which takes effect April 1, will cost more, about $1 billion over four and a half years.

Poole said inflation was driving up costs for state agencies just as it is for households and businesses, and that was a factor in some of the budget increases requested.

Ivey also released her proposed budget for the Education Trust Fund and a proposed supplemental bill for that budget. That ETF supplemental proposal includes a $400 tax rebate for state income tax filers, which the governor had announced during her State of the State address two weeks ago. That will be funded by using part of a $2.8 billion surplus in the ETF. The governor released a statement about both the General Fund and ETF proposals.

“Alabama, especially considering the state of the nation’s economy, is on sound footing,” the governor said. “Our budgets are strong, and that is, no doubt, because of the fiscally conservative approach we have taken and continue to take. Just as every Alabama family budgets to invest, pay their debts and increase their savings, my budget proposals do just that for our state. From returning our taxpayers’ hard-earned dollars back to them to making historic investments in our students’ education, these budgets will help foster a strong Alabama today and a stronger Alabama tomorrow.”

In addition to the General Fund budget for next year, Ivey proposed a bill to supplement this year’s General Fund budget by a total of about $200 million. That’s possible because of funds left over at the end of last fiscal year, when revenues exceeded expenditures.

Poole said the governor’s supplemental proposal is a concerted effort to increase reserves and reduce debt. It includes adding $50 million to the General Fund budget reserve fund, which Poole said would bring the balance of that fund to $150 million, the most since it was created three years ago. Another $40 million would go to early repayment of state debts.

Among the other allotments in Ivey’s proposed supplemental spending bill:

$43 million to the Department of Mental Health. Of that, $23 million would be for construction costs at Taylor Hardin Secure Medical Facility, the psychiatric hospital for criminally committed male patients; $10 million would be for the reopening of Pickens County Hospital and renovations for child and psychiatric services; and $10 million would be for renovations at East Alabama Medical Center for child and psychiatric services.

$12 million to the Alabama Forestry Commission, including $10 million for grants to volunteer fire departments and rescue squads and $2 million to replace firefighting equipment and aging equipment.

$8 million for elevator upgrades in the State Capitol.

$8 million for the Alabama Law Enforcement Agency for the computerized criminal history system.

$5.7 million to the Military Department for construction costs at the Huntsville Armory.

$5 million for repairs and maintenance at the surplus property warehouse of the Alabama Department of Economic and Community Affairs in Montgomery.

$4.8 million to the Department of Forensic Sciences, including $4 million for equipment in the Huntsville lab and $800,000 for equipment in the new Dothan lab.

$1.9 million for repairs and maintenance at the Heflin-Torbert state judicial building in Montgomery.