MONTGOMERY, Ala. -- The Alabama Legislature on Tuesday approved a cigarette tax increase as lawmakers busted through months of deadlock over a looming budget shortfall.
Lawmakers gave final approval to the 25-cent-per-pack increase and agreed to a separate proposal to shift $80 million in education dollars to shore up the state cash-strapped general fund budget. The 11th-hour agreement could stave off deep cuts to prisons, Medicaid and other critical state agencies when the fiscal year begins in two weeks.
"I hope at the end of the day the governor knows we've done about the best we can do and will sign the budget," said Senate President Pro Tem Del Marsh. Marsh called the budget plan a compromise between legislators who supported tax increases and those who wanted to shift around existing state revenue.
Lawmakers have been meeting in special session to address a $200 million shortfall for the fiscal year that begins Oct. 1. The components of the budget deal brokered this week are the cigarette tax, the transfer of education dollars, and Medicaid provider taxes on nursing home beds and pharmacies.
The $166 million in total revenue is less than the $260 million that Gov. Robert Bentley sought at the beginning of the special session. However, Bentley praised lawmakers' progress and said he was inclined to sign the budget.
In this March 3, 2015, file photo, Alabama Gov. Robert Bentley speaks at the Capitol in Montgomery, Ala."I think we're moving in the right direction," Bentley said after visiting with lawmakers.
Bentley, a Republican, for seven months has been struggling to persuade the Republican-controlled Alabama Legislature to approve tax increases. The divisions were evident on the Senate floor Tuesday night.
A Republican senator lashed out at the cigarette tax proposal, calling it a flip-flop on the no-new-taxes pledge and calls for budget reforms made by some Republicans.
"The concern I have is, as Republicans we're for less government, less taxes. Right now, I'm not seeing that," said Sen. Paul Bussman, R-Cullman.
Lawmakers will vote Wednesday on a budget, based on the new revenue, to provide level funding for Medicaid, prisons, courts, the Department of Mental Health and the Department of Human Resources. Other state agencies would see cuts of about 5.2 percent.
The House and Senate on Tuesday also agreed to a compromise plan that would shift $80 million from use-tax collections, which now go to the education budget, and give the money to the general fund. The transfer is less than the $100 million senators approved but more than the $50 million net transfer sought by the House.
Education groups said the proposal was acceptable, particularly compared with the large sums that some senators had proposed taking from education funding when the special session began.
"This is good for education," said Tracy Meyer, the legislative liaison for the Alabama Department of Education. "We knew we would have to give something up in use tax."
Meyer said revenue bills that lawmakers approved in the last special session will offset some of the cuts to education, but that projections were fuzzy on exactly how much the bills would generate.
"I don't think this body has done anything but pass the buck and rob the education trust fund," said Sen. Vivian Davis Figures, D-Mobile.
As part of the deal, legislators also revamped the state's Rolling Reserve Act, a budget reform passed by Republicans in 2011, to free up more money for education spending each year.