Alabama Rainy Day Accounts, Amendment 1 (2008)

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The Alabama Capital Rainy Day Accounts Amendment, also known as Amendment 1, was on the ballot in Alabama on November 4, 2008, as a legislatively referred constitutional amendment. It was approved. This measure proposed to reinstate the Education Trust Fund Rainy Day Account.

Election results

Alabama Rainy Day Accounts
Result		Votes	Percentage
a Yes		943,361	56.8%
No		717,056	43.2%

Election results via: Alabama Votes

Changes to the Alabama Constitution

The passing of Alabama Rainy Day Accounts, Amendment 1, added Amendment 803 to the Alabama Constitution.

Background

In 2008, Alabama had two main operating budgets: the General Fund and the Education Trust Fund. The state had two rainy day accounts for the Education Trust Fund, used to prevent proration, or across-the-board budget cuts: the Proration Prevention Account, which was used like a savings account, and the Rainy Day Account, which set up like a credit line. The Proration Prevention Account was funded with tax revenues; the Rainy Day Account was designed to give the state the power to temporarily transfer money from the $3.3 billion Alabama Trust Fund, which was funded by sales of drilling rights and oil and gas lease royalties. The state exhausted the $440 million Proration Prevention Account to cover revenue shortfalls in the fiscal 2008 budget. The state had the ability to transfer up to $248 million from the Alabama Trust Fund to cover Education Trust Fund shortfalls. The money had to be returned to the Alabama Trust Fund within five years. In 2008, there was no General Fund Rainy Day Account to protect General Fund programs and services from proration during an economic downturn.

Specific Provisions

The measure enacted the following provisions::

• It revised the existing Education Rainy Day Account by (1) making the cap on transfers proportional in order to keep up with growth in the Education Trust Fund (ETF) and (2) expanding the coverage of the Rainy Day Account to protect all programs and services funded from the ETF, not just schools. Additional programs included immunizations for school children, voluntary Pre-K, and public libraries.
• It established a General Fund Rainy Day Account to protect General Fund services, such as law enforcement, health care, child protective services, and services for seniors from cuts in a struggling economy, without raising taxes. At the time, Alabama was one of only three states without some type of General Fund Rainy Day Account.
• It lengthened the repayment period to six years for the Education Trust Fund, ten years for the General Fund, establishing both repayment periods by constitutional mandate.
• It gave the governor ultimate authority to withdraw money from the Alabama Trust Fund to avoid proration.

Supporters

The amendment was officially sponsored by State Senator Steve French (R-Birmingham).

• Governor of Alabama Bob Riley
• Superintendent of Education Joe Morton
• Mac McArthur, Executive Director of the Alabama State Employees Association
• Jim Main, State Finance Director to the Governor
• The Birmingham News
• The Mobile Press-Register

Arguments in Favor

Notable arguments made in support of the measure included:

• The measure would prevent cuts to educational programs and public education in general
• The measure would prevent cuts to vital state agencies and services, including health care, law enforcement, foster care, child support collection, and so on.
• The measure would disarm special interests that might use drastic cuts as an excuse to push for tax increases.
• The measure would be fiscally responsible because savings transferred from the Alabama Trust Fund must be returned within a constitutionally mandated timeframe. The repayment would come from future growth, not new taxes, under the proposal.
• The measure would not be a "Wall Street" type bailout because it relied on the state's own money. It was designed to facilitate a transfer from one state account to another.
• The measure would represent a proven strategy: Rainy Day savings were transferred from the Alabama Trust Fund to prevent proration in 2003. The money was put back one year early, and the Alabama Trust Fund still grew over the previous 5 years by more than a billion dollars.

Opponents

• State Senator Scott Beason, R-Gardendale
• Republican gubernatorial candidate Tim James
• Former Governor Fob James

Arguments in Opposition

Notable arguments made in opposition to the measure included:

• The measure would encourage irresponsible budgets
• The measure would draw down the money in the Alabama Trust Fund
• The measure would reduce interest payments from that fund to governments across the state
• The measure would break the commitment to protect public money

See also

• 2008 ballot measures
• Alabama 2008 ballot measures

Suggest a link

External links

• Text of the proposed amendment
• Election Information
• Election Results