On Tuesday, February 7, Lt. Governor Kay Ivey and House Speaker Mike Hubbard gaveled in their respective Houses to signify the start of the 2012 Regular Legislative Session. The legislature is expected to focus this session on job creation, economic development, immigration, and charter schools.

That evening, Governor Bentley delivered the annual “State of the State” address to a joint session of the Legislature. The Governor’s speech highlighted the need for new economic development legislation, additional flexibility for local school districts, teacher tax credits for supplies, special Healthcare alliance, and the need for charter schools. Additionally, the Governor addressed his desires for the Education and General Fund budgets. While both budgets face shortfalls, the deficit in the General Fund is particularly great.

In the budget he presented to the Legislature, Governor Bentley recommended moving $45 million in tax revenue from the ETF to the General Fund and shifting the payment of $185 million in Medicaid costs for children from the General Fund to the ETF. Legislative reaction to the Governor's proposed budgets, in particular, the transfer of ETF money to the General Fund, was negative, and the Legislature is expected to propose its own budget for consideration. Despite tremendous budget challenges, both the Governor and Legislative Leadership remain steadfast in their pledge not to raise taxes, instead focusing on spending cuts, the consolidation of state agencies, and the reduction of the size of government.

The House and Senate met three days this week focusing on the leadership's "jobs" agenda. On Thursday, the first day on which bills could be considered for passage, the House focused exclusively on economic development measures. This included the passage of a bill to provide incentives to companies involved in aircraft manufacturing and Data Processing Centers and the expansion of tax incentives for coal mining businesses. Additionally, the House passed a bill to rename the Alabama Development Office - the State's lead agency on economic development - the Department of Commerce. The House of Representatives will reconvene on Tuesday, February 14 at 1:00 pm. The Senate will reconvene on the same day at 2:00 pm. The legislature is expected to meet three days next week.

On Wednesday, February 15, the Joint Budget Committees will hold budget hearings on the Medicaid Agency and the Department of Corrections. These two agencies combine to account for 55% of the entire General Fund Budget and therefore figure heavily into the discussions as to how to balance the budget.

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