The first regular session of the state Legislature for 2004, which begins today, could result in a "house divided" on some of Gov. Bob Riley's proposals in order to balance the fiscal 2005 Educational Trust Fund and General Fund Budgets.

Riley will deliver his State of the State speech tonight at 6:30 p.m on Alabama Public Television. to the public on the potential crisis facing the General Fund Budget.

"It's going to be on reform and accountability," John Matson, deputy press secretary for the governor said. "He's going to talk about making state government more accountable and transparent to the people."

But most of the action and heated debates may occur in the Legislature.

In a survey conducted by the Associated Press, a narrow margin of state legislators have said they would support Riley's plan for state workers and employees paying more for their insurance.

Members of the Senate and House, however, disagreed when the AP asked them about their stance on not allowing any more employees to enroll in the state's Deferred Retirement Option Plan, DROP.

Riley has talked about "freezing" the DROP program, which has some state officials against his proposals.

Currently, a state employee pays nothing each month for individual coverage and an education employee pays $2. A retired state employee under 65 pays $138 a month, and a retired teacher under 65 pays $134. A retired state employee who is eligible for Medicare pays nothing, and a retired education employee eligible for Medicare pays $1.34.

Paul Hubbert, executive secretary of AEA, and Mac MacArthur, executive director of AEA, are key opponents to Riley's plan.

In the most recent edition of the Alabama School Journal, Hubbert wrote, "At a time when BCA (Business Council of Alabama) and the Hamby Commission (Hamby is also 2nd Vice President of BCA) is calling for teachers, ESPs, and retirees to give up current benefits and take home smaller paychecks, Riley's appointed business people want to fatten their wallets at taxpayers' and educators' expense."

"We intend to make sure (state employees) keep all they have earned," MacArthur told the AP.

House Speaker Seth Hammett said the AEA and other organizations may have a strong stance on the proposals.

Hammett added he supports the idea of state employees paying more for insurance.

"Every Alabamian has a stake in the outcome of the FY 05 budget," Hammett said.

"As always, legislators will have suggestions on how to resolve the state's funding problems offered from a variety of sources. Ideally, a consensus will be formed and a budget can be passed that is as fair as possible to everyone.

"I truly believe that state employees and teachers need to pay more of a portion of the cost of health insurance," Hammett continued. "The appropriate way to accomplish that is by phrasing this repayment requirement in as cost of living adjustments are made. I think this process should be continued until the average for Southeastern states has been reached."

According to the AEA's official publication, Democratic leaders have planned to unveil their own 16-piece accountability plan – much of which came from the Amendment One package.

"Some of our proposals have already received unanimous or near unanimous approval from the house and senate so why not begin where there is agreement already," Hammett said.

The General Fund Budget, however, may not work as out "ideally," according to Senator Jimmy Holley.

"We are in a very serious economic situation," Holley said. "In particular, we have a crisis in the General Fund."

One-time national funds were used for the FY 2004 Budgets, but that money is not available this year, added Holley.

There is a "silver lining" in the Education Trust Fund and its "increase was more than expected," said Holley.

But the General Fund, with the repayment of money borrowed from the Rainy Day Fund and significant increases in state insurance premiums, could be in trouble.

Holley said having state employees pay more for insurance wouldn't generate new revenue but "would shift the burden of the state to the workers."

"There are no proposals for new revenue at this time," he said.

Holley said there would be a threshold to cross with the people of the state before new revenue could be generated.

"There were two main things people said under the Amendment One (campaign): One – people said this is too much money and Two – they said the money wasn't earmarked for a specific purpose," he said.

Holley added trust needs to be restored to the people before talks of new revenue.

"Without question the Legislature's most daunting task during the upcoming session will be crafting a Fiscal Year 2005 budget that, without new revenue, is expected to be hundreds of millions of dollars in the red," Hammett commented.

Holley said he would "be willing" to look at a version of "freezing" the DROP enrollment, but Hammett said he is skeptical on its short-term effects.

"Freezing enrollment in the DROP Program would eventually save the state money, but only in the long run," Hammett said. "Such a move would have no effect on the looming budget crisis facing us today."

If a compromise on the budgets can't be reached between the governor and Legislature, a special session may be in the cards later this year.

"Special sessions are called strictly as a prerogative of the governor," Hammett said. "It is certainly my hope the legislative and executive branches of government can agree on a budget without the need for a special session."