Alabama state budget

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Alabama faces a $1.2 billion budget gap for fiscal year 2010.^[1] However, in Gov. Bob Riley's State of the State 2010 Address he announced that his proposed budget for FY 2011 has "no cuts" and "general fund agencies will receive the same amount of funding that they will be getting this year."^[2] State lawmakers, like Rep. John Knight said they were surprised by Riley's address. According to the Legislative Fiscal Office the state's general fund is facing a shortfall of about $600 million.^[3]

The governor started the new fiscal year, October 1, by announcing September 29, 2009 a 7.5% cut from the budgeted $5.7 billion Education Trust Fund, reducing it to $5.3 billion.^[4] However, in light of federal stimulus money which won't be available, Legislative fiscal officer Joyce Bigbee estimates a $600 million shortfall for 2011. Tax revenues are estimated to be equal to 2009 at $1.3 billion.^[5]

Gov. Riley announced August 21, 2009 adjustments for Alabama’s second major budget, the $1.5 billion General Fund, because of declines in state revenue. Spending adjustments for many of the agencies funded by the General Fund were ordered to modify their standard allocations of 25% each quarter to 22% for the 1st to 3rd quarters and 34% for the 4th quarter.^[6]

Alabama faced a $1.1 billion budget deficit for fiscal year 2009.^[7]

[edit] Budget Background

Constitution of 1901 has numerous amendments addressing the call for a balanced budget. Amendment No. 26, ratified in 1993, calls for a proration of state funds when the revenues actually received are less than the obligations appropriated by the Legislature and approved by the Governor.^[8]

Alabama's fiscal year begins October 1 and ends September 30 of the following year. Each year the state's agencies submit budget requests along with expenditures, an estimated condition of funds and a planning summary. All agencies must submit their requests by December 1 to the Governor. On December 8 the revenue projections for the following fiscal year are finalized. At the beginning of each regular legislative session, the Governor submits a two-part budget proposal for lawmakers to consider.^[9]

• The FY 2010 Education Trust Fund totaled $5.7 billion (reduced to $5.3 billion by Gov. Riley September 2009) compared to the FY 2009 budget of $5.8 billion.^[10]
• The FY 2010 General Fund budget totaled $1.5 billion compared to the FY 2009 budget of $1.9 billion.^[11]

The following is an example of a budget preparation calendar typical of the second and third years of a legislative quadrennium. During the first and fourth years, the Legislature comes into session in March and January, respectively; therefore, time frames are somewhat different for those two years.^[12]

• August 31 Budget instructions and forms mailed
• October 15 - December 20 Executive budget hearings
• November 1 Budget requests due
• December 1 Preliminary budget information to Governor
• December 8 Revenue projections finalized
• January 8 Governor's budget recommendations finalized
• January 21-31 Appropriations bills prepared and printed
• February 4 Governor presents budgets to Legislature
• February 4 - May 18 Regular Session of the Legislature

See Alabama state budget (2008-2009) for more details.

[edit] Accounting Principles

Created in 1947, The Department of Examiners of Public Accounts is responsible for auditing the books, accounts, and records of all state and county offices, officers, bureaus, boards, commissions, corporations, departments, and agencies and reporting on expenditures, contracts, or other audit findings found to be in violation of law.^[13]

The Department of Examiners of Public Accounts is a part of the Legislature Branch of Alabama, independent of the Executive and Judicial branches. It is overseen by a twelve-member legislative committee called the Legislative Committee on Public Accounts. Five members of the committee are from the House of Representatives and five members are from the Senate. The other two members are the Speaker of the House, who serves as the Vice-Chairman of the committee, and the Lieutenant Governor, who serves as the Chairman.^[14]

The Department of Examiners of Public Accounts is headed by The Chief Examiner. The Chief Examiner is appointed or re-appointed every seven years by the Legislative Committee on Public Accounts. The current Chief Current Examiner, Ronald L. Jones, was appointed in 1982 and re-appointed 1989, 1996 and 2003. The Chief Examiner has the authority to issue subpoenas to compel the attendance of witnesses and the production of records in connection with audits. Each state and county officer must keep his books, records, and accounts, and make reports as prescribed by the Chief Examiner.^[15]

The rules under which the Department operates are found in Title 41, Chapter 5 of the Code Of Alabama. The majority of audit work performed by the Department consists of traditional financial and compliance audits, including Federal compliance. These audits focus on two areas: reliability and accuracy of financial statements; and compliance with laws, ordinances, regulations, and other requirements. In addition, the Department performs "operational audits" and sunset reviews that go beyond the traditional audits and address economy, efficiency and effectiveness of operations. Such audits have been developed because the performance of governmental entities is not generally measured by profit and cannot therefore be determined through analysis of financial transactions alone. Operational audits and sunset reviews are not normally comprehensive, but focus on particular aspects of operations.^[16] The Department’s audit reports are published on their Web site.

The Institute for Truth in Accounting (IFTA) rates Alabama “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Alabama’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not iclude significant liabilities for the pension plans and for other post employment benefits, such as health care.^[18] Alabama’s Comptroller's Office is responsible for filing the CAFR, which are published on their Web site. Michael G. Hudson is Alabama’s Acting State Comptroller.

[edit] Accounting transparency checklist

Comprehensive Balanced budget Timeliness Usability

[edit] The good

• The CAFR contains extensive notes to help explain its data. ^[19]

[edit] The bad

• The CAFR is published in a pdf. format, which means it cannot be searched through online.^[20]
• The CAFR is published well over 45 days after the end of the fiscal year ^[21]
• The CAFR reveals that the legislature overspent its FY 2008 budget. ^[22]

[edit] Ideas about the budget deficit

• Foreclosure filings across Alabama dropped 22 percent in February 2009 from January and remained at almost the same level as 2008. Research firm RealtyTrac said default notices, auction sale notices and bank repossessions totaled 713 in January. That equals one foreclosure filing for every 2,997 Alabama households, lower than the U.S. rate of one in 440 households. U.S. filings jumped 6 percent in February from the previous month and 30 percent from the prior year, RealtyTrac said. ^[23]
• Unlike the majority of cities in Alabama the city of Tuscumbia saw an 8.2 percent increase in January 2009 sales tax revenue and is above budget for the year. During January, 52 percent of 100 surveyed state-wide retailers reported a sales decrease in January compared with 2008, down from 60 percent of 109 retailers who reported decreased November and December 2008 sales. ^[24]
• In an effort to recuperate lost revenue the state of Alabama is offering tax amnesty to individuals and businesses that haven't paid what they're supposed to. The program began February 1,2009 and ends May 15, 2009. The last time Alabama tried a tax amnesty was 1984, when it collected $3 million, however, state officials said that they expect to collect more than $3 billion. In Oklahoma, the state recently collected $115 million and Virginia $98 million. ^{[25] [26]}
• Alabama allows taxpayers to write off all capital gains losses on stock during a single calendar year. It puts a $3,000 cap on such losses. If losses exceed that amount, it may be deducted on future tax reports. In 2001 taxpayers who deducted all capital gains losses had "a significant effect" on state income tax revenue, said state Rep. Richard Lindsey, who chairs the House Education Appropriations committee. Lindsey said he is watching the matter closely because the state income tax makes up 54 percent of the Education Trust Fund. ^[27]

[edit] Economic Stimulus Package

Alabama is expected to receive approximately $3 billion from the $787 billion economic stimulus package. ^[28] According to White House officials the stimulus bill is estimated to create or save 51,000 jobs. ^[29] For more information on how the federal stimulus funds are being used in the state of Alabama, visit the state recovery website.
Like some states across the country Gov. Bob Riley announced that he rejected the unemployment funds. Of the $7 billion dedicated to unemployment benefits, Alabama was expected to receive $100 million however, Riley and other governors said that they fear that the the strings Congress attached would lead to higher business taxes. ^[30] Gov. Riley was quoted by the Asscoiated Press saying:

"It's illogical for anyone to think government can expand benefits and no one has to pay for it." ^[31]

However, a bill has been introduced in the Alabama Legislature to challenge Gov. Riley's rejection of the funds. ^[32] Sen. Rodger Smitherman, introduced the legislation in early March 2009 and was quoted by the Associated Press saying:

"There is no reason to believe our record unemployment will be this high four years from now when stimulus money ends, so our benefit costs should decrease, not increase." ^[31]

According to preliminary reports Alabama is expected to receive:

• $71.8 million in home weatherization funding for low-income families ^[33]
• $55.5 million towards the state energy program ^[33]
• $1 billion towards education ^[34]
• $513.69 million towards improving highway infrastructure ^[35]

[edit] Budget transparency

On February 11, 2009, Governor Bob Riley signed an Executive Order to create a state spending database.^[36] The order mandated that the site, to be operated by the state Department of Finance, be up by March 1, 2009. The site was launched recently,^[37] and is now available to citizens.

[edit] Website evaluation

Budget Usability Elected Officials Administrative Officials Ethics Audits Contracts Lobbying Public records Taxes

Alabama.gov is the website for the state of Alabama.

• Main article: Evaluation of state websites

[edit] The good

• Site is mostly user friendly, includes a search function.^[38]
• Budget is published.^[39]
• Active state contracts are posted.^[40]
• Audit reports are available.^[41]
• Ethics commission information is posted.^[42]
• Elected and administrative officials are listed under respective departments,^[43] also an employee search is available.^[44]
• State tax information is provided.^[45]
• Includes forms and guidelines for lobbyists and registered lobbyists list.^[46]

[edit] The bad

• Several departments include information on making public records requests, but there is no comprehensive information about the Alabama Public Records Law.^[47]
• Does not provide information on state paid lobbying activity and agency lobbying contracts.

[edit] Economic Stimulus Transparency

• The American Recovery and Reinvestment Plan of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[48]

• Alabama will receive an estimated $3 billion in Federal funding.^[49]

• The economic recovery website for Alabama is available here.

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[50][51]

The ARRP website created 4 phantom districts in Alabama.^[52]

[edit] Legislation

Alabama Executive Order 46

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
open.alabama.gov

[edit] See Also

• Alabama taxpayer-funded lobbying
• Government budgets

[edit] External links

[edit] Additional reading

• Alabama 2011 Executive Budget
• Gov. Bob Riley,"The 2010 State of the State Address," January 12, 2010
• Gov. Bob Riley,"The 2009 State of the State Address," February 3,2009

[edit] References

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	v • d • e State of Alabama Montgomery (capital)
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