Alabama state budget

Alabama operates on an annual budget cycle. Its fiscal year begins October 1.

Oct. 1, 2012, will mark the start of FY2013 for the state, and Gov. Robert Bentley signed both the FY2013 education and general fund budgets into law on May 24, 2012.^[1] The general budget spends 3.8 percent less than the state spent in FY2012.^[1]

The state general fund for FY2012 spends $1,769,103,104, which is an increase of 11.44% over FY2011.^[2] Alabama's fiscal year begins in October and ends in September.^[3] Alabama's budget is unique in that 84% of tax revenue is set aside by the state constitution or state law for specific purposes, which is the highest percentage of any state budget in the nation.^[4]

Alabama has a total state debt of $60, 573,949,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and FY2013 budget gap.^[5] That is up from last year's debt of $60,412,502,000,^[6]

Alabama's total state debt per capita is $12,612.37.^[7]

See also: The Alabama State Budget on State Budget Solutions

Economic Freedom

A new Fraser Institute report on economic freedom ranks Alabama 39th in economic Freedom. Delaware ranks 1st and New Mexico ranks 50th. The study examines the impact of economic freedom on both the level of economic activity and the growth of economic activity. According to the study, the freest economies operate with minimal government interference, relying upon personal choice and markets to answer basic economic questions. More governmental restrictions on those choices curbs economic freedom. The study looks at three major categories per state – size of government, taxes and regulations. ^[8]

Federal Aid to State Budget

The chart below represents how much of the state’s budget comes from the federal government. The number is corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of funding):

• Figures are calculated by dividing each state’s intergovernmental revenue into its general revenue. Data is available at in U.S. Census.

Fiscal Year 2013 State Budget

Lawmakers approved both a General Fund budget and a $5.4 billion education budget for FY2013 on May 17, 2012. Gov. Robert Bentley signed both budgets into law on May 24, 2012.^[1]

Education Budget

The education budget for FY2013 can be found here. It allocates the Education Trust Fund and also appropriates $7.77 billion in federal grants, other state taxes and other funds.^[1] The education budget spends $5.4 billion, a reduction of $208 million, or 3.7 percent, from FY2012.^[1] Spending for public schools and universities reduces by $208 million, but it does not include teacher layoffs and it does not increase class sizes.^[9] The spending reduction comes in part from the Legislature shifting $67 million of the state's use tax collections from the state education budget to the General Fund budget.^[9]

The Education Trust Fund collected $4.51 billion in October through July, the first 10 months of the state’s fiscal year, an increase of $250.7 million, 5.9 percent, over the same time in FY2012.^[10]

General Fund Budget

The General Fund budget as enacted can be found here.

The operating budget spends $1.67 billion from the General Fund, $66.7 million, 3.8 percent, less than the state spent in FY2012.^[1] The$1.67 billion in General Fund spending is dependent upon the General Fund getting $145.8 million from the Alabama Trust Fund, a giant state savings account, which would require voters agreeing to rewrite the state constitution in a referendum scheduled for Sept. 18. Besides the General Fund, the operating budget for next year also appropriates $12.1 billion in federal grants, other state taxes and other funds. ^[1]

Legislative proposed budget

After negotiating with the General Assembly passed the general fund state budget at 11:45 p.m. on May 16, 2012, with 15 minutes left in the regular session. The Senate’s very brief debate period allowed only two senators to speak on the legislation, and House members were critical of the lack of time to ask questions. The FY2013 state budget spends $66.7 million less than the state spent in FY2012.^[11]

Highlights of the budget include:

• Medicaid receives $603 million;
• The Department of Corrections will get $365 million, $16 million less than the prior year;

The legislature began holding budget hearings when it returned to session starting Feb. 7, 2012.^[12]

The House passed a budget on April 10, 2012 by a vote of 56-47. It reduces general fund spending by $345 million, 19.9 percent, from FY2012. General fund spending in FY2013 under the House budget would be $1.39 billion^[13]

Under the House budget, agencies cuts include:

• 32 percent from the Department of Public Health,^[14]
• 24 percent from the Department of Human Resources,^[14]
• 30.5 percent from Medicaid, reducing funding by $175.4 million.^[13]
• no funding for the Attorney General's office because it is expecting mortgage settlement funds.^[14]

Governor's proposed budget

The governor's proposed FY2013 state budget diverts funds from the Education Trust Fund, the main source of state tax dollars for public schools and colleges, to the $1.4 billion General Fund, which supports Medicaid, prisons, courts, etc. He also proposed shifting $185 million in Medicaid costs for children from the General Fund budget to the state education budget.^[15]

Gov. Bentley's proposed budget for FY2013 includes many cuts:^[16]

In October 2011, Gov. Robert Bentley said of the FY2013 budget, "[O]ur education budget is going to be OK," but a new law intended to promote fiscal responsibility will require lawmakers to spend $108 million less on education in 2013 than was available in FY2012. The law uses a 15-year rolling average to cap how much lawmakers can spend on education.

The governor also said that he hopes for a constitutional amendment that would combine the states two budgets, one for education and a separate General Fund budget for non-education programs including Medicaid, prisons and state troopers into one comprehensive budget. He proposes that tax revenue from state income tax and and state sales tax that is set aside for education by state law must be made available for other uses.^[17]

Fiscal Year 2012 State Budget

• See past state budgets

Education Spending

For FY2012, Alabama devoted 32.7% of its total spending to education, down from 33.6% in FY2009.^[18]

Cuts Ordered March 2012

Gov. Bentley ordered 10.6 percent cut of General Fund spending on March 16, 2012, in response to revenue growth that was less than lawmakers anticipated when drafting the budget. The proration could be made much worse by $85 million in overestimated sav­ings in the Medicaid budget.^[21] The Legislative Fiscal Office projected in Feb. 2012 a shortfall of $170 million in the FY2012 Gener­al Fund budget. The $5.6 billion Education Trust Fund, which pays for most education funding in the state, is projected to be off by $23 million by the end of the year.^[22]

After the governor's 10.6 percent cut to agencies was announced, the Senate passed an appropriations bill that would give the Department of Corrections an extra $45 million so that a larger number of prisoners were not released. When the budget was originally passed, the the Department of Corrections' budget was $378 million. The governor's cuts would have meant losing approximately $40 million, and the appropriations bill restored that cut and then some.^[23]

Budget as Passed

The Alabama state budget for FY2012, and a comparison of that budget to the governor's proposed budget and the FY2011 and FY2010 budgets can be found here.

The state general fund for FY2012 spends $1,769,103,104, which is an increase of 11.44% over FY2011.^[24] Medicaid and Corrections are the two largest line items in the General Fund,^[25] which funds most non-education programs in the state.^[21] Lawmakers relied on $263 million in one-time money from the Alabama Trust Fund "to fill a hole" in the General Fund and that money will not be available in FY2013.^[25]

State education officials advised local school administrators to expect 3-5% funding cuts in FY2012.^[26]

Legislative Budgets

The Senate approved the $1.76 billion General Fund budget, which provides appropriations for all non-education entities. This budget moved to the House for consideration at an increase of $177.5 million, or 11.2%, from FY2011. Under the budget, prisons would receive see $62.6 million more in funding and Medicaid would receive an additional $247 million to maintain services that had been previously provided due to federal stimulus funds. The judiciary and the Department of Public Health agencies will see the largest cuts under the Senate budget, of 18% and 37%, respectively.^[27]

The House passed a $5.58 billion dollar education budget that means 1,100 fewer teachers in the state, but no lay offs due to retirement and attrition. It now goes to the Alabama Senate.^[28]

Budget transparency

• See also: Evaluation of Alabama state website
• See also: Constitutional provisions regarding reading of bills
• See sample transparency legislation at the Sunshine Standard

On February 11, 2009, Governor Bob Riley signed an Executive Order to create a state spending database.^[29] The order mandated that the site, to be operated by the state Department of Finance, be up by March 1, 2009. The site can be found here. ^[30]

Source	Sponsor	Data year	Searchable	Grants	Contracts	Line Item Expenditures	Dept/Agency budgets	Salaries/Pensions
Open Alabama	Government	2008-2012	Y	Y	Y	Y	Y	Y

• Line item expenditures are viewable when searching expenditures by agency.^[31]
• Budget requests and performance metrics are available by viewing agency planning and performance reports.^[32]
• Salary and benefit details can be found under the personnel costs expenditures category.^[33]

Alabama does not have a constitutional provision providing a legislative review period.

Transparency legislation

Main article: Alabama transparency legislation and transparency headlines

2011

• The Alabama House of Representatives passed a bill that would require elected officials and candidates for office to disclose contracts with state agencies by a vote of 96-0. The bill was sponsored by Rep. Mike Ball.^[34]

• The House also voted to require monthly reports on the condition of the General Fund and Education Budget by a vote of 97-0. The bill was sponsored by Rep. Paul DeMarco.^[35]

Multi-Measure Budget Transparency Profile

The Institute of Government and Public Affairs at the University of Illinois has created a multi-measure transparency profile for Alabama, which measures state transparency as of September 2011 using indicators from a range of organizations, including Sunshine Review. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.

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.^[36]

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.^[37]

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.^[37]

• 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.

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.^[38]

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.^[38] The Department’s audit reports are published on their Web site.

Stimulus

Alabama has received $2.2 billion in federal funding.^[40]

Public Employees

According to 2008 Census data, the state of Alabama and local governments in the state employed a total of 324,365 people.^[41] Of those employees, 266,786 were full-time employees receiving a net pay of $908,100,454 per month and 57,579 were part-time employees paid $56,199,051 per month.^[41] More than 52% of those employees, or 169,824 employees, were in education or higher education.^[41]

See Also

• Alabama government sector lobbying
• Alabama public pensions
• Alabama state government salary
• Government budgets

External links

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

References

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