Budget hearings bring grim newsPublished 7:30pm Friday, February 18, 2011
By Cam Ward | Special to the Advertiser
State budget officers held their first public hearings on the budgets recently for Alabama, and the news was not good.
Alabama has two state budgets, one for education and the other pays for the rest of state government’s services. Both budgets are going to continue the three-year decline in revenue we have been seeing.
Nearly 80 percent of all tax dollars in Alabama go toward education. The biggest source of revenue for the Education Trust Fund Budget comes from income tax and sales tax. The recent recession has battered sales tax revenue in Alabama on a historical proportion.
In 2009, sales tax revenue dropped 9.9 percent, which is the largest decline in over half a century. The decline in sales and income tax collections, due to our high unemployment, has caused the Education Budget to shrink from $6.9 billion in 2008 to $5.2 billion in 2010.
Budget analysts predict that number to drop further for the next budget cycle. What does this mean for the upcoming school year? Right now it looks like we could see a 3 percent cut in current operating costs and hopefully stay close to the same for next year’s budget.
The state General Fund is in the worst financial condition that budget officials say they have seen in nearly a century. As early as 2008, the state General Fund had as much as $1.8 billion, which was propped up by federal stimulus dollars. Next year, Alabama will only have $1.3 billion to fund all operational expenses besides education.
This kind of revenue decrease means that the Legislature is going to have to make some tough cuts this year. With 42 percent of the entire general fund budget going toward Medicaid and an overcrowded prison system, there are limited options on what is left to slash. It is becoming more apparent that layoffs will be likely in state government. The question is where and how many jobs we cut.
The budget hearings were a sober reminder that Alabama’s economy is still struggling to regain its footing. Until our anemic 9 percent unemployment numbers drop considerably, we will likely continue to see tight budgets for state government.
–Ward is the state senator representing Chilton County.