Stimulus to help budgets, director says

Published 10:08 pm Friday, February 27, 2009

The money Alabama will receive from President Barack Obama’s economic recovery package will help make up for revenue deficits in the state’s budget, according State Finance Director Jim Main.

Alabama’s education budget will receive almost $1 billion over the next two years while the general fund budget especially in Medicaid will get a big boost. Main said that should make the state survive.

“Our economic situation isn’t as bad as our surrounding states,” Main said during yesterday’s Lions Club meeting. “Other states are having to lay off thousands of people. Some are even thinking about raising taxes, but we shouldn’t have to do that.”

In the education budget, $600 million for teacher retention will be divided 70 percent to 30 percent for K-12 and four-year schools respectively. A total of $200 million will go to special education while another $200 million will be used for Title I.

Main said the stimulus package money should help offset proration, which was offset some by the Education Rainy Day Fund. What caused the shortfall in education was the declining state economy.

Education is funded mostly by sales and income taxes. Thus, there is less revenue since more people are unemployed and consumers aren’t spending as much money.

“Income and sales taxes just about fell off a cliff,” Main said.

One aspect of the package that should help the general fund is help with Medicaid. Unlike Medicare, Medicaid was an unfunded mandate passed by Congress, but Main said the state is finally going to get money to help pay that bill. About $800 million over the next 27 months is coming to the state to pay a large portion of the state’s Medicaid bill.

“We’re finally going to get some help with Medicaid,” Main said.

Although the economy is struggling, not every sector of sales is reporting losses. Main said one area did see an increase — whiskey sales.

“It’s really up,” he said.