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Alabama state budget and finances

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Alabama budget and finances
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General information
Budget calendar:
Annual
Fiscal year:
2015
State credit rating:
AA (as of 2014)
Current governor:
Robert J. Bentley
Financial figures
Total spending (state and federal funds):
$23.9 billion (estimated for 2014)
Per capita spending:
$4,927.02 (estimated for 2014)
Total state tax collections:
$9.3 billion (2013)
Per capita tax collections:
$1,916.94 (2013)
State debt:
$68.3 billion (as of 2014)
Per capita state debt:
$14,173 (as of 2014)
State budgets and finances
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Total state expendituresState debtTax policy in Alabama
Note: This page utilizes information from a variety of sources. As such, the currency of the information varies somewhat. The information presented on this page reflects the most recent data available as of February 2015.
Between fiscal years 2013 and 2014, total government spending in Alabama decreased by approximately $200 million, from $24.1 billion in fiscal year 2013 to an estimated $23.9 billion in 2014. This represents a 0.9 percent decrease. The cumulative rate of inflation during the same period was 1.58 percent, calculated using the Consumer Price Indices for January 2013 and January 2014. As of 2014, financial services firm Standard and Poor's had assigned Alabama a AA credit rating.[1][2][3]
In fiscal year 2014, total estimated spending in Alabama amounted to $23.9 billion. In 2012 federal aid contributed to 36.5 percent of the state's general revenue, the ninth-highest percentage in the nation.

Spending

Definitions

The information below comes from the National Association of State Budget Officers (NASBO). These spending figures are broken into three broad categories in order to facilitate comparison between the states.[3]

  • State funds: State funds include general and other state-based funds. A general fund is "the predominant fund for financing a state's operations." Other state funds are "restricted by law for particular governmental functions or activities."
  • Federal funds: Federal funds are "funds received directly from the federal government."
  • Total spending: Total spending is calculated by adding together the totals for state and federal funds.

These figures exclude spending from the sale of bonds.

2014 expenditures

See also: Total state expenditures

The table below breaks down estimated spending totals for fiscal year 2014 (comparable figures from surrounding states are included to provide additional context). Figures for all columns except "Population” and “Per capita spending" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the columns labeled "Population” and "Per capita spending" have not been abbreviated.[3]

Total estimated spending in Alabama was $23.9 billion, second-lowest among its neighboring states. Alabama's estimated per capita spending was $4,927.

Total estimated state spending, FY 2014 ($ in millions)
State State funds Federal funds Total spending Population Per capita spending
Alabama $14,605 $9,288 $23,893 4,849,377 $4,927.02
Florida $48,135 $25,416 $73,551 19,893,297 $3,697.28
Georgia $29,545 $11,834 $41,379 10,097,343 $4,098.01
Mississippi $10,479 $8,197 $18,676 2,994,079 $6,237.64
Tennessee $18,832 $13,231 $32,063 6,549,352 $4,895.60
Per capita figures are calculated by taking the state's total spending and dividing by the number of state residents according to United States Census estimates.[4]
Source: National Association of State Budget Officers

Spending by function

See also: State spending by function as a percent of total expenditures
Breakdown of spending by function in FY 2013.
Source: National Association of State Budget Officers

State spending in Alabama can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2013 information is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percents, indicating the share of the total budget spent per category.[3]

In 2013 Alabama dedicated the largest portion of its budget to Medicaid at 22.8 percent. The state also dedicated a larger share of its budget on higher education (19.9 percent) than any of its neighboring states.

State spending by function as a percent of total expenditures, FY 2013
State K-12 education Higher education Public assistance Medicaid Corrections Trans-
portation
Other
Alabama 20.4% 19.9% 0.2% 22.8% 2.4% 6.5% 27.7%
Florida 19.3% 8.5% 0.3% 31.8% 3.9% 10.9% 25.4%
Georgia 24.1% 19% 0.1% 21.3% 3.7% 5.7% 26.2%
Mississippi 16.4% 16.1% 5.9% 26.1% 2% 6.7% 26.7%
Tennessee 17.8% 13.9% 0.4% 30.8% 2.8% 6.1% 28.2%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[3]

Spending trends

From 2009 to 2013, the portion of the Alabama state budget dedicated to K-12 education decreased from 25 percent to 20.4 percent. Decreases can also be seen in the portions dedicated to Medicaid and corrections. See the table below for further details (figures are rendered as percents, indicating the share of the total budget spent per category).[3][5][6][7][8]

Spending by function from 2009 to 2013 (as percents)
Year K-12 education Higher education Public assistance Medicaid Corrections Transportation Other
2013 20.4% 19.9% 0.2% 22.8% 2.4% 6.5% 27.7%
2012 20.9% 20.1% 0.2% 23.3% 2.5% 6.1% 27.0%
2011 24.9% 22.5% 0.3% 24.9% 2.9% 6.9% 17.7%
2010 24.3% 21.4% 0.2% 25.8% 2.9% 8.2% 17.1%
2009 25.0% 20.7% 0.2% 25.5% 2.9% 6.5% 19.2%
Source: National Association of State Budget Officers
Note**: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[3]

Revenues

2013 revenues

See also: State government tax collections by source

The table below breaks down state government tax collections by source in 2013 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "population" and "per capita revenue" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "population" and "per capita revenue" have not been abbreviated).[9]

In 2013 state tax collections in Alabama totaled $9.3 billion. Per capita tax collections in Alabama totaled $1,917.

State tax collections by source ($ in thousands)
State Property taxes Sales and gross receipts Licenses Individual income taxes Corporation net income taxes Other taxes Total 2013 population Per capita collections
Alabama $322,300 $4,707,375 $490,475 $3,202,520 $382,202 $161,597 $9,266,469 4,833,996 $1,916.94
Florida $360 $28,526,653 $1,993,965 N/A $2,071,710 $1,995,790 $34,588,478 19,600,311 $1,764.69
Georgia $61,052 $7,408,422 $744,401 $8,772,227 $797,255 $10,795 $17,794,152 9,994,759 $1,780.35
Mississippi $24,122 $4,571,294 $530,010 $1,755,424 $415,980 $105,895 $7,402,725 2,992,206 $2,474.00
Tennessee N/A $9,128,175 $1,421,174 $262,842 $1,256,173 $298,527 $12,366,891 6,497,269 $1,903.40
Source: Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014
Alabama tax collections by source in 2013.
Source: Tax Policy Center

The table below lists 2013 tax collections by source as percentages of total collections. Most of Alabama's revenue was generated by sales taxes and gross receipts, which accounted for 50.8 percent of total collections. Individual income tax collections accounted for 34.6 percent of total collections.[9]

State tax collections by source (as percentages)
State Property taxes Sales and gross receipts Licenses Individual income taxes Corporation net income taxes Other taxes
Alabama 3.48% 50.80% 5.29% 34.56% 4.12% 1.74%
Florida 0.00% 82.47% 5.76% N/A 5.99% 5.77%
Georgia 0.34% 41.63% 4.18% 49.30% 4.48% 0.06%
Mississippi 0.33% 61.75% 7.16% 23.71% 5.62% 1.43%
Tennessee N/A 73.81% 11.49% 2.13% 10.16% 2.41%
Source: Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014

Current fiscal year budget

See also: Historic Alabama budget and finance information

Fiscal year 2015

DocumentIcon.jpg See budget bill: S.B. 184: Education Trust Fund Appropriations
DocumentIcon.jpg See budget bill: H.B. 235: State General Fund Appropriations

Governor Robert Bentley announced his fiscal year 2015 budget proposals on January 28, 2015. Bentley's Education Trust Fund budget totaled approximately $5.9 billion and his General Fund budget totaled roughly $1.8 billion. Under the governor's budget proposals, K-12 education spending would have increased by $153.6 million and higher education spending would have increased by $30.8 million. General Fund spending would have increased by roughly $16 million.[10]

Bentley signed into law the state's Education Trust Fund budget on April 11, 2014. The budget as enacted included $60 million less in spending than the governor's proposal. The enacted General Fund budget, conversely, included approximately $17.3 million more in spending than the governor's proposal.[10]

State debt

See also: State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, Alabama had a state debt of approximately $68.3 billion. Its state debt per capita was $14,173. The report revealed that state governments faced a combined $5.1 trillion in debt. The obligation amounted to $16,178 per capita in the nation.[11]

Total state debt, 2014
State Total state debt State debt per capita Per capita debt ranking
Alabama $68,343,597,000 $14,173 26
Florida $197,871,611,000 $10,243 43
Georgia $115,193,862,000 $11,612 39
Mississippi $54,686,815,000 $18,321 14
Tennessee $41,049,738,000 $6,358 50
Sources: State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014

Public pensions

See also: Alabama public pensions and Alabama public employee salaries

A 2012 report from the Pew Center on the States noted that Alabama's pension system was funded at 70 percent at the close of fiscal year 2010, well below the 80 percent funding level experts recommend. Consequently, Pew designated the state's pension system as cause for "serious concern." The funded ratio for the state's pension system decreased from 79.4 percent in fiscal year 2007 to 66.2 percent in fiscal year 2012, a decrease of 13.2 percentage points, or 16.6 percent. Likewise, the system's unfunded liabilities increased from just under $8 billion in fiscal year 2007 to more than $14 billion in fiscal year 2012.[12]

Credit ratings

See also: State credit ratings

Credit rating agencies, such as Standard and Poor's, assign grades to states that take into account a state's ability to pay debts and the general health of the state's economy. Generally speaking, a higher credit rating indicates lower interest costs on the general obligation bonds states sometimes sell to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). This in turn results in lower interest costs, thereby lowering the cost to taxpayers.[13][14]

The table below lists the Standard and Poor's credit ratings for Alabama and surrounding states from 2004 to 2014. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest.[15]

State credit ratings, 2004 to 2014
State 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Alabama AA AA AA AA AA AA AA AA AA AA AA
Florida AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AA+
Georgia AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA AAA
Mississippi AA AA AA AA AA AA AA AA AA AA AA
Tennessee AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA AA
Source: Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014

Federal aid to state budget

See also: Federal aid to state budgets

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[16]

The table below notes what share of Alabama’s general revenues came from the federal government in 2012. That year, Alabama received approximately $8.1 billion in federal aid, 36.5 percent of the state's total general revenues. Figures from surrounding states are provided for additional context.[16]

Federal aid to state budgets, 2012
State Total federal aid ($ in thousands) Federal aid as a % of general revenue Ranking
Alabama $8,112,509 36.50% 9
Florida $22,850,620 25.48% 30
Georgia $13,794,726 29.02% 7
Mississippi $7,725,294 34.51% 1
Tennessee $11,198,575 40.97% 3
Source: United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014

Stimulus

According to Recovery.gov, the official government website for the Recovery Accountability and Transparency Board, under the American Recovery and Reinvestment Act, Alabama received $3,335,790,000 in federal stimulus funding between February 2009 and June 2013.[17]

Budget process

The state operates on an annual budget cycle. Alabama's fiscal year runs from October 1 and ends September 30 of the following year. The sequence of key events in the budget process is as follows:[18][19]

  1. In September of the year preceding the start of the new fiscal year, budget instructions are sent to state agencies.
  2. In November, agencies submit their budget requests to the governor.
  3. Budget hearings are held with state agencies in January.
  4. By the second legislative day of each regular session of the legislature, the governor must submit his or her proposed budget to the state legislature. These dates vary from session to session, occurring as early as January and as late as March.
  5. The legislature must pass a budget with a simple majority. The fiscal year begins in October.

The governor is required to submit a balanced budget to the legislature. In turn, the legislature must pass a balanced budget.[19]

Alabama is one of 44 states in which the governor has line item veto authority.[19][20][19]

Agencies, offices and committees

There are five major standing committees in the Alabama State Legislature that deal with budget and finance matters:

  1. Senate Finance and Taxation Education Committee
  2. Senate Finance and Taxation General Fund Committee
  3. House Ways and Means Education Committee
  4. House Ways and Means General Fund Committee
  5. Joint Finances and Budget Committee
  6. Ways and Means Education Committee, Alabama House of Representatives
  7. Ways and Means General Fund Committee, Alabama House of Representatives

The duties of the Alabama State Auditor include auditing the records of the Alabama Treasurer and reporting the findings to the governor. The auditor is elected during federal midterm election years.[21]

The Alabama Treasurer is the state's chief financial officer. The treasurer is also elected during federal midterm election years.

Studies and reports

U.S. PIRG "Following the Money" report

See also: "Following the Money" report, 2014

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[22] According to the report, Alabama received a grade of D and a numerical score of 55, indicating that Alabama was "lagging." in terms of transparency regarding state spending.[22]

Budget and finance ballot measures

See also: Spending and finance on the ballot and List of Alabama ballot measures

Ballotpedia has tracked 9 ballot measures relating to state and local budget and financial matters.

  1. Alabama Amendment 1 (2003)
  2. Alabama Board of Education Expenditure Increase, Amendment 4 (2014)
  3. Alabama Capital Improvement Trust Fund, Amendment 2 (2014)
  4. Alabama Cell Radio Tax, Amendment 1 (1998)
  5. Alabama Excellence Initiative Fund, Amendment 1 (September 2003)
  6. Alabama General Fund Rainy Day Account, Amendment 2 (2002)
  7. Alabama Phaseout of Supernumary Programs, Amendment 2 (1999)
  8. Alabama Proposal 2, Dedicated Funds for State Retiree Health Costs (2007)
  9. Alabama Rainy Day Accounts, Amendment 1 (2008)

Recent news

This section displays the most recent stories in a Google news search for the term "Alabama + budget"

All stories may not be relevant to this page due to the nature of the search engine.

Alabama state budget news feed

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Contact

Alabama Department of Finance, Executive Budget Office
11 S. Union Street, Room 237
Montgomery, AL 36104
334-242-7230

See also

External links

Additional reading

References

  1. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  2. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  3. 3.0 3.1 3.2 3.3 3.4 3.5 3.6 National Association of State Budget Officers, "State Expenditure Report: 2012-2014," accessed February 18, 2015
  4. United States Census Bureau, "State and County QuickFacts," accessed February 23, 2014
  5. National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  6. National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  7. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  8. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  9. 9.0 9.1 Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014
  10. 10.0 10.1 National Association of State Budget Officers, "Summaries of Fiscal Year 2015 Proposed and Enacted Budgets," July 11, 2014
  11. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  12. Retirement Systems of Alabama, "Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012," accessed October 22, 2013
  13. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  14. Bankrate, "The 6 states with the worst credit ratings," September 27, 2012
  15. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014
  16. 16.0 16.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  17. Recovery.gov, "Stimulus Spending by State," accessed April 14, 2014
  18. National Conference of State Legislatures, "State Experiences with Annual and Biennial Budgeting," updated April 2011
  19. 19.0 19.1 19.2 19.3 National Association of State Budget Officers, "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  20. NCSL "Gubernatorial Veto Authority with Respect to Major Budget Bill(s)," accessed March 2, 2014
  21. Office of the Alabama State Auditor, "Duties and Responsibilities," accessed May 23, 2011
  22. 22.0 22.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014