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State budget historical spending below was compiled by the [[National Association for State Budget Officers]]. Figures reflect the reported Total Expenditures in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).<ref name=expenditures2013/><ref name=expenditures2012/>
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State budget historical spending below was compiled by the [[National Association of State Budget Officers]]. Figures reflect the reported Total Expenditures in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).<ref name=expenditures2013/><ref name=expenditures2012/>
 
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Revision as of 14:16, 7 May 2014

Alabama state budget

Flag of Alabama.png
Budget calendar:  Annual
Current fiscal year:  2014
State credit rating:  AA (as of May 2012)
Current governor:  Robert J. Bentley
Financial figures
GF expenses[1]:  $6.9 billion (estimated for FY13)
All funds expenses:  $24.1 billion (estimated for FY13)
Spending % change:  Decrease.svg0.25%[2]
% from federal funding:  36.50%
State debt:  $68,343,597,000
Per capita state debt:  $14,173
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This page contains information about budget processes and policy issues in Alabama, including:
  • A summary of the budget drafting process
  • Trends in revenues and expenditures
  • Current fiscal year budget developments
  • Financial transparency measures

Between fiscal year 2009 and fiscal year 2013, Alabama's total expenditures increased by approximately $4.38 billion, from $19.74 billion in 2009 to $24.12 billion in 2013. This represents a 22.19 percent increase, outpacing the cumulative rate of inflation during the same period (9.06 percent, calculated using the Consumer Price Indices for January 2009 and January 2013).[3][4]

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:[5][6]

  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.[6]

In Alabama, the Governor has line-item veto and item veto of appropriations authority.[6][7]

Expenditures

Definitions

Although each state executes its budget process differently, the National Association of State Budget Officers (NASBO) breaks down state expenditures into four general categories. This allows for comparisons among the 50 states. NASBO's categories are as follows:[8]

  • General fund: "The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state."[8]
  • Other funds: "Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds."[8]
  • Federal funds: "Funds received directly from the federal government."[8]
  • Bonds: "Expenditures from the sale of bonds, generally for capital projects."[8]

2013 expenditures

Breakdown of expenditures in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down expenditures for fiscal year 2013 (comparable figures from surrounding states are provided to give additional context).[8] Figures for all columns except "Per capita expenditures" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita expenditures" have not been abbreviated.

Total state expenditures, FY 2013 ($ in millions)[8]
State General fund Federal funds Other funds Bonds Total Per capita expenditures
Alabama $6,897 $9,541 $7,490 $189 $24,117 $4,989.32
Florida $24,717 $24,737 $18,437 $2,084 $69,975 $3,578.76
Georgia $18,303 $11,752 $10,211 $808 $41,074 $4,110.62
Mississippi $4,699 $8,274 $5,660 $784 $19,417 $6,491.36
Tennessee $12,622 $13,055 $5,394 $382 $31,453 $4,841.92
Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.[9][10]
Source: National Association of State Budget Officers

Expenditures by function

Breakdown of expenditures by function in FY 2012.
Source: National Association of State Budget Officers

State expenditures in Alabama can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2012 data 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.

Expenditures by function, FY 2012 (as percents)[8]
State Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other
Alabama 20.9% 20.1% 0.2% 23.3% 2.5% 6.1% 27.0%
Florida 18.8% 7.1% 0.3% 30.6% 4.2% 11.0% 28.1%
Georgia 24.0% 18.7% 0.1% 21.5% 3.7% 5.2% 26.8%
Mississippi 16.9% 16.8% 5.8% 23.4% 1.8% 7.5% 27.7%
Tennessee 17.7% 12.8% 0.4% 30.7% 2.7% 6.4% 29.3%
Source: National Association of State Budget Officers

Expenditure trends

Between 2008 and 2012, the budget allocation for elementary education increased by more than seven percent. Similarly, the allocation for higher education spending increased by 9.6 percent. Medicaid spending increased by 12.3 percent. During the same period, spending categorized as "other" fell by more than 30 percent. The table below details changes in expenditures from 2008 to 2012.[8][11][12][13][14] Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures from 2008 to 2012 (as percents)
Year Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other
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%
2008 13.7% 10.5% 0.1% 11.0% 1.4% 3.1% 60.2%
Change in % 7.2% 9.6% 0.1% 12.3% 1.1% 3% -33.2%
Source: National Association of State Budget Officers

Revenues

2013 revenues

Breakdown of general fund revenue sources in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down general fund revenues by source in fiscal year 2013 (comparable figures from surrounding states are also provided to give additional context).[8] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, FY 2013 ($ in millions)[8]
State Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
Alabama $1,945 $3,104 $376 $2 $1,887 $7,314 $1,513.12
Florida $18,302 $0 $2,233 $242 $4,244 $25,021 $1,279.66
Georgia $5,226 $8,486 $706 $0 $3,562 $17,980 $1,799.41
Mississippi $1,887 $1,480 $463 $145 $763 $4,738 $1,583.98
Tennessee $6,643 $126 $1,083 $0 $3,551 $11,403 $1,755.39
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates for 2013.[9]
Source: National Association of State Budget Officers

Revenue trends

The table below details the change in revenue sources in the general fund from 2009 to 2013.[8][11] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, Alabama ($ in millions)[8][11]
Year Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
2013 $1,945 $3,104 $376 $2 $1,887 $7,314 $1,513.12
2012 $2,028 $2,919 $379 $2 $2,060 $7,388 $1,533.57
2011 $1,925 $2,693 $291 $2 $1,944 $6,855 $1,427.64
2010 $1,882 $2,486 $415 $2 $1,700 $6,485 $1,355.12
2009 $1,781 $2,586 $447 $2 $2,466 $7,282 $1,546.50
Change in % 9.21% 20.03% -15.88% 0.00% -23.48% 0.44% -2.16%
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates.[9][10]
Source: National Association of State Budget Officers

State budgets by year

Fiscal year 2014

Alabama state budget -- 2014
Alabama State Legislature
Text:SB 143
Legislative history
Introduced:February 6, 2013
House:April 23, 2013
Vote (lower house):75-27
Senate:March 12, 2013
Vote (upper house):22-9
Conference:May 9, 2013
Conference vote (lower house):74-25
Governor:Robert J. Bentley
Signed:May 9, 2013

On May 9, 2013, the state legislature delivered two budget bills for fiscal year 2014 to the Governor -- SB 143, the General Fund budget, and HB 166, the Education Trust Fund budget. The $1.7 billion General Fund budget included significant increases for corrections and prison facilities. The $5.8 billion Education Trust Fund budget included a two percent pay raise for elementary and secondary education employees, the first such pay raise since fiscal year 2008.[15]

For fiscal year 2014, the grand total of all appropriations (including, in addition to the General Fund and the Education Trust Fund, earmarked state, federal and local funds) came to roughly $28.5 billion.[16]

Fiscal year 2013

See also: Alabama state budget (2012-2013)

Fiscal year 2012

See also: Alabama state budget (2011-2012)

Fiscal year 2011

See also: Alabama state budget (2010-2011)

Fiscal year 2010

See also: Alabama state budget (2009-2010)

Historical spending

State budget historical spending below was compiled by the National Association of State Budget Officers. Figures reflect the reported Total Expenditures in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).[8][12]

Historical state budget spending in Alabama ($ in millions)
Fiscal year General Fund Other funds Federal funds Bonds Budget totals
Total % of Budget Total % of Budget Total % of Budget Total % of Budget
2011-2012 $7,274 30.1% $7,270 30.1% $9,308 38.5% $326 1.3% $24,178
2010-2011 $6,842 28.3% $6,753 28% $10,252 42.5% $292 1.2% $24,139
2009-2010 $6,588 32% $4,963 24.1% $8,662 42% $391 1.9% $20,604
Averages: $6,901.33 30% $6,328.67 28% $9,407.33 41% $336.333 1% $22,973.67
General Fund: The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state.
Other funds: Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds.
Federal funds: Funds received directly from the federal government.
Bonds: Expenditures from the sale of bonds, generally for capital projects.

State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, Alabama had a state debt of over $68 billion. Its state debt per capita was $14,173. The report revealed that state governments faced a combined $5.1 trillion in debt, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded public pensions.[17][18]

Total state debt in Alabama[19]
Type Totals U.S. rank
Total state debt $68,343,597,000 24
Per capita debt $14,173 26
State and other fund expenditures $14,544,000,000 19

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 13.2 percent drop. 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.[20]

Credit ratings

States sometimes sell general obligation bonds to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). Credit rating agencies, such as Standard and Poor's, assign grades to states, evaluating their ability to pay the principal and interest on such bonds. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest. Generally speaking, a higher credit ranking indicates lower risk for an investor, which in turn lowers costs for taxpayers.[21]

The table below lists the Standard and Poor's credit ranking for Alabama from 2001 to 2012 (grades from surrounding states are provided for additional context).[21]

S&P credit ratings from 2001 to 2012
Alabama Florida Georgia Mississippi Tennessee
2012 AA AAA AAA AA AA+
2011 AA AAA AAA AA AA+
2010 AA AAA AAA AA AA+
2009 AA AAA AAA AA AA+
2008 AA AAA AAA AA AA+
2007 AA AAA AAA AA AA+
2006 AA AAA AAA AA AA+
2005 AA AAA AAA AA AA
2004 AA AA+ AAA AA AA
2003 AA AA+ AAA AA AA
2002 AA AA+ AAA AA AA
2002 AA AA+ AAA AA AA

Federal aid to state budget

See also: Federal aid to budgets in the 50 states

The chart below notes how much of the state’s general revenues come from the federal government. Figures were calculated by dividing each state’s federal intergovernmental revenue into its general revenue. The number in the rightmost column indicates the state's ranking in relation to the rest of the nation (e.g., if "1," the state receives the highest percentage of federal funding in the nation). Figures from neighboring states are included to provide additional context.[22]

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.[22]

Federal aid to state budgets in 2012
State Federal aid as % of general revenue Total federal aid ($ in millions) National rank
Alabama 36.50% $8,113 11
Florida 32.08% $22,851 30
Georgia 38.06% $13,795 7
Mississippi 45.35% $7,725 1
Tennessee 41.02% $11,199 3

Stimulus

Between February 2009 and June 2013, Alabama received $3,335,790,000 in federal stimulus funding.[23]

Budget transparency

Transparency evaluation
Searchability Y
600px-Yes check.png
Grants Y
600px-Yes check.png
Contracts Y
600px-Yes check.png
Line item expenditures Y
600px-Yes check.png
Dept./agency budgets Y
600px-Yes check.png
Public employee salaries Y
600px-Yes check.png
Last evaluated in 2012.
See also: Evaluation of Alabama state website and Constitutional provisions regarding reading of bills

On February 11, 2009, Governor Bob Riley signed an Executive Order to create a state spending database.[24] 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 accessed here.[25]

The table to the right is helpful in evaluating the accessibility and scope of the information provided by the Alabama state spending database.

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

Transparency legislation

See also: Alabama transparency legislation

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.[26]
  • 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.[27]

Multi-measure budget transparency profile

The Institute of Government and Public Affairs at the University of Illinois created a multi-measure transparency profile for Alabama, which measured state transparency as of September 2011 using indicators from a range of organizations. These indicators measured both website transparency and other recognized facets of governmental transparency. In addition, IGPA presented 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.[28][29]

IGPA devised a budget transparency index based on information available from the National Association of State Budget Officers. Alabama tied for 46th in the nation with three other states, earning three out of eight possible points.[29]

Alabama - IGPA score for budget process, contents and disclosure
Budget transparency indicator Yes or no?
Performance measures N
600px-Red x.png
"Generally Accepted Accounting Principles" budget N
600px-Red x.png
Multi-year forecasting
{{{1}}}
Annual cycle
{{{1}}}
Binding revenue forecast N
600px-Red x.png
Legislative revenue forecast N
600px-Red x.png
Non-partisan staff
{{{1}}}
Constitution or statutory tax/spend limitations N
600px-Red x.png
TOTAL 3

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[29]

U.S. PIRG "Following the Money" report

See also: Following the Money 2014 Report

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.[30] 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.[30]

Accounting principles

See also: Alabama government 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.[31]

The rules under which the department operates can be 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 audits. 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 scope of 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.[31] The department’s audit reports are published on its website.

See also

External links

Additional reading

Contact

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

References

  1. Refers to General Fund spending. Typically in state budgets the General Fund is spending that is most directly controlled by state legislators.
  2. This figure is derived by calculating the percent difference between the prior two years' spending levels according to the National Association of State Budget Officers.
  3. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  4. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  5. National Conference of State Legislatures, "State Experiences with Annual and Biennial Budgeting," updated April 2011
  6. 6.0 6.1 6.2 National Association of State Budget Officers, "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  7. NCSL "Gubernatorial Veto Authority with Respect to Major Budget Bill(s)," accessed March 2, 2014
  8. 8.00 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08 8.09 8.10 8.11 8.12 8.13 National Association of State Budget Officers "State Expenditure Report, 2011-2013," accessed February 21, 2014
  9. 9.0 9.1 9.2 United States Census Bureau, "Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2013," accessed February 26, 2014
  10. 10.0 10.1 United States Census Bureau, "Vintage 2009: Annual Population Estimates," accessed February 26, 2014
  11. 11.0 11.1 11.2 National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  12. 12.0 12.1 National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  13. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  14. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  15. AL.com, "Rancorous session comes to a close; Republicans, Democrats offer divergent reviews," May 21, 2013
  16. Alabama Legislative Fiscal Office, "Budget Fact Book - FY 2014," accessed April 14, 2014
  17. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  18. Washington Examiner, "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014
  19. State Budget Solutions "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  20. Retirement Systems of Alabama, "Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012," accessed October 22, 2013
  21. 21.0 21.1 Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  22. 22.0 22.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  23. Recovery.gov, "Stimulus Spending by State," accessed April 14, 2014
  24. WAFF.com, "Ala. governor signs order on state spending," February 11, 2009
  25. WSFA.com, "Alabama's checkbook online," March 4, 2009
  26. The Huntsville Times, "Long-debated government transparency bill finally clears Alabama House," March 24, 2011
  27. WHNT.com, "Ala. House votes to put more state financial records online" March 31, 2011
  28. Institute of Government and Public Affairs at University of Illinois, "Home page," accessed February 21, 2014
  29. 29.0 29.1 29.2 Institute of Government and Public Affairs at University of Illinois, "Budget Transparency Profiles - All 50 States," September 2011
  30. 30.0 30.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
  31. 31.0 31.1 Alabama Department of Examiners of Public Accounts, "Home page," accessed April 14, 2014