Difference between revisions of "Alabama state budget and finances"
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Alabama budget process
Revision as of 09:48, 8 May 2014
|Alabama budget and finances|
|Budget calendar: |
|Fiscal year: |
|State credit rating: |
AA (as of May 2012)
|Current governor: |
Robert J. Bentley
|GF expenses: |
$6.9 billion (estimated for FY13)
|All funds expenses: |
$24.1 billion (estimated for FY13)
|Spending % change: |
|% from federal funding: |
| State debt: |
|Per capita state debt: |
|Other state budgets|
|Alabama • Alaska • Arizona • Arkansas • California • Colorado • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Illinois • Indiana • Iowa • Kansas • Kentucky • Louisiana • Maine • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Montana • Nebraska • Nevada • New Hampshire • New Jersey • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon • Pennsylvania • Rhode Island • South Carolina • South Dakota • Tennessee • Texas • Utah • Vermont • Virginia • Washington • West Virginia • Wisconsin • Wyoming|
|Total state expenditures • State debt • Tax 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.|
- 1 Budget process
- 2 Expenditures
- 3 Revenues
- 4 State budgets by year
- 5 Historical spending
- 6 State debt
- 7 Federal aid to state budget
- 8 Budget transparency
- 9 Accounting principles
- 10 See also
- 11 External links
- 12 Contact
- 13 References
- 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).
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:
- In September of the year preceding the start of the new fiscal year, budget instructions are sent to state agencies.
- In November, agencies submit their budget requests to the governor.
- Budget hearings are held with state agencies in January.
- 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.
- 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.
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:
- 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."
The table below breaks down expenditures for fiscal year 2013 (comparable figures from surrounding states are provided to give additional context). 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)|
|State||General fund||Federal funds||Other funds||Bonds||Total||Per capita expenditures|
| 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.|
Source: National Association of State Budget Officers
Expenditures by function
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)|
|State||Elementary and secondary ed.||Higher ed.||Public assistance||Medicaid||Corrections||Transportation||Other|
|Source: National Association of State Budget Officers|
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. 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|
|Change in %||7.2%||9.6%||0.1%||12.3%||1.1%||3%||-33.2%|
|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). 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)|
|State||Sales tax||Personal income tax||Corporate income tax||Gaming tax||Other taxes and fees||Total||Per capita revenue**|
| 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.|
Source: National Association of State Budget Officers
The table below details the change in revenue sources in the general fund from 2009 to 2013. 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)|
|Year||Sales tax||Personal income tax||Corporate income tax||Gaming tax||Other taxes and fees||Total||Per capita revenue**|
|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.|
Source: National Association of State Budget Officers
State budgets by year
Fiscal year 2014
|Alabama state budget -- 2014|
|Alabama State Legislature|
|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.
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.
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)
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 $2,448,000,000).
|Historical state spending in Alabama ($ 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|
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.
|Total state debt in Alabama|
|Total state debt||$68,343,597,000||24|
|Per capita debt||$14,173||26|
|State and other fund expenditures||$14,544,000,000||19|
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.
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.
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).
|S&P credit ratings from 2001 to 2012|
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.
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 $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.
|Federal aid to state budgets in 2012|
|State||Federal aid as % of general revenue||Total federal aid ($ in millions)||National rank|
Between February 2009 and June 2013, Alabama received $3,335,790,000 in federal stimulus funding.
|Line item expenditures|
|Public employee salaries|
|Last evaluated in 2012.|
On February 11, 2009, Governor Bob Riley signed an Executive Order to create a state spending database. 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.
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.
- See also: Alabama transparency legislation
- 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.
- 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.
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.
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.
|Alabama - IGPA score for budget process, contents and disclosure|
|Budget transparency indicator||Yes or no?|
|"Generally Accepted Accounting Principles" budget|
|Binding revenue forecast|
|Legislative revenue forecast|
|Constitution or statutory tax/spend limitations|
In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.
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. 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.
- 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.
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. The department’s audit reports are published on its website.
- Alabama government sector lobbying
- Alabama public pensions
- Alabama state government salary
- Government budgets
- Alabama Governor
- Alabama State Legislature
- Alabama House of Representatives
- Alabama State Senate
- Open Alabama
- State Budget Solutions, Alabama
- Model transparency legislation from the American Legislative Exchange Council is available here
- Alabama Policy Institute
- Alabama Department of Finance, Executive Budget Office
- Alabama State Government Website
- U.S. PIRG, "Report: Transparent & Accountable Budgets," April 8, 2014
- The New York Times, "Battles loom in many states over what to do with budget surpluses," February 3, 2014
- Center on Budget and Policy Priorities, "Policy Basics: The ABCs of State Budgets," February 7, 2013
- Office of the Governor of Alabama, "2010 State of the State Address," January 12, 2010
- Office of the Governor of Alabama, "2009 State of the State Address," February 3,2009
Alabama Department of Finance, Executive Budget Office
11 S. Union Street, Room 237
Montgomery, AL 36104
- Refers to General Fund spending. Typically in state budgets the General Fund is spending that is most directly controlled by state legislators.
- 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.
- Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
- InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
- National Conference of State Legislatures, "State Experiences with Annual and Biennial Budgeting," updated April 2011
- National Association of State Budget Officers, "Budget Processes in the States, Summer 2008," accessed February 21, 2014
- NCSL "Gubernatorial Veto Authority with Respect to Major Budget Bill(s)," accessed March 2, 2014
- National Association of State Budget Officers, "State Expenditure Report, 2011-2013," accessed February 21, 2014
- United States Census Bureau, "Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2013," accessed February 26, 2014
- United States Census Bureau, "Vintage 2009: Annual Population Estimates," accessed February 26, 2014
- National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
- National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
- National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
- National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
- AL.com, "Rancorous session comes to a close; Republicans, Democrats offer divergent reviews," May 21, 2013
- Alabama Legislative Fiscal Office, "Budget Fact Book - FY 2014," accessed April 14, 2014
- State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
- Washington Examiner, "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014
- State Budget Solutions "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
- Retirement Systems of Alabama, "Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012," accessed October 22, 2013
- Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
- United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
- Recovery.gov, "Stimulus Spending by State," accessed April 14, 2014
- WAFF.com, "Ala. governor signs order on state spending," February 11, 2009
- WSFA.com, "Alabama's checkbook online," March 4, 2009
- The Huntsville Times, "Long-debated government transparency bill finally clears Alabama House," March 24, 2011
- WHNT.com, "Ala. House votes to put more state financial records online" March 31, 2011
- Institute of Government and Public Affairs at University of Illinois, "Home page," accessed February 21, 2014
- Institute of Government and Public Affairs at University of Illinois, "Budget Transparency Profiles - All 50 States," September 2011
- U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
- Alabama Department of Examiners of Public Accounts, "Home page," accessed April 14, 2014