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PARCA, Birmingham News Studies Draw Different Conclusions

PARCA, Birmingham News Studies Draw Different Conclusions

By Susan Britt
Alabama Political Reporter

A study published by the Public Affairs Research Council of Alabama (PARCA) in its May 2012 monthly newsletter took issue with an article published by the Birmingham News on May 20.

Both studies were aimed at comparing the budget impact that Jefferson County will face as a result of the state legislature not signing a bill upholding its occupational tax.

Jim Williams, PARCA’s executive director, pointed out in the newsletter that there were major discrepancies in the foundational calculations of the studies.

Williams writes that The Birmingham News’ “Discussion of trends was based on FY 2007 budget estimates rather than on actual revenues.” He also points out that the Birmingham News report was based on calculations of revenues for Mobile and Madison that included all General and earmarked funds “while comparing them to an adjusted version of General Fund revenues for Jefferson County.”

The report compared Jefferson, Mobile and Madison counties. The study contended that without the occupational tax Jefferson County’s per capita revenues would be “far lower” than the other two counties.

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PARCA’s report also includes Montgomery County but its conclusion shows that without the occupational tax Jefferson County’s per capita revenue drops below Mobile County by 6 percent but is still substantially higher than the other two.

In the newsletter, Williams writes that the PARCA study is based on audited revenues instead of budgeted amounts. He continues writing, “Using a General Fund comparison alone can be very misleading. It goes without saying that comparing one county’s general fund finances with another county’s total governmental finances is an ‘apples-to-orange’ mistake that can produce erroneous conclusions.”

Therefore, the PARCA report was based on total general fund, earmarked funds and total governmental funds.

Williams used FY 2010 governmental revenues on a per-capita basis and 2010 Census populations to reach what he calls a more “apples-to-apples” comparison.

He added in data for Jefferson County Health Department that is separately reported and excluded Jefferson County’s Limited Obligation School Fund. They also removed a $50 million one-time payments from debt-related litigation.

Mobile County’s  funds for the University of South Alabama Hospital and Health Department were added to its total.

Williams wrote they did this to “eliminate artificial differences among the counties.”

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PARCA’s results were as follows:

“Key Findings

1. In FY 2010, Jefferson County had the highest general and governmental revenues per capita among Alabama’s four largest counties. Its revenues were much higher than those in Montgomery and Madison counties, and its General Fund revenues were substantially above those in Mobile County.

2. General Fund trend data indicate that this has been the normal situation.

3. With loss of the occupational tax, Jefferson County would drop below Mobile County but overall would remain comparable to the three peer counties in revenue availability.”

With all governmental funds including occupational tax shows Jefferson County ranked number one at $567 per capita, Mobile County was $544, Montgomery County $345 and Madison County was at $266.

Jefferson County’s Budget Management Office estimates a $178 million drop in the General Fund revenue will occur without the occupational tax. PARCA calculated the impact on Jefferson County’s per capita General Fund revenue would result in a drop to $270 per capita ranking it at 6 percent lower than Mobile County but still remain substantially higher than the other two counties.

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At the end of the report, Williams asks a series of questions related to a further examination and comparison between these counties in order to seek better solutions.

One example cited by the study notes that Jefferson County invests $117 per capita in its health and indigent care where Mobile County invest $52 per capita and questions whether the Mobile system is “more cost-effective, or merely cheaper.”

He concluded by writing, “Answers to questions such as these are urgently needed.”

For the full report:

http://parca.samford.edu/LocalGovernment/The%20Finances%20of%20Alabama’s%20Largest%20Counties.pdf?AspxAutoDetectCookieSupport=1

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