The new fiscal year begins this week for Alabama government. We have two budgets, a General Fund and an Education Budget. Both budgets have seen devastating havoc to their revenues due to the coronavirus. The Education Budget was drastically destroyed from what was originally expected at the beginning of the calendar year in January.
The Education Budget receives the revenues generated from our sales and income taxes in the state. Therefore, the downturn in the economy is especially heartbreaking for educators, teachers, schools, and universities.
The Education Budget was poised in January to be by far the largest and robust in state history. There was money for a 6 percent increase over the $7.1 billion 2020 Education Budget. However, that was eliminated and the budget is level funded.
Altogether, the coronavirus pandemic has left a half billion dollar cut to Alabama’s state budgets for the upcoming year.
The pandemic debacle has decimated other states much more than Alabama. Indeed, our legislative budget committees have done such a good job as stewards of our tax spending and of budgeting that, unlike other states that are deficit spending and headed towards bankruptcy, there is a slight increase in our two budgets.
In fact, all surveys nationally rank Alabama in the top five of the 50 states when it comes to how well states are handling and are able to absorb the staggering blow to state’s budgets.
Our state budget chairmen, Reps. Bill Poole of Tuscaloosa and Steve Clouse of Ozark and Senators Arthur Orr of Decatur and Greg Albritton of Escambia, have done a yeoman’s job of keeping Alabama afloat by passing conservative budgets and implementing rainy day funds.
The Education Budget will be about $7.2 billion. The General Fund will be about $2.2 billion. The difference in what was expected in January is about $500 million.
However, Alabama’s share of the Federal Stimulus money is said to be $1.8 Billion. This is like manna from Heaven.
The General Fund budget still includes increases for the Alabama Medicaid Agency. The Department of Public Healthalso got an increase to cover a larger share of the costs for The Children’s Health Insurance program. The Department of Mental Health got an increase to setup three regional crisis centers for folks with mental illness caused by the epidemic.
The Department of Corrections will get about a $20 million increase, but it may not be enough to satisfy the feds. Within the Education Budget, the Legislature was able to fund a bond issue for school and capital projects. All-in-all, it could be a lot worse. Again, Alabama is in better shape than other states.
One of the best things the crafters of our 1901 Constitution did was to make it unconstitutional to have a deficit budget. We have a constitutional mandate that we cannot spend more than we take in. We cannot print money in Alabama like the Federal Government does. The amount of red ink that the federal government is stacking up is staggering.
The federal government with the printing of new money sent over $1.8 billion to the state in the 2020 Cares Act bailout. This money was sent to the states to pay for expenses incurred from the coronavirus epidemic.
That is a lot of money and it did not take lawmakers and the governor’s office long to start salivating and feuding over the use of the pandemic relief manna from Heaven from the good old debtor Uncle Sam.
Indeed, the fight over the windfall money caused quite a brouhaha between Governor Kay Ivey and the Legislature. It is a natural spat because it is a gray constitutional interpretation of power between the Legislative Branch, which is given the power to appropriate money, and the Executive Branch which administers state government.
The Cares Act of 2020 passed by Congress, which appropriated a total of $105 billion of which Alabama received $1.8 billion, is different than the federal bailout funds during the Great Recession. This relief money for this year cannot be used to aid in current or long-term expenses. It can only be used for expenses directly related to or incurred for expenses directly caused by the coronavirus.
We are in the waning days of the census count. If you have not been counted, be sure you are.
See you next week.