State Finance Director Bill Poole told media Tuesday that Gov. Kay Ivey’s record budget proposal has three clear themes: targeted strategic investments, reducing debt obligations and increasing reserve accounts.
“Alabama, especially considering the state of the nation’s economy, is on sound footing,” Ivey said in a statement Tuesday. “Our budgets are strong, and that is, no doubt, because of the fiscally conservative approach we have taken and continue to take. Just as every Alabama family budgets to invest, pay their debts and increase their savings, my budget proposals do just that for our state. From returning our taxpayers’ hard-earned dollars back to them to making historic investments in our students’ education, these budgets will help foster a strong Alabama today and a stronger Alabama tomorrow.”
Retiring debt and increasing reserve accounts are important steps to take now, Poole said, as Alabama is currently flooded with increased revenue that appears destined to run dry sooner than later.
“There are a lot of lessons to be learned from the past,” Poole said. “We had historic revenues immediately preceding the Great Recession. We have to recognize the lessons of the past and prepare for the stability of the future.”
One of the highlights of Ivey’s proposed budget has been the governor’s promise to send $400 tax rebates out to Alabamians. Poole shed some more light on the particulars of that plan on Tuesday.
The rebates would be sent out to every person who filed a tax return in 2021, and the money is expected to come within 60 to 90 days of the Legislature passing a bill to that effect.
Of course, the Legislature has the final say and could follow through on Ivey’s plan as is or drastically change how they handle the rebates. Or they could fail to pass any rebates at all.
Still Speaker Nathaniel Ledbetter, R-Rainsville, and other leadership had signaled general support for doing rebates in this session. But Democrats and Lt. Gov. Will Ainsworth have focused on eliminating grocery tax over offering rebates and some conservatives have been critical of offering one-time money over permanent tax relief.
Ivey’s budget proposal also includes 2 percent raises for state employees and educators.
Poole said the 2 percent raise for educators particularly is part of a sustainable plan to keep the state competitive in teacher recruitment.
“I understand we have a shortage, but we have been careful to provide careful increases over the years,” Poole said. “We know it’s a tight labor market.”
The budget proposal includes increasing the rainy day fund 50 percent, from $100 million to $150 million. The proposal also calls for paying off $40 million in debt obligations.
Two of the most significant increases in the general fund budget are for Medicaid and the Department of Corrections.
Poole said a $69 million increase in Medicaid expenses is due in part to the expiration of federal public health emergency funds, increasing state obligations for funding.
And $58 million in new funding for the Department of Corrections comes largely due to the department’s controversial new prison healthcare contract, as well as a few other variables including cell phone interdiction technology.
Alabama State Port Authority Director and CEO John C. Driscoll thanked Ivey for including $25 million for McDuffie Coal Terminal in her budget request.
“We thank Gov. Ivey for her continued leadership and vision to grow Alabama’s economy and create Alabama jobs,” Driscoll said. “Alabama’s metallurgical coal is recognized worldwide for its quality, and the McDuffie Coal Terminal is a critical piece of our state’s multi-billion-dollar coal industry.
“This state investment would allow the Port to modernize aged infrastructure, which will double the terminal’s capacity and enable Alabama businesses to meet global demand. We look forward to working with the legislature to enact this crucial investment in Alabama’s port. “