Alabama state budget and finances

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Alabama budget and finances
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General information
Budget calendar:
Annual
Fiscal year:
2017
State credit rating:
AA (as of 2017)
Current governor:
Kay Ivey
Financial figures
Total spending (state and federal funds):
$26,474,000,000 (estimated 2016)
Per capita spending:
$5,444 (estimated 2016)
Total state tax collections:
$9,919,794,000 (2016)
Per capita tax collections:
$2,040 (2016)
State debt:
$8,969,350,000 (2014)
Per capita state debt:
$1,848 (2014)
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State budget and finance pages • Total state expenditures • State debt • Tax policy in Alabama
Note: In comparing dollar amounts across the states, it is important to note that the cost of living can differ from state to state and within a state. The amounts given on this page have not been adjusted to reflect these differences. For more information on "regional price disparities" and the Consumer Price Index, see the U.S. Department of Commerce, Bureau of Economic Analysis. This article, which is updated on an annual basis, was last updated in June 2017. It contains information from several sources; consequently, the currency of the information can vary from source to source.

In Alabama, as in other states, lawmakers and public officials are elected in part to manage the state's finances. This includes generating revenues (money coming into the state from various sources) and approving expenditures (the money spent on governmental functions and servicing state debt). State budgets are complex and fluid, as they depend on anticipated revenues and planned expenditures, which may alter over the course of a fiscal year. If revenues do not keep pace with expenditures, states generally have to raise taxes, cut services, borrow money, or a combination of the three. State budget decisions are also influenced by policy decisions at the national level, such as the Affordable Care Act or energy and environmental regulations, and issues at the local level, such as crime and the quality of education.

HIGHLIGHTS
  • Between fiscal years 2015 and 2016, total government spending in Alabama increased by approximately $1.2 billion—from $25.3 billion in fiscal year 2015 to an estimated $26.4 billion in 2016. This represents a 4.7-percent increase.[1]
  • In Alabama in fiscal year 2015, 51.5 percent of total tax revenues came from sales taxes and gross receipts. Income taxes accounted for 39.0 percent of total state tax collections.
  • Education accounted for 41.6 percent of state expenditures in fiscal year 2015, while 24.1 percent went to Medicaid.

    • Definitions

    The following terms are used to describe a state's finances:

    • Revenues come mainly from tax collections, licensing fees, federal aid, and returns on investments.
    • Expenditures generally include spending on government salaries, infrastructure, education, public pensions, public assistance, corrections, Medicaid, and transportation.
    • State debt refers to the money borrowed to make up for a deficit when revenues do not cover spending.
    • The state credit rating is the grade given by a credit rating agency based on the general financial health of the state's government and economy.
    • State funds include general and other state-based funds. A general fund is "the predominant fund for financing a state's operations." Other state funds are "restricted by law for particular governmental functions or activities."[2]
    • Federal funds are "funds received directly from the federal government."[2]
    • Total spending is calculated by adding together the totals for state and federal funds used for expenditures.

    Revenues

    2016 revenues

    See also: State government tax collections by source

    The table below breaks down state government tax collections by source in 2016 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "2016 population" and "Per capita collections" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "2016 population" and "Per capita collections" have not been abbreviated.[3]

    State tax collections by source ($ in thousands), 2016
    State Property taxes Sales and gross receipts Licenses Income taxes Other taxes Total 2016 population Per capita collections
    Alabama $346,277 $5,106,102 $507,479 $3,869,584 $90,352 $9,919,794 4,863,300 $2,040
    Florida $20 $30,429,302 $2,241,468 $2,272,230 $2,697,400 $37,640,420 20,612,439 $1,826
    Georgia $961,780 $8,408,456 $663,946 $11,420,536 -$272 $21,454,446 10,310,371 $2,081
    Mississippi $26,725 $4,777,794 $553,510 $2,263,164 $39,198 $7,660,391 2,988,726 $2,563
    United States $18,364,298 $442,909,995 $52,164,396 $392,286,910 $24,538,146 $930,263,745 322,762,018 $2,882.20
    Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed June 26, 2017

    The table below lists 2016 tax collections by source as percentages of total collections. About 51.5 percent of Alabama's total state tax collections came from sales taxes and gross receipts.[3]

    State tax collections by source (as percentages), 2016
    State Property taxes Sales and gross receipts Licenses Income taxes Other taxes
    Alabama 3.5% 51.5% 5.1% 39.0% 0.9%
    Florida 0.0% 80.8% 6.0% 6.0% 7.2%
    Georgia 4.5% 39.2% 3.1% 53.2% 0.0%
    Mississippi 0.3% 62.4% 7.2% 29.5% 0.5%
    Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed April 4, 2016


    Federal aid to the state budget

    See also: Federal aid to state budgets

    State governments receive aid from the federal government to fund a variety of joint programs, mainly in the form of grants for such things as Medicaid, education, and transportation. In 2014, federal aid to the states accounted for roughly 31 percent of all state general revenues. Federal aid varies from state to state. For example, Mississippi received approximately $7.2 billion in federal aid in 2014, accounting for about 41 percent of the state's general revenues, the highest percentage of all of the states. By contrast, North Dakota received about $1.5 billion in federal aid in 2014, or just 17 percent of the state's general revenues, the lowest percentage in the nation.[4]

    The table below notes what share of Alabama’s general revenues came from the federal government in 2014. That year, Alabama received approximately $8.0 billion in federal aid, 34.9 percent of the state's general revenues. Taking into consideration the state's 2014 population, this came out to about $1,653 in federal aid per capita. Figures from surrounding states are provided for additional context.[4]

    Federal aid to state budgets, 2014
    State Total federal aid ($ in thousands) Federal aid as a % of general revenues Ranking (by % of general revenues) Est. 2014 population Aid per capita
    Alabama $8,005,055 34.9% 14 4,843,214 $1,653
    Florida $25,468,800 33.2% 22 19,888,741 $1,281
    Georgia $14,327,475 36.7% 8 10,087,231 $1,420
    Mississippi $7,193,839 40.9% 1 2,992,400 $2,404
    Sources: United States Census Bureau, "2014 State and Local Government Finances," accessed June 26, 2017
    Note: Per-capita figures were generated by Ballotpedia by dividing total federal aid for the state by the estimated population of that state in 2014.

    Spending

    Estimated 2016 expenditures

    See also: Total state expenditures

    The table below breaks down estimated spending totals for fiscal year 2016 (comparable figures from surrounding states are included to provide additional context). Figures for all columns except "Population” and “Per capita spending" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the columns labeled "Population” and “Per capita spending" have not been abbreviated.[5]

    The total estimated government spending in Alabama in fiscal year 2016 was $26.4 billion.

    Total estimated state spending, FY 2016 ($ in millions)
    State State funds Federal funds Total spending Population Per capita spending
    Alabama $16,339 $10,135 $26,474 4,863,300 $5,444
    Florida $53,476 $24,921 $78,397 20,612,439 $3,803
    Georgia $34,102 $13,394 $47,496 10,310,371 $4,607
    Mississippi $12,728 $9,592 $22,320 2,988,726 $7,468
    Per-capita figures are calculated by taking the state's total spending and dividing by the number of state residents according to United States Census Bureau estimates.
    Source: National Association of State Budget Officers, "State Expenditure Report (Fiscal 2014-2016)," accessed June 26, 2017

    Spending by function

    See also: State spending by function as a percent of total expenditures

    State spending in Alabama can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2015 information is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percentages, indicating the share of the total budget spent per category.[5]

    In fiscal year 2015, education accounted for 41.6 percent of Alabama's total expenditures.

    State spending by function as a percent of total expenditures, FY 2015
    State K-12 education Higher education Public assistance Medicaid Corrections Trans-
    portation     		Other
    Alabama 20.8% 20.8% 0.1% 24.1% 2.4% 6.8% 25.1%
    Florida 18.8% 7.2% 0.3% 31.7% 3.8% 11.9% 26.3%
    Georgia 24.6% 18.7% 0.1% 21.9% 3.7% 5.5% 25.5%
    Mississippi 16.2% 18.4% 5.1% 24.8% 1.8% 6.2% 27.4%
    Source: National Association of State Budget Officers
    Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[5]

    Spending trends

    The table below details the spending trends in Alabama in previous years. Figures are rendered as percentages, indicating the share of the total budget spent per category.[1][6][7]

    Spending by function from 2010 to 2015 (as percentages)
    Year K-12 education Higher education Public assistance Medicaid Corrections Transportation Other
    2015 20.8% 20.8% 0.1% 24.1% 2.4% 6.8% 25.1%
    2014 20.5% 20.6% 0.2% 23.3% 2.4% 6.4% 26.6%
    2013 20.4% 19.9% 0.2% 22.8% 2.4% 6.5% 27.7%
    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%
    Source: National Association of State Budget Officers
    Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[5]

    State debt

    See also: Alabama state debt

    State debt refers to any debt owned by a state government. Debt may include any financial obligations a state has that have not been paid, such as bonds issued by state governments, money borrowed by a state government that has not been repaid, or post-retirement benefits promised to state employees. According to the U.S. Census Bureau, Alabama had a debt of $8,969,350,000 in fiscal year 2015. The state debt per capita was $1,848. This ranked Alabama 28th among the states in debt and 41st in per capita debt. The total state debt owned by the 50 states was $1.15 trillion with a per capita debt of $3,582.[8]

    Economic indicators

    See also: Economic indicators by state
    Alabama's GDP increased by 0.7 percent in 2014. Click the image to view a larger version.

    Broadly defined, a healthy economy is typically one that has a "stable and strong rate of economic growth" (gross state product, in this case) and low unemployment, among many other factors. The economic health of a state can significantly affect its healthcare costs, insurance coverage, access to care, and citizens' physical and mental health. For instance, during economic downturns, employers may reduce insurance coverage for employees, while those who are laid off may lose coverage altogether. Individuals also tend to spend less on non-urgent care or postpone visits to the doctor when times are hard. These changes in turn may affect the decisions made by policymakers as they react to shifts in the industry. Additionally, a person's socioeconomic status has profound effects on their access to care and the quality of care received.[9][10][11]

    In September 2014, Alabama had the lowest unemployment rate among its neighboring states, at 6.6 percent. This was higher than the national unemployment rate, however. The greatest portion of its population earned annual incomes between 200 and 399 percent of the federal poverty level, with a median annual household income of $43,330.[12][13][14][15]

    Note: Gross state product (GSP) on its own is not necessarily an indicator of economic health; GSP may also be influenced by state population size. Many factors must be looked at together to assess state economic health.

    Various economic indicators by state
    State Distribution of population by FPL* (2013) Median annual income (2011-2013) Unemployment rate Total GSP (2013)†
    Under 100% 100-199% 200-399% 400%+ Sept. 2013 Sept. 2014
    Alabama 17% 22% 33% 28% $43,330 6.4% 6.6% $193,566
    Georgia 16% 21% 32% 31% $47,753 8% 7.9% $454,532
    Mississippi 23% 20% 29% 28% $40,338 8.4% 7.7% $105,163
    Tennessee 18% 20% 34% 28% $42,785 8.2% 7.3% $287,633
    United States 15% 19% 30% 36% $52,047 7.2% 5.9% $16,701,415
    * Federal Poverty Level. "The U.S. Census Bureau's poverty threshold for a family with two adults and one child was $18,751 in 2013. This is the official measurement of poverty used by the Federal Government."
    † In millions of current dollars. "Gross State Product is a measurement of a state's output; it is the sum of value added from all industries in the state."
    Source: The Henry J. Kaiser Family Foundation, "State Health Facts"

    Budget process

    State documents and agencies
    Below are links to official Alabama budget and financial documents. The first is the state's Comprehensive Annual Financial Report (CAFR). A CAFR is a detailed presentation of a government entity's financial condition. This includes fiscal activities and balances for a fiscal year. The second link is to the state's relevant budget agency or office.

    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:[16]

    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. 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.
    4. The legislature adopts a budget between February and May. It must pass with a simple majority.

    The governor is required to submit a balanced budget to the legislature. In turn, the legislature must pass a balanced budget.[16]

    Alabama is one of 44 states in which the governor has line item veto authority.[16][17]

    Agencies, offices, and committees

    There are five major standing committees in the Alabama State Legislature that deal with budget and finance matters:

    1. Senate Finance and Taxation Education Committee
    2. Senate Finance and Taxation General Fund Committee
    3. House Ways and Means Education Committee
    4. House Ways and Means General Fund Committee
    5. Joint Finances and Budget Committee
    6. Ways and Means Education Committee, Alabama House of Representatives
    7. Ways and Means General Fund Committee, Alabama House of Representatives

    The duties of the Alabama State Auditor include auditing the records of the Alabama Treasurer and reporting the findings to the governor. The auditor is elected during federal midterm election years.[18]

    The Alabama Treasurer is the state's chief financial officer. The treasurer is also elected during federal midterm election years.

    Public Interest Research Group 2016 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 2016. The report, entitled "Following the Money," measured how transparent and accountable state websites were with regard to state government spending. According to the report, Alabama received a grade of D+ and a numerical score of 60, indicating that Alabama was "Lagging" in terms of transparency regarding state spending.[19]

    Budget and finance ballot measures

    Voting on state and local government budgets, spending, and finance
    State finance.jpg
    Policy
    Budget policy
    Ballot measures
    By state
    By year
    Not on ballot
    See also: Spending and finance on the ballot and List of Alabama ballot measures

    Ballotpedia has tracked 79 ballot measures relating to state and local budget and financial matters.

    1. Alabama Amendment 1 (2003)
    2. Alabama Phaseout of Supernumary Programs, Amendment 2 (1999)
    3. Alabama Cell Radio Tax, Amendment 1 (1998)
    4. Alabama Rainy Day Accounts, Amendment 1 (2008)
    5. Alabama Board of Education Expenditure Increase, Amendment 4 (2014)
    6. Alabama Capital Improvement Trust Fund, Amendment 2 (2014)
    7. Alabama Municipal Funding, Amendment 1 (1932)
    8. Alabama City Funding, Amendment 4 (1932)
    9. Alabama County Fees and Salaries, Amendment 7 (1932)
    10. Alabama Tax Office Salaries, Amendment 9 (1932)
    11. Alabama County Budget, Amendment 5 (1944)
    12. Alabama County Budget, Amendment 1 (1944)
    13. Alabama County Indebtedness, Amendment 9 (1946)
    14. Alabama Disbursement of Income Tax, Amendment 1 (1947)
    15. Alabama County Budgets, Amendment 2 (1947)
    16. Alabama County Budgets, Amendment 4 (1947)
    17. Alabama County Tax, Amendment 3 (1947)
    18. Alabama County Budget, Amendment 1 (1948)
    19. Alabama County Indebtedness, Amendment 2 (1949)
    20. Alabama County Budget, Amendment 4 (1949)
    21. Alabama County Budget, Amendment 8 (1951)
    22. Alabama County Budget, Amendment 13 (1951)
    23. Alabama Municipal Taxes and Bonds, Amendment 23 (1951)
    24. Alabama County Finances, Amendment 3 (1952)
    25. Alabama County Finances, Amendment 4 (1952)
    26. Alabama Public Indebtedness, Amendment 7 (1953)
    27. Alabama County Budget, Amendment 10 (1953)
    28. Alabama County Budget, Amendment 2 (1954)
    29. Alabama Municipal Indebtedness, Amendment 7 (1955)
    30. Alabama County Compensation Amounts, Amendment 10 (1955)
    31. Alabama County Budget Regulation, Amendment 11 (1955)
    32. Alabama County Budget, Amendment 17 (1955)
    33. Alabama County Budget, Amendment 24 and 25 (1955)
    34. Alabama Motor Vehicle Revenue Spending, Amendment 29 (1955)
    35. Alabama Government Spending, Amendment 3 (August 1956)
    36. Alabama County Budget, Amendment 6 (August 1956)
    37. Alabama Municipal Indebtedness, Amendment 11 (1957)
    38. Alabama Walker County Budget, Amendment 12 (1957)
    39. Alabama DeKalb County Budget, Amendment 20 (1957)
    40. Alabama Madison County Budget, Amendment 21 (1957)
    41. Alabama Colbert County Budget, Amendment 22 (1957)
    42. Alabama Cullman County Budget, Amendment 23 (1957)
    43. Alabama Dallas County Salaries, Amendment 24 (1957)
    44. Alabama Montgomery County Budget, Amendment 25 (1957)
    45. Alabama County Court Budget, Amendment 4 (1960)
    46. Alabama County Budget, Amendment 8 (1960)
    47. Alabama County Budget, Amendment 16 (1960)
    48. Alabama County Budget, Amendment 18 (1960)
    49. Alabama County Budget, Amendment 31 (1961)
    50. Alabama County Taxes and Bonds, Amendment 33 (1961)
    51. Alabama County Hospital Budget, Amendment 40 (1961)
    52. Alabama County Budget, Amendment 42 (1961)
    53. Alabama County Tax Limits and Debts, Amendment 2 (1962)
    54. Alabama County Budget, Amendment 6 (1963)
    55. Alabama County Taxes and Debts, Amendment 7 (1963)
    56. Alabama County Indebtedness, Amendment 10 (1963)
    57. Alabama County Budget, Amendment 1 (1964)
    58. Alabama County Budget, Amendment 2 (1964)
    59. Alabama County Budget, Amendment 4 (1964)
    60. Alabama County Budget, Amendment 9 (1965)
    61. Alabama County Budget, Amendment 11 (1965)
    62. Alabama County Budget, Amendment 13 (1965)
    63. Alabama County Budget, Amendment 21 (1965)
    64. Alabama Managing Natural Resources, Amendment 27 (1965)
    65. Alabama County Budget, Amendment 29 (1965)
    66. Alabama County Budget, Amendment 4 (1966)
    67. Alabama Limits of Indebtedness, Amendment 3 (1967)
    68. Alabama County Budget, Amendment 13 (1967)
    69. Alabama Local Corporate Budget, Amendment 15 (1967)
    70. Alabama County Budget, Amendment 10 (1969)
    71. Alabama County Budget, Amendment 17 (1969)
    72. Alabama County Tax Spending, Amendment 22 (1969)
    73. Alabama County Budget, Amendment 27 (1969)
    74. Alabama Tax Revenue Spending, Amendment 28 (1969)
    75. Alabama City Trust Funds, Amendment 9 (1998)
    76. Alabama Rules Governing Allocation of State Park Funds, Amendment 2 (2016)
    77. Alabama Amendment 7, Local Economic and Industrial Development Bonds and Financing Amendment (2022)
    78. Alabama Approval of Budget Isolation Resolution Proposing a Local Law, Amendment 14 (2016)
    79. Alabama Allow Franklin County Board of Education to Manage, Sell, or Lease Land in the Franklin County School System Amendment (2024)

    Budget and finance legislation

    The following is a list of recent budget and finance bills that have been introduced in or passed by the Alabama state legislature. To learn more about each of these bills, click the bill title. This information is provided by BillTrack50 and LegiScan.

    Note: Due to the nature of the sorting process used to generate this list, some results may not be relevant to the topic. If no bills are displayed below, no legislation pertaining to this topic has been introduced in the legislature recently.

    Recent news

    The link below is to the most recent stories in a Google news search for the terms Alabama budget. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

    Alabama state budget and finances - Google News

    Contact

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

    See also

    Footnotes

    1. ↑ 1.0 1.1 National Association of State Budget Officers, "State Expenditure Report (Fiscal 2014-2016)," accessed June 26, 2017
    2. ↑ 2.0 2.1 National Association of State Budget Officers, "State Expenditure Report: 2013-2015," accessed April 7, 2016
    3. ↑ 3.0 3.1 U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed June 26, 2017
    4. ↑ 4.0 4.1 United States Census Bureau, "2014 State and Local Government Finances," accessed June 26, 2017
    5. ↑ 5.0 5.1 5.2 5.3 National Association of State Budget Officers, "Summaries of Fiscal Year 2015 Proposed and Enacted Budgets," July 11, 2014
    6. ↑ National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
    7. ↑ National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
    8. ↑ United States Census Bureau, "State Government Finances," accessed June 4, 2017
    9. ↑ Academy Health, "Impact of the Economy on Health Care," August 2009
    10. ↑ The Conversation, "Budget explainer: What do key economic indicators tell us about the state of the economy?" May 6, 2015
    11. ↑ Health Affairs, "Socioeconomic Disparities In Health: Pathways And Policies," accessed July 13, 2015
    12. ↑ The Henry J. Kaiser Family Foundation, "Distribution of Total Population by Federal Poverty Level," accessed July 17, 2015
    13. ↑ The Henry J. Kaiser Family Foundation, "Median Annual Household Income," accessed July 17, 2015
    14. ↑ The Henry J. Kaiser Family Foundation, "Unemployment Rate (Seasonally Adjusted)," accessed July 17, 2015
    15. ↑ The Henry J. Kaiser Family Foundation, "Total Gross State Product (GSP) (millions of current dollars)," accessed July 17, 2015
    16. ↑ 16.0 16.1 16.2 National Association of State Budget Officers, "Budget Processes in the States, Spring 2021," accessed January 24, 2023
    17. ↑ National Conference of State Legislatures, "Separation of Powers: Executive Veto Powers," accessed January 26, 2024
    18. ↑ Office of the Alabama State Auditor, "Duties and Responsibilities," accessed May 23, 2011
    19. ↑ U.S. Public Interest Research Group, "Following the Money 2016 Report," accessed June 29, 2017
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