Fiscal year 2011 better, not great

Published 11:10 pm Friday, November 5, 2010

We are now a month into the 2011 fiscal year for Alabama state government. For decades, we have started our budgetary calendar on October 1, and this first month provides an indicator of where revenue for things like schools, public safety and health care will be.

What we see is this: it could be worse, but it is nowhere near what it needs to be. Let’s explain.

The state economy is obviously starting to rebound on a consistent basis. We have had five straight months of improvement in unemployment, dropping from a peak of 11.8 percent down to 8.9 percent in September. It is still much too high, and there are areas where that number is much higher still, yet the positive trend is important and it indicates there will be further improvement.

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The advancement on jobs and economic growth should have an impact on the single largest part of state spending, the education budget. All state income and sales taxes are earmarked for education, providing six out of every 10 dollars spent on Alabama schools. When the economy first went into recession starting in 2007, those two revenue streams dropped sharply.

It caused two straight years of proration, which is mid-year budget cuts, to keep spending in line with revenue. The revenue drop overall was more than 20 percent, an unprecedented loss. Governor Riley will be the first governor in Alabama history to preside over back-to-back years of proration without proposing one measure to improve revenue. To add insult to injury, he had to declare proration again in September, cutting another 2.5 percent just before the old fiscal year ended.

Proration last year would have been much worse if it weren’t for $500 million emergency school funds from stimulus funds. That money prevented any layoffs of teachers paid for by state funds, and saved thousands of other school jobs. Alabama will rely on another $500 million from the same stimulus for the 2011 fiscal year.

It is important to remember that the budgets that have been passed in the last two years are as bare-boned as possible. New textbook purchases and classroom supplies were eliminated, older buses were kept in service longer, technology upgrades put on hold indefinitely, and every other place that could be cut was cut.

The improving economic numbers after the first month of 2011 budget year indicate our revenue situation has stabilized.

However this is not great news, not where we need to be, because we will not start making up the one-in-five dollars we invested in schools just three years ago. With that investment, we saw great gains in student achievement, and there is always worry that those gains could be lost if we are forced to gut the initiatives in Reading, Math, Science and Technology.

In just a few months a new Legislature will start on the 2012 education budget, and concerns are already growing. There are no more stimulus dollars, and so we start without $500 million, more than 10 percent in the hole. The question is, can the growing economic rebound generate enough revenue to fill that hole, or will the new governor either propose new taxes or declare proration again?

That is why the state budget answer is ìit could be worse.î We see improvement, but it is uncertain it will be enough to avert further pain, let alone make up what was lost.

AJ McCampbell is a state representative for Marengo County.