State Budgets in “Pretty Good Shape”; Questions Remain on CARES Act Spending Plan
Updated: Jul 24, 2020
Montgomery, Ala. - State senators heard from agency heads and budget officials on the status of both the General Fund and Education Trust Fund budgets today in Montgomery. Though not currently in Session, Senators indicated in recent weeks they wanted updates to the fiscal health of both budgets entering a new fiscal year beginning on October 1st. Kirk Fulford, Deputy Director of the Alabama Legislative Services Agency, presented new numbers showing relative strength in the General Fund driven by online sales taxes from retailers like Amazon and EBay. Fulford said it was “not surprising” that online sales were up while court costs and lodging went down. The General Fund portion of the online sales tax has grown from $70 million to an expected $125 million in fiscal year 2020.
Fulford pointed out that the State has not been in proration, or mandatory cuts of budgets in the middle of a fiscal year, since 2012. The Legislature, led by General Fund Chairmen Representative Steve Clouse and Senator Greg Albritton, have been keen to carry significant sums of money over each year. This cushion has given what Fulford described as the ability to experience “zero growth” in the budget and still be able to meet all the fiscal year 2021’s obligations.
The prognosis for the Education Trust Fund was as Fulford put it a “different situation.” Because the income tax filing deadline was extended from April 15 to July 15 due to the Covid-19 pandemic, over $500 million less than expected has been received by the State. The ETF is almost exclusively funded by income and sales taxes, so hits to the economy are felt stronger in the ETF than in the General Fund. Still even with the uncertainty, the ETF has grown over 1% year to date. Fulford mentioned while both budgets are in “pretty good shape” another extended shutdown or severe economic pain could cause significant long term damage to the fiscal health of Alabama’s two budgets.
A link to Fulford’s presentation is here.
State Finance Director Kelly Butler also gave a presentation on the distribution of the CARES Act money that was allocated to the State by Congress. Nearly $4.1 billion across various agencies and programs were budgeted. In May, the Alabama Legislature appropriated about $1.9 billion under the Governor and Department of Finance’s control into different buckets ranging from broadband expansion, to reimbursements for cities and counties’ Covid-19 related expenditures, and additional testing. Butler described some of the expenditures that have already occurred including partnering with UAB on testing, a $100 million small business grant program, and $18 million to nursing homes for testing and proactive surveillance for healthcare workers.
Long-time broadband expansion advocate Senator Del Marsh inquired as to the status of the money set aside to help schools deliver distance learning to children who may not have the technology or internet connections necessary if another shutdown happens. Senator Bobby Singleton has also advocated for monies to be spent on nursing stations and testing machines in schools. Butler and other Senators noted that the money has to be spent by the end of the year otherwise it will have to be returned to the Federal Government. As of now, Butler stated that about $700-800 million has been pledged leaving approximately $1 billion left.