Alabama Gov. Kay Ivey to request increases in state budgets; caution urged

Alabama’s state finance director said today Gov. Kay Ivey would request increases in the state’s General Fund and education budgets but cautioned that lawmakers should prepare for leaner times.

Finance Director Bill Poole gave a presentation to lawmakers on the budget committees on the first day of the legislative session.

Poole and Legislative Fiscal Officer Kirk Fulford, whose presentation included state and national economic trends, both said an unusual surge in tax revenues the last couple of years is ending and that legislators should budget accordingly.

Poole said the governor’s requested education budget calls for spending $8.79 billion from the Education Trust Fund next fiscal year, which starts Oct. 1. That’s a 6.5 percent increase over this year, which was the largest budget ever.

Poole said Ivey’s priorities include a tax rebate, debt retiring, capital projects for K-12 schools and higher education, workforce development, prison education, teacher compensation, expansion of the state’s pre-kindergarten program into high-needs areas.

Another priority will be funding to support the Literacy Act and the Numeracy Act, initiatives aimed at improving reading and math instruction in the earliest grades. “We want to make sure those are fully implemented to their greatest capacity,” Poole said.

For the General Fund budget, which pays for non-educational state programs and services, Ivey is requesting $2.97 billion for fiscal year, 8.4 percent more than this year.

Poole said priorities on the General Fund side include increasing a reserve fund, a substantial increase in state employees’ insurance costs, and rising costs for Medicaid and the Alabama Department of Corrections.

A federal funding boost Congress provided states for Medicaid during the pandemic is coming to an end, and Poole said that would increase the state’s costs for the program, which provides some form of services to about one million Alabamians.

The ADOC faces a substantial increase in healthcare costs for inmates and rising costs associated with trying to fix a severe shortage of correctional officers.

Poole said tax revenues that support the education budget grew 20.5 percent last year, and those that support the General Fund rose 8.4 percent, both extraordinary numbers.

“So far out of the normal historic trend it’s hard to even imagine that,” Poole said.

In contrast, projected revenue growth for this year is about 1 percent for the education budget and 3 percent for the General Fund.

“We’re seeing some flattening on the education side, particularly,” Poole said.

Ivey is expected to give more details about her proposals during her State of the State address tonight.