Legislative Wrap-Up, 0714 ALBJ, 75 The Alabama Lawyer 270 (2014)
| Author | Othni J. Lathram, J. |
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The State Budgeting Process
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Over the past few years, there has been more focus and inquiry into the budgeting process for state government. While our state government has always been fairly lean, the recent economic downturn made our budgets and the way in which they are formulated even more newsworthy. I rarely talk to a group of lawyers about the legislature or legislative process without being asked a number of questions about the state budget. Therefore, I thought it worthwhile to shed some light on that process.
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Any discussion about our budgets to an audience of lawyers must include first noting the tremendous leadership in this arena by a few members of the Alabama State Ban. Senator Arthur Orr of Decatur and Representative Bill Poole of Tuscaloosa chair the Senate Finance and Taxation General Fund and House Ways and Means Education Committees respectively1 These lawyer-legislators bring tremendous dedication and skill to what are often very thankless jobs and, as citizens, we are fortunate that they are willing to serve. Additionally, Norris Green serves as director of the Legislative Fiscal Office. The Legislative Fiscal Office is comprised of non-partisan professionals, many of whom are lawyers, who assist the legislature with all aspects of budgetary, revenue and fiscal inquires and staff the budget committees. He has graciously agreed to share insight and analysis of the process.
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Alabama's Budgeting Process
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Discussion of the budgeting process in Alabama should begin with a recap of how we predetermine or earmark state tax revenues that are appropriated by the legislature.
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0■ Earmarking of State Funds
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Alabama earmarks approximately 86 percent of its revenues for specific purposes, which is more than any other state. According to the National Conference of State Legislatures, the average of earmarked state funds in other states is around 24 percent.2
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Over 52 percent of state funds (approximately $6 billion) for FY 2014 are earmarked either by the Alabama Constitution or state law for educational purposes. The legislature decides how to allocate these funds but all must be used for education. About 32 percent of state funds (approximately $3.5 billion) for FY 2014 are earmarked for a variety of other state programs. For example, gasoline taxes are distributed to the Public Road and Bridge Fund to be used for roadways and traffic enforcement. Cigarette taxes are distributed to several health-related programs such as the departments of Public Health, Mental Health and Human Resources. Certain provider taxes paid by health care providers are dedicated for t he Medicaid program to be used to match federal funds. Other agency-generated revenues, such as license fees and publication sales, are retained by the respective agency. The remaining state funds are considered general revenues that may be appropriated by the legislature for any lawful purpose and comprise 16 percent of state funds for FY 2014 [approximately $1.75 billion).3
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0A primary focus of the legislature each year is the budgetary process. The above-mentioned appropriations to education are contained in a single bill and the appropriations from the State General Fund for other functions of government are made in the General Appropriations Act, also a single bill. Although all funds must be appropriated in order to be expended, there is usually less attention paid to the appropriation of the other earmarked funds since state law dictates how those funds are to be expended. These funds are also appropriated in the General Appropriations Act. When federal and local funds are added, the appropriation of funds by the legislature for FY 2014 totaled over $28 billion in the two budget acts.4
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The Budget Process Cycle
\xA0\xA...
To continue reading
Request your trial