Update: Alabama Legislature

By SLRC Staff

Vol. 3, No. 2, 1981, pp. 18-19

The Alabama legislature returned to Montgomery on February 3rd to face critical budget problems which have been plaguing the state for years. Tax revenues earmarked for many functions of state government, especially the education system, are failing to keep pace with inflation and Alabama’s bare bones approach to government services is leading to drastic proposals to cutback public assistance and social welfare programs.

Many Alabama agencies are facing proration, or across the board percentage reductions, as revenue falls short of expectations. Ironically, under present funding systems, Alabama Education Association must defend the earmarked sales tax revenues on which the education budget depends against proposals to exempt food and drug items from the sales tax. Meanwhile, the state’s income and property taxes remain very low compared to other states.

With social programs already struggling to survive, Governor James has announced a goal of identifying $45 million of “excess and waste” in the current year’s budget in order to transfer monies to the State Department of Corrections’ expansion program. James hopes that program will convince the federal court to return the prison system to state control. such a transfer plan will be highly controversial, requiring legislative authorization.

Last year, the legislature agreed the state needed $407 million from the general fund, yet could promise only 75 percent of that total, making $109 million of “conditional” appropriations. Recurring proration and increasing “conditional” appropriations—only rarely granted—point to a need for substantial reform in the taxation and finance system in Alabama.

In his “state of the state” address to the legislature, however, James said no

---

Page 19

new tax proposals were needed and that “the ship of state” was leaky with misused funds and earmarked monies. The governor is asking the legislature to unfreeze funds designated for specific purposes by legislation and to establish an election on a constitutional amendment to release monies earmarked in the state constitution.

If successful, James would unfreeze funds from the state income tax, license taxes, some sales taxes, and fines from state game and fish laws violations.