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Last updated 4:42AM ET
February 27, 2021
State Lawmakers Delay Budget Work Until After Easter
(APR - Alabama Public Radio ) - The chairmen of the Legislature's budget committees said Wednesday they will postpone work on the two state budgets until late March or April, which will give them better financial information about the size of budgets cuts that may be needed.

That is later than normal. But this is not a normal budget session because of the economic slowdown that will cause one or possibly both budgets to shrink.

Gov. Bob Riley is proposing big cuts in the education budget and level funding for most non-education agencies in the General Fund budget.

Sen. Hank Sanders, chairman of the Finance and Taxation-Education Committee, and Sen. Roger Bedford, chairman of the Finance and Taxation-General Fund Committee, told their committee members Wednesday that they won't take up the budgets until April.

Sanders, D-Selma, and Bedford, D-Russellville, said they want to see the state's tax collections for February and March before attempting to write the budgets.

"We are in financially uncertain times, with the price of oil going through the roof, interest rates dropping, and the stock market being unstable," Bedford said.

Riley's state finance director, Jim Main, told legislators that the governor was required by law to recommend budgets when the legislative session began Feb. 5, but the committees are wise to wait to gauge the impact of the economic slowdown before starting work on the governor's proposed budgets.

"It looks to me the path you have taken is the right path," Main said.

Normally, the House budget committee chairmen like to start work early in the session.

But Rep. John Knight, chairman of the Government Appropriations Committee, said he plans to take up the General Fund budget after the Legislature's Easter break. Knight, D-Montgomery, said the most likely dates are March 26 or April 2.

The chairman of the House Education Appropriations Committee, Rep. Richard Lindsey, D-Centre, said he also plans to wait until around April 1 to start on the education budget.

The budgets must be finished by the end of the legislative session in mid-May, and they will take effect Oct. 1.

Riley has proposed a $1.9 billion General Fund budget for the next fiscal year. That is up from $1.8 billion this year due mainly to capital gains from state investments. Under Riley's plan, most agencies get the same amount they are receiving this year, but Medicaid and prisons would get increases.

Joyce Bigbee, director of the Legislative Fiscal Office, told the committee that Riley's plan is based, in part, on investment gains that she does not feel comfortable counting. Bigbee estimates that next year's General Fund budget will have less revenue than this year's budget.

For the next fiscal year, the governor has recommended a $6.3 billion education budget, down from $6.7 billion this year. His proposed budget would cut appropriations for two-year and four-year colleges and K-12 schools to about what they received in fiscal 2007.

The budget cuts are due, in part, to the economic slowdown causing state sales tax collections to be flat and individual income tax collections to grow less than 1 percent. Also, the Legislature and other state officials did not anticipate how quickly the slowdown would occur and they overspent in the current budget.

State officials will have to take about $370 million out of a rainy day fund to balance this year's education budget, Main said.

Complicating the process is the federal economic stimulus package. It accelerates the depreciation schedule for businesses, and Alabama's depreciation schedule is tied to the federal schedule. That will mean a $59 million tax loss for the education budget.

In addition, the Republican governor and several Democratic legislative leaders have advocated removing the state income tax on the federal tax rebates received by Alabama citizens. Without that tax break, Alabamians would have to pay about $57 million in state income tax on their federal rebates, said Bigbee.

Paul Hubbert, executive director of the Alabama Education Association, said, "We can't take a double hit."

Sanders said he supports waiving the state income tax on the rebates, but the Legislature must find some way to replace the revenue.

Main said the governor is studying the situation, but stands by his proposal to remove the state income tax on the rebates.

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