Alabama lawmakers begin their regular session on March 1. It promises to be a historic session of the Alabama Legislature as it is the first time that body has been dominated by Republican legislators since 1874. The predominately Republican Legislature, along with newly-elected Republican Governor Robert Bentley, come to power at a time when state fiscal concerns are significant and the resources to address those concerns are sparse.
Recently, at organizational meetings of the legislative members in Montgomery, the Legislative Fiscal Office ("LFO") presented some very sobering information to assist legislators in the upcoming budgetary process.
Specifically, LFO advised legislators that the Alabama Education Trust Fund ("ETF") is currently facing a deficit of more than $126 million for fiscal year 2011. Even more disturbing was the revelation that given current information, LFO predicts that the ETF will face a shortfall of more than $687 million in the 2012 fiscal year.
Likewise, Alabama's General Fund is facing substantial deficits. LFO estimates that the General Fund will have a shortfall of over $131 million for fiscal year 2011 and a staggering $554 million in fiscal year 2012.
Of course, it should be noted that these numbers are current estimates and may improve somewhat if tax collections continue to improve. The Alabama Department of Revenue recently released information that through January, total tax collections were up 6.2% for the current fiscal year over the previous fiscal year. Those collections are still far below the levels seen in the pre-Great Recession days, but trending in the right direction.
Even with improved tax collections, it is likely that the Alabama Legislature and Governor Bentley will be forced to make significant cuts in state spending in the near future.
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