With the unanticipated slowdown in the Alabama economy caused by proactive measures meant to limit the spread of coronavirus, the possibility of proration, a dirty word in Montgomery circles, has been raised.
When proration is declared, state agencies are forced to decrease expenditures through the remainder of the fiscal year. However, State Finance Director Kelly Butler says Alabama is not to that point yet.
During an appearance on Alabama Public Television’s “Capitol Journal,” Butler laid out the state’s financial situation, noting that things were in a good place prior to the COVID-19 disruption.
“For those that might be listening, Alabama’s fiscal year runs from October 1 through September 30,” he explained. “So, we are halfway through that fiscal year. And up until this COVID-19 epidemic and the resulting economic slowdown, our economy was running strong. Unemployment was very low. Tax revenues were reflective of that. We were showing growth of revenues greater than our expectations through the first six months of the fiscal year, October through February. And really, we just got the March reports, and they were also still showing strong growth in income and sales tax. And that’s to be expected since that’s primarily based on February economic activity before the slowdown. That helps us be prepared for this fiscal year through September to sort of have some money in the bank from better than expected revenues to help deal with shortfalls that we know are coming.”
Butler said for those reasons and other responsible actions taken by the governor and the legislature, he was not expecting proration this fiscal year.
“At this point, we’re still not anticipating having to prorate either budget,” Butler said. “But we are watching the revenues closely, and we will take whatever action is necessary. For the general fund, the SSUT has been one factor that has helped it to be more able to meet the needs on the expenditure side that are in the general fund. It’s also an economic-driven tax. Legislatures have put more growth taxes into the general fund, which has helped. I think the other thing that has helped is the governor and the legislative leadership has been conservative in budgeting the general fund and leaving balance available, which will also help fund the general fund this fiscal year.”
@Jeff_Poor is a graduate of Auburn University and the University of South Alabama, the editor of Breitbart TV, a columnist for Mobile’s Lagniappe Weekly and host of Huntsville’s “The Jeff Poor Show” from 2-5 p.m. on WVNN.
Don’t miss out! Subscribe today to have Alabama’s leading headlines delivered to your inbox.