State’s economic outlook bleak, says Newton
Rep. Charles Newton didn’t want to paint a completely gloomy forecast for the state’s future economy, but he made it clear that the state’s budget for 2011 was looking bad, and 2012 was looking even worse.
“I don’t want to sound too pessimistic,” Newton said during a speaking engagement with the Luverne Kiwanis Club. “I wish I could give you a positive outlook of the economy and our budget for next year, but you’re not going to hear that from me today.”
Newton explained that the revenues coming into the state for the coming fiscal year were simply “not enough.”
“Two years ago, our education budget, which is the biggest budget in the state, was $6.7 billion, and that year, we used $439 million from the Proration Prevention Account for level funding.”
During 2008-09, Newton said, the education budget was cut to $5.9 billion, and $400,000 from the Rainy Day Fund was used to make up some of the shortfall.
“It looks like next year’s education budget will be $5.3 billion, which means it has gone down 21 percent in two years,” he said.
Millions of dollars came to Alabama’s education system last year due to President Obama’s stimulus package, which helped with some of the cuts.
“It (the stimulus package) did save some jobs in Alabama, but we don’t have those reserve pools of money for next year,” he said.
Alabama’s education budget is funded through sales and income taxes, and with a ten percent unemployment rate in the state right now, those taxes have been slashed as well.
“When will the economy turn around? Everyone wants to know—I wish I could give you an answer,” Newton said.
Gov. Bob Riley is concerned about the lack of revenues coming in that support the General Fund Budget, Newton said, which was $1.7 billion for 2008-09. However, millions of that was provided by stimulus package money that will no longer be available.
Some of the state agencies, such as the Department of Human Resources, the court systems, the Department of Public Safety, and the Department of Public Health, receive approximately 25 percent of their allocated funds from the state quarterly; however, next year, they will only receive 22 percent quarterly, according to Newton.
“If the funds are there in the fourth quarter, those departments would get the balance of their allocations, but next year, it will probably be different,” he said. “It looks like we’re out of solutions—it’s going to be tough.”
But the Representative from Greenville did not want to end on such a negative note.
“We need to just hold on tight, ride the wave, and wait for better circumstances,” he said. “We don’t need to surrender or give up—that’s the policy we need to adopt right now.”