Free Report About Review Of State Budget – Alabama

Review of State Budget

Budget reviews are a comprehensive examination of state funds and their appropriations in order to fulfil the state’s obligations to its citizens. It assesses not only the budget estimations, but also the reviews the earmarked funds and expenditure. The state of Alabama has a two separate earmarked revenue model, one being the General Fund Budget and the other is a fund for education. The paper is a review of the state of Alabama general fund budget and the Education Trust Fund budget for the financial years 2014, 2015 and 2016.
The Executive Budget Office (EBO), a segment of the financial division of Alabama is responsible for overseeing the state budget. It makes recommendations on appropriations, execution of the budget, makes estimations, and fiscal analysis of previous years. The EBO sends budget instructions and forms to agencies at the end of the month of August. These forms instruct the agencies to prepare planning documents such as their preliminary budget indication the projections on mandatory growth, reduction of current services if requested and the expansion of current and new programs. The EBO also advises the Governor on appropriations and fiscal matters concerning the state.
The EBO officers divide the budget into different agencies under the legislative, judiciary, and the executive. These are the main bodies under which agencies fall. However, there are other appropriations such as Law Enforcement Funds and Election Expenses. Transfers of Departmental receipts are also included in the budget, as well as, the budget to non-state agencies such as the Network for Child Advocacy. Conditional appropriations in a budget arise when there are excess revenues in budget excluding the beginning balance of a budget. They include budget items such as employees’ pay raise, crime victims’ compensations, and Medicaid Agency appropriations. Agencies may also transfer funds to the State General Fund. According to the financial year 2014, the agencies’ transfer to the state general fund was over twenty-three million U.S. dollars. The designated funds were; however, fifteen million U.S. dollars indicating that the agencies transferred more funds to the state general fund .
The Education Trust Fund (ETF) in Alabama is founded to promote, support, maintain, and develop public education in Alabama. It also helps the EBO make capital improvements to the educational facilities and finance programs that relate to the education of the citizens of Alabama. Budget reports indicates that twelve different taxes in Alabama contribute to the ETF; the largest tax contributions coming from individual and corporate income tax, sales tax, utility tax, and use tax. Analysis if previous budgetary reports also indicate that the ETF makes up for more than half of the state funds of Alabama. The ETF supports agencies under programs under the legislature such as the Examiners of Public Accounts, the judiciary such as the Supreme Court Law Library and the executive that has the most agencies such as the Youth Service Department and the Historic Blakely Authority. The ETF also supports the K-12 program, public library services, the performing, and visual arts programs, as well as, various scholarship programs for citizens and non-citizens .
There are certain benefits to having Alabama’s two separate earmarked revenue budget. One is that there is certainty of funds availability to education, which is a key state service to its citizens. However, a significant issue arises from this model. In case the revenues fall short of the planned expenditure, the legislature makes budget cuts on the assigned revenues. Due to the separation model, the education budget will undergo cuts and cannot borrow funds from the earmarked revenues from the State General Fund. In the past, this has resulted in numerous cuts to the ETF and this undermines education .

References

Alabama Department of Finance. (2015). General Fund 2015-2016 Governor's Budget; Education Trust Fund 2015-2016 Governor's Proposed Budget. Retrieved from budget: http://www.budget.state.al.us/