Economy, budget numbers differ

By Staff
Rep. Johnny Mack Morrow
You know there is a problem when two groups of people can look at the same thing and come up with very different answers. That is exactly what is happening as we move forward on the General Fund Budget, the part of the state government covering everything from state troopers to healthcare.
Last week Gov. Riley's finance director Jim Main was invited to the House General Fund Committee to explain the administration's budget. Now the governor and the Legislature see the same need to put more troopers on the highways, get more children health insurance, and take care of the priorities of the people. We are also looking at the same economic forecasts that tell us how much funding there will be next year, but here we come to very different conclusions.
The Riley administration's estimate of revenues for next fiscal year is about $210 million higher than the current estimate of the Legislature. The governor's budget anticipates $1.9 billion in income for the state General Fund through funds generated from the oil and gas trust and earmarked taxes. But the Legislative Fiscal Office estimates revenue flowing into state coffers for the General Fund will be more like $1.7 billion. It is pretty normal that there are differences between estimates, but not that large of a gap.
The difference between the two estimates is so large that under the governor's plan the state would spend $100 million more than in the current fiscal year, while the legislative estimate is $100 million less, and would mean cuts for that amount in already strapped programs.
There are two main differences between the two revenue projections. First, the governor hopes that state investments from oil and gas revenues will bring $117 million, much higher than the Legislature. Second, that the Legislature will pass a change in the way major companies pay taxes on oil and gas drilled in Alabama, from an estimated value tax to a "pay-as-you-pump" rate. The administration hopes this will generate another $40 million. The problem with these two things is that there is no guarantee for either coming true.
It didn't help matters that after the budget committee hearing, Main reportedly shrugged his shoulders and said the governor had done his duty. "It's our job to present the budgets and it's the legislative branch's job to pass them," Main was quoted as saying in the press.
It is in our state constitution to pass balanced budgets. We cannot pass a budget that is more than $200 million out-of-whack, regardless of what the governor says. We are already looking to tighten spending wherever we can, but you cannot and should not cut in so many vital areas.
"You certainly don't want to pass a budget that when you pass it, you know you're $200 million in the hole. I think it's irresponsible," said Rep. John Knight (D-Montgomery), chairman of the General Fund committee.
One bright note is that the legislative projections are better than they were a few months ago, and may still further improve with the actions that federal authorities have been taking to boost the economy. As we move through the budget process and the session continues, maybe we'll have less dire revenue numbers to work with.
But Knight and many of us are convinced that the Legislature's numbers are closer to reality that what the governor has put out there. It is the House's responsibility whether to accept Riley's budget or lower revenue projections and reduce spending.
That is a grave responsibility, and one we take seriously.
Johnny Mack Morrow is a state representative for Franklin County. His column appears each Wednesday.