2020 Regular Session of the Alabama Legislature Kelly Butler, - PowerPoint PPT Presentation

2020 Regular Session of the Alabama Legislature Kelly Butler, Director of Finance

State Budget Process • September – process begins with revenue estimating November 1 st - agencies begin submitting budget requests • • Budget Office staff receive and analyze requests • November/December – meetings with agencies to discuss their budgets • Late December/Early January - discuss priorities with the Governor and begin to formulate early drafts of the budget • Follow up meetings are held with agencies as necessary • The Governor holds meetings with legislative leadership to get their input on policy matters • Final decisions are made by the Governor up to the week before the Regular Session begins 2

Revenue Estimates and Economic Assumptions ➢ Alabama’s economy remains strong o In 2019 Alabama added, on average, 40,230 jobs per month o Unemployment rate was 2.7% for December 2019 ➢ We do not anticipate a recession through 2021 o U.S. economy (Real GDP) grew 2.3% in 2019 o Forecasted growth is 2.1% in 2020 and 2.1% in 2021 ➢ ETF Estimated revenue growth o FY2020 – 4.46% o FY2021 – 1.90% ➢ SGF Estimated revenue growth o FY2020 – 3.94% o FY2021 – 2.40% 3

Sales Tax Collections GROSS SALES TAX 12 MONTH ROLLING AVERAGE 8% 7% 6% 5.11% 4.74% 4.68% 5% 4.54% 4.39% 4.29% 4.30% 4.12% 3.89% 4% 2.99% 2.75% 3% 2.23% 1.90% 2% 1% 0% Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 4

Individual Income Tax Collections GROSS INDIVIDUAL INCOME TAX 12 MONTH ROLLING AVERAGE 10% 9.16% 9% 8.58% 8.29% 8.20% 8% 7.19% 7.15% 7.45% 6.65% 6.58% 7% 6.03% 6% 5.40% 5.16% 4.97% 5% 4.57% 4% 3% 2% Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 5

Total State Debt Outstanding General Obligation Bonds $658 million Revenue Bonds $4.05 billion o Public School & College Authority o State Port Authority o Economic Settlement o Federal Aid Highway Finance Authority o Incentives Finance Authority o Public Healthcare Authority o Building Renovation Finance Authority o 21 st Century Authority o Mental Health Authority o Revolving Loan Fund Authority Total State Indebtedness $4.70 billion (as of 9/30/19) 6

Debt Outstanding – Rank vs Other States Net Tax % of Supported National Per National Personal State Debt (in 000s) Rank Capita Rank Income Rank Alabama $4,285,571 25 $877 27 2.2% 27 Arkansas $1,782,522 38 $591 35 1.4% 31 Florida $17,302,435 9 $812 29 1.7% 30 Georgia $10,476,548 14 $996 26 2.3% 25 Kentucky $8,633,844 16 $1,932 12 4.8% 9 Louisiana $7,099,162 20 $1,523 17 3.5% 16 Mississippi $5,322,398 23 $1,782 14 4.9% 8 South Carolina $2,555,179 31 $503 39 1.2% 38 Tennessee $2,062,971 35 $305 44 0.7% 44 7

Total Annual Debt Service (in millions) $600 $500 $400 $300 $200 $100 $0 8

Rainy Day Accounts ➢ ETF Current available amount is $454,146,159 (6.5% of FY19 budget) o No outstanding amount to be repaid o ➢ SGF Current available amount is $212,295,186 (10% of FY19 budget) o No outstanding amount to be repaid o ➢ ATF Repayment Original amount withdrawn $437,390,829 o Amount repaid as of 9/30/20 $280,434,126 o o Remainder $156,956,703 Annual required payment $ 13,500,000 o 9

Alabama Trust Fund Offshore Royalty Receipts $400,000,000 $369,397,745 $345,231,494 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $47,694,378 $42,837,457 $50,000,000 $0 10

Alabama Trust Fund Assets (in millions) $4,000 $3,500 $3,146 $3,244 $3,294 $3,150 $2,934 $3,000 $2,788 $2,591 $2,539 $2,430 $2,543 $2,485 $2,490 $2,483 $2,500 $2,365 $2,300 $2,329 $2,090 $2,123 $2,000 $1,707 $1,500 $1,000 $500 $0 * 11

General Fund Revenue (in millions) $2,500 $2,152 $1,996 $1,920 $2,000 $1,851 $1,845 $1,755 $1,725 $1,684 $1,603 $1,517 $1,428 $1,500 $1,000 $500 $0 12

General Fund Expenditures (in millions) $2,500 $2,034 $1,897 $2,000 $1,854 $1,841 $1,824 $1,747 $1,727 $1,716 $1,686 $1,473 $1,535 $1,500 $1,000 $500 $0 13

ETF Revenue (in millions) $8,000 $7,215 $6,754 $7,000 $6,327 $6,073 $6,048 $5,679 $5,803 $6,000 $5,704 $5,683 $5,338 $5,217 $5,000 $4,000 $3,000 $2,000 $1,000 $0 14

ETF Expenditures (in millions) $8,000 $7,000 $6,616 $6,409 $6,325 $5,954 $5,878 $5,679 $5,731 $6,000 $5,678 $5,437 $5,341 $5,206 $5,000 $4,000 $3,000 $2,000 $1,000 $0 15

2021 Budget – Governor’s Proposal General Fund: Beginning balance $ 273 million Revenue $2.290 billion Available $2.563 billion Appropriations $2.563 billion Ending balance $0 16

2021 Budget – Governor’s Proposal Education Trust Fund: Beginning balance $0 Revenue $7.677 billion Appropriations $7.537 billion Ending balance $ 130 million 17