State Budget Process

• September – process begins with revenue estimating

• November 1st - 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

➢Alabama’s economy remains strongo In 2019 Alabama added, on average, 40,230 jobs per montho Unemployment rate was 2.7% for December 2019

➢We do not anticipate a recession through 2021o U.S. economy (Real GDP) grew 2.3% in 2019o Forecasted growth is 2.1% in 2020 and 2.1% in 2021

➢ ETF Estimated revenue growtho FY2020 – 4.46%o FY2021 – 1.90%

➢ SGF Estimated revenue growtho FY2020 – 3.94%o FY2021 – 2.40%

Revenue Estimates and Economic Assumptions

3

Sales Tax Collections

4

2.23%1.90%

2.75%2.99%

4.39%4.68%

4.29%4.74%

4.30%

5.11%

4.54%4.12%

3.89%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Jan-

18

Feb-

18

Mar

-18

Apr-1

8

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr-1

9

May

-19

Jun-

19

Jul-1

9

Aug-

19

Sep-

19

Oct

-19

Nov

-19

Dec

-19

GROSS SALES TAX

12 MONTH ROLLING AVERAGE

Individual Income Tax Collections

5

4.57%

5.16%

6.65%7.15%

8.58%8.29%

5.40%4.97%

9.16%

7.45%

8.20%

6.03%

7.19%

6.58%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Jan-

18

Feb-

18

Mar

-18

Apr-1

8

May

-18

Jun-

18

Jul-1

8

Aug-

18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr-1

9

May

-19

Jun-

19

Jul-1

9

Aug-

19

Sep-

19

Oct

-19

Nov

-19

Dec

-19

GROSS INDIVIDUAL INCOME TAX

12 MONTH ROLLING AVERAGE

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 21st Century Authority

o Mental Health Authority

o Revolving Loan Fund Authority

Total State Indebtedness $4.70 billion (as of 9/30/19)

Total State Debt Outstanding

6

Debt Outstanding – Rank vs Other States

7

Net Tax % ofSupported 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

8

Total Annual Debt Service (in millions)

$0

$100

$200

$300

$400

$500

$600

Rainy Day Accounts

➢ETFo Current available amount is $454,146,159 (6.5% of FY19 budget)o No outstanding amount to be repaid

➢ SGFo Current available amount is $212,295,186 (10% of FY19 budget)o No outstanding amount to be repaid

➢ATF Repaymento Original amount withdrawn $437,390,829

o Amount repaid as of 9/30/20 $280,434,126

o Remainder $156,956,703

o Annual required payment $ 13,500,000

9

Alabama Trust Fund Offshore Royalty Receipts

10

$369,397,745$345,231,494

$47,694,378$42,837,457

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

$400,000,000

Alabama Trust Fund Assets

11

(in millions)

$1,707

$2,090 $2,123 $2,329

$2,539 $2,788

$3,150 $2,934

$2,485 $2,490 $2,483 $2,365 $2,300

$2,591 $2,430

$2,543

$3,146 $3,244 $3,294

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

*

General Fund Revenue

12

(in millions)

$1,603$1,428

$1,517$1,684 $1,725 $1,755

$1,851 $1,845$1,920

$1,996$2,152

$0

$500

$1,000

$1,500

$2,000

$2,500

General Fund Expenditures (in millions)

13

$1,716

$1,473 $1,535$1,686 $1,727 $1,747

$1,824 $1,854 $1,841$1,897

$2,034

$0

$500

$1,000

$1,500

$2,000

$2,500

ETF Revenue (in millions)

14

$5,679

$5,217 $5,338$5,704 $5,683 $5,803

$6,048 $6,073$6,327

$6,754$7,215

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

ETF Expenditures (in millions)

15

$5,679

$5,206 $5,341$5,678

$5,437$5,731 $5,878 $5,954

$6,325 $6,409 $6,616

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

General Fund:

Beginning balance $ 273 million

Revenue $2.290 billion

Available $2.563 billion

Appropriations $2.563 billion

Ending balance $0

2021 Budget – Governor’s Proposal

16

2021 Budget – Governor’s Proposal

17

Education Trust Fund:

Beginning balance $0

Revenue $7.677 billion

Appropriations $7.537 billion

Ending balance $ 130 million