On Tuesday, the Alabama Senate voted to concur with changes to the state general fund budget made by the House of Representatives last week. Governor Kay Ivey congratulated lawmakers following final passage.

“Here in Alabama, we continue budgeting wisely,” said Gov. Ivey. “Despite the tough national economic climate, our financial footing is strong, and we are able to make investments where they count – investments that will pay dividends for generations to come.”

Ivey said that she will sign the budget into law.

“While being good stewards of taxpayer dollars and ensuring our budgets are prepared for whatever may lie ahead, we are increasing funding in critical services like public safety and mental health care,” said Ivey.

Alabama House passes record $3.4B General Fund budget

The state legislature for since 2020 has been preparing for an economic downtown by carrying over money into the next budgetary year. Since no economic downturn has happened, the state carried over a sizable surplus from 2023 into 2024; thus allowing the Legislature to make a supplemental appropriation in the 2024 budget year. FY2025 will begin on October 1.

“Historically large revenues, high interest rates and our previous conservative budgets have led to Alabama’s general fund being stronger than ever,” said Rep. Rex Reynolds (R-Huntsville), chair of the House Ways and Means General Fund Committee.

“We’re blessed to be operating from a position of surplus, but it’s also important that we recognize this unprecedented growth is not sustainable long term and remain committed to the conservative budgeting practices that got us here. This year’s General Fund budget and its supplemental appropriation reflect my committee’s commitment to being responsible with taxpayer dollars, and I sincerely appreciate the body voting unanimously to approve them today.”

The House-passed budget is $3,410,393,112 — up from the FY2024 budget of $3,013,400,381.

The supplemental appropriation allocates $2,243,062 from the Youth Services Reimbursement Fund to the Department of Youth Services; $300,000 from the Veterans’ Assistance Fund to the Department of Veterans’ Affairs; and $253,875,169 from the SGF to various state agencies.

Both bills were sponsored by Sen. Greg Albritton (R-Atmore) who chairs the Senate Finance and Taxation General Fund Committee.

Albritton offers insight into general fund budget decision-making philosophy at BCA

The State of Alabama uses a budgeting system in which over 84% of the money is earmarked to a certain fund and the state has two pots of money, the SGF and the education trust fund (ETF). The Alabama Department of Transportation is funded through fuel taxes outside of the two budgets.

The ETF funds K-12 schools, the two-year college system, the four-year colleges, early childhood education, and universities, and education related agencies such as archives and history. The ETF is funded by personal and corporate income taxes.

The Alabama Departments of Corrections, Medicaid, Commerce, Public Health, Mental Health, the Alabama Law Enforcement Agency, as well as courts and district attorneys are just some of the agencies appropriated by the general fund.

The General Fund is funded by use taxes on online purchases, insurance taxes, utility taxes, a portion of the property tax, and interest income on the money held in trust in the Alabama Trust Fund.

“I look forward to putting pen to paper and officially signing this budget into law,” Ivey concluded.

“Managing a multibillion-dollar budget and ensuring every state agency is sufficiently funded is undoubtedly one of the most difficult jobs in state government, and I couldn’t be prouder of how Chairman Reynolds and his committee have stepped up to the task. Our wise investments today will lead to a stronger Alabama of tomorrow.”

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