State General Fund revenues barely grew in the first three months of fiscal 2021 compared to the previous year, and that may make lawmakers cautious with the budget they'll begin preparing in February.
Revenues from the start of fiscal 2021 on Oct. 1 through December grew about 0.67% over 2020.
“There are revenue sources that are doing extremely well, there are revenue sources that are still feeling the impact of COVID and the net of that is $3.6 million dollars and a little less than 1% growth,” Kirk Fulford, deputy director of the Legislative Services Agency, told the Senate General Fund budget committee Thursday.
By comparison, the General Fund’s more than 40 revenue streams saw a net growth of about 10% in the first three months of 2020 and ended the year in September with about 7% growth.
Fulford told lawmakers that the current spending budget is in very good shape.
“But that doesn’t mean there aren’t issues you shouldn’t pay attention to,” Fulford said.
He noted that on monthly revenue reports, growth in the General Fund appears to be much larger, but that is because of some reporting anomalies and changes in deposit timing.
“Most of the growth is timing issues that will straighten themselves out as we go through the year,” Fulford said.
Data reported in September showed that though some of the dozens of tax revenue streams that flow into the General Fund and education budgets withered when the coronavirus came to Alabama, overall, both funds’ revenues were up in 2020 compared to 2019. Neither needs growth in tax revenue to cover planned spending in 2021, $2.39 billion in the General Fund and $7.2 billion in the Education Trust Fund.
Meanwhile, the General Fund started the year with a beginning balance of more than $400 million.
“There is a cushion there in the event that things turn really bad in the next few months, which I don’t anticipate,” Fulford said.
When lawmakers begin the regular legislative session Feb. 2, they’ll hear fiscal 2022 budget projections and funding requests from state agencies supported in the General Fund.
Committee chairman Sen. Greg Albritton, R-Range, said for 2022, state leaders need to be “cautious and real about what our needs are.”
“We have grown accustomed to increasing revenues in the General Fund, we’ve been accustomed to double-digit growth and my concern is everyone’s expectations are for a continuation of what we’ve had,” he said. “I’m just concerned that while we’ve got some padding, we’re not in trouble, I just want everyone to take a deep breath and figure out, just what do I really need.”
Fulford said some timing issues are also impacting the Education Trust Fund, and its real growth so far this year is about 5.43%.
“However, please remember that timing issues occur each year in both budgets, so this is nothing out of the ordinary,” he said.