Government Faring Better Than Taxpayers
Despite projected budget shortfalls, Alabama state government is in better financial shape than most of the state's residents, according to a report presented at the Alabama Farmers Federation's Commodity Producers Conference.
Dr. Dwight Steedley, a mathematician who lives in Mobile County, noted in the report that government spending is growing almost twice as fast as taxpayers' income.
"During the ten-year period from 1992-2001, total revenue for the state of Alabama increased from $10.5 billion to $17.9 billion--an increase of 70 percent," Steedley said. "During the same period, Alabama's per capita income increased from $17,400 to $24,477, an increase of 40 percent. Thus, state government had a 70 percent increase in income, while individuals had only a 40 percent increase in income."
Steedley pointed out that Alabama's practice of writing budgets based on projected revenues has made it almost impossible for taxpayers to keep pace with government spending. In contrast, he said Colorado has controlled spending by limiting the growth of its budgets to inflation plus population growth. Had Alabama started using that formula in 1997, Steedley said the state would have a budget surplus this year of $2 billion-$3 billion instead of a projected shortfall of $675 million.
Steedley went on to say that it should be easier for state government to cut spending than for taxpayers to cough up another $1.2 billion for Gov. Bob Riley's tax package.
"The governor and many others around the state are telling us that Alabama, which ranks 23rd in total revenue and 28th in per-capita revenue, cannot cut $675 million from an approximately $17 billion budget," Steedley said. "Yet, they say that the people of Alabama who rank 43rd out of 50 states in per-capita income should have no problem paying an additional $1.2 billion in taxes."
Gov. Riley claims he has cut $230 million in wasteful spending from state budgets since taking office, but Steedley said these savings represent only a small fraction of the state's total revenue.
"This 1.2 percent savings (in a $17 billion budget) is the equivalent of someone who makes $24,000 a year saving 79 cents a day--the price of a Coke," Steedley said. "The total projected shortfall faced by the state is $675 million, which is 3.9 percent of the 2002 expenditures. To cover a 3.9 percent deficit, someone making $24,000 a year would have to save $2.56 a day--approximately the price of a sandwich."
Steedley's analysis of U.S. Census Bureau and Alabama Department of Revenue reports also showed that Alabama's government revenues are higher than neighboring states on a per-capita basis, even though Alabama taxpayers typically make less than people in other states.
In 2001, Steedley said Alabama government received $1,164 more per person than the state of Florida. Yet, people in Florida made $4,571 more per person than Alabama taxpayers. Steedley's report showed Alabama state government had more money available to spend per person than the governments of Georgia, Tennessee and Texas, but Alabamians' personal incomes lagged far behind those states.
Of the states he studied, only Colorado's government received more money per person than Alabama, but its per-capita income was $8,978 more than Alabama's.
"The people of Alabama have a per-capita income that is $4,455 less than the average per-capita income of the people in these five states, yet Alabama's per capita tax burden is greater," Steedley concluded. "For the people of Alabama to have a per-capita tax burden equivalent to the people of these five states, Alabama would have to cut taxes by $1.4 billion."