By Associated Press
Montgomery AL – Tax collections for the state education budget aren't coming in as fast as state officials planned, and they are talking about having to take an unusual step: making next year's school budget smaller than this year's.
Through the first three months of fiscal 2008, tax collections for education grew 4.2 percent, according to a report by the state Finance Department. The Legislature based the budget on 5 percent growth.
The education budget relies mainly on sales and income taxes, which rise and fall with the economy.
"I think the economy has clearly slowed down," state Finance Director Jim Main told The Birmingham News.
The fiscal 2007 budget, which wrapped up Sept. 30, had been based on 9 percent growth. But the state only recorded 6.5 percent. That meant there was less unspent money to carry over to this year's budget.
That shortfall, combined with lower-than-anticipated tax collections this year, means Gov. Bob Riley may have to spend part the $680 million the state has in reserve to brace up school spending during economic downturns, said state Sen. Hank Sanders, chairman of the Senate's education budget committee.
Sanders told The Birmingham News that the amount needed from the reserve fund could exceed $200 million.
Sanders said that when the Legislature convenes next month, the budget it writes for the 2008-2009 school year will likely be smaller than this year's $6.7 billion budget.
That will be an unusual turn for the Legislature which normally increases the size of the budget each year.
Main agreed the $6.7 billion figure "is not a sustainable level" for the next fiscal year, but he said it's too early to predict what the budget might total.
Gov. Bob Riley told the newspaper that he won't propose any state taxes or fees to shore up the education budget.
"I just don't think it's necessary," Riley said.
Riley said there should be enough money to fund core education programs for the next school year. "On some of the other issues that we have overfunded in the last few years, we may have to back up a little," he said without offering many details.
The state's General Fund budget, which finances non-education programs, is based on different taxes and revenue sources than the education budget. It grew 21.6 percent during the first three months of the fiscal year.
That growth included an unusually large payment of capital gains in state investments by the Alabama Trust Fund. The trust fund is a savings account for part of the royalties the state receives from natural gas wells drilled in state-owned waters along the Alabama coast.