Report: Alabama's process to estimate revenues lags those of other states

Alabama should improve the way it estimates revenues to create a more fiscally responsible budget, according to a new report released Aug. 7, 2014, by the Center on Budget and Policy Priorities (CBPP), a nonprofit research organization in Washington, D.C. In the report’s evaluation of how states estimate annual revenues, Alabama scored only a 1 on a scale of zero to five because it lacks some practices that Kentucky, Louisiana and other states use to help create strong estimates to guide state spending.

“Our state’s revenue estimating process has room for improvement,” Arise Citizens’ Policy Project executive director Kimble Forrister said. “Lawmakers should reform it to improve fiscal discipline and create a more robust debate about how Alabama raises and spends money.”

Alabama annually estimates how much money it will take in during the next fiscal year. Lawmakers use those figures to decide how much the state can invest in schools, health care and other vital public services. But having separate estimates from the governor and the Legislature risks confusion.

Among CBPP’s recommended reforms for Alabama’s revenue estimating process are:

  • The governor and Legislature should jointly produce revenue estimates. Consensus forecasts would reduce the odds of budgetary gridlock and increase the revenue estimates’ value as a trusted starting point for writing state budgets.
  • The assumptions used to reach revenue estimates should be clearly marked and easily found on the Internet. This would make the budgeting process more transparent and make it easier for the public to join the debate over how Alabama allocates resources to education, health care, public safety and other vital public services.
  • Revenue estimates should be revised regularly and periodically each year. Regularly adjusting estimates to reflect changing economic conditions can improve their accuracy.

“These are some concrete ways that Alabama can improve its revenue estimating process, which will ultimately benefit all Alabamians by creating a more open process that is accountable to the public,” said CBPP fellow Elizabeth McNichol, the report’s author.

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