A New Constitution Plus Additional Amendments on the Nov. 8 Ballot

Beyond the political contests on the November  8th ballot, Alabama voters will decide whether to adopt the Alabama Constitution of 2022, a recompiled version of the current constitution, as well as 10 statewide constitutional amendments. There will also be 19 other state constitutional amendments appearing on the ballots only in the county where those amendments apply.

Replacing the Alabama Constitution of 1901 has long been a goal of reformers. The current Constitution was adopted explicitly to guarantee White Supremacy in Alabama, by disenfranchising black and poor white voters, mandating segregated schools, and forbidding interracial marriage, among other provisions. 

Such unconstitutional and repealed provisions will be gone from the Alabama Constitution of 2022. The constitution would also incorporate and reorganize the 978 amendments that have been made to the current constitution.

At the same time, the new constitution would preserve current law and practices that centralize power in the Legislature and require amendments to the state constitution for even mundane local matters. If the Alabama Constitution of 2022 is adopted, Alabama will still have the world’s longest constitution: more than three times the length of the next closest state.     

PARCA’s new report, An Analysis of the Proposed Alabama Constitution of 2022 and the Statewide Amendments, details the proposal for the new constitution and the 10 amendments that will also be on ballots statewide.

As always, PARCA provides a high-level analysis of each statewide amendment. We study the ballot wording, but also the authorizing legislation behind the language. We do not make recommendations or endorsements, rather, we seek to understand the impact of the proposed changes and the rationales for them.

Voters can find sample ballots on the Secretary of State’s website, listed by county.  The ballot language for the statewide and local constitutional amendments is also available on the site. Background material on the proposed Constitution can be found on the website of the Legislative Services Agency.

PARCA, Leadership Alabama, and Samford hosted a discussion of the proposed constitution Oct. 18, and a video recording of that event is available online.

Read the full report here.



Alabama Public Opinion Survey 2022

With elections for governor and legislature pending in the fall, Alabamians are united in support for public investment in education and healthcare, divided on how to raise money for new investments, and express a preference for local leadership and decision-making. That is according to PARCA’s annual public opinion survey.

The poll of over 400 Alabama residents was conducted by Dr. Randolph Horn, Samford University, Assistant Vice President for Enrollment Research and Professor of Political Science. 

Results from this year’s survey are consistent with previous years’ results in some important ways.

  • Alabamians continue to rank education as the most important state government activity.
  • Large majorities of Alabamians say the state spends too little on education and healthcare.
  • Alabamians have an aversion to taxes but say upper-income residents pay too little.
  • A slim majority say budget surpluses should be reinvested in state services, specifically education, rather than used to cut taxes.
  • If budget surpluses are used to cut taxes, the most popular tax cut is the sales tax on groceries.
  • Alabamians are willing to pay more taxes to support education but do not agree on which taxes should be increased.
  • Alabamians are essentially split on tax-funded vouchers to pay for private school tuition. However, a majority believe vouchers, if allowed, should be available to all students.
  • Alabamians continue to believe that they have no say in state government and that government officials in Montgomery do not care about their opinions.

Results of the survey indicate many opportunities for officials to demonstrate responsiveness to public concerns and leadership in crafting public policy solutions.

Download the full report here.


2021 Population Change in Alabama Cities

Each year, PARCA analyzes population estimates issued by the U.S. Census Bureau. Visualizations of the population estimates and change for the state, counties, and metro areas can be found on our data dashboard. The estimates release covers cities and towns and their population changes between July 1, 2020, and July 1, 2021. For additional perspective, see coverage of the estimates by al.com.

During this period, international migration was effectively shut off. The influx of new residents from overseas had been a primary driver of population gain in the larger established cities. Meanwhile, this period also saw elevated mortality rates due to the pandemic. Also, due to the pandemic, cities across the nation saw an outflow of residents as businesses stayed shuttered and workers were asked to work from home.

Printable PDF version available here

Birmingham’s population dropped by 2,558, more than any other Alabama city. It was followed by Mobile, which was down 1,459, and Montgomery down 1,341. With an estimated population of 197,575 in 2021, Birmingham is now the state’s third-largest city, behind Montgomery at 198,665, and No. 1 Huntsville, at 216,963.

Huntsville bucked the trend of large city population loss, adding 1,920 residents according to the estimates. Only Auburn added more, 2,135, which was more population gain than any other Alabama city. Since 2010, Auburn’s population has increased 43%, the fastest rate of growth among cities over 20,000. Neighboring Opelika has also grown, adding an estimated 465 in 2021.

Both Auburn and Huntsville have been spreading out through annexation, adding undeveloped land where housing is now being built. At 218 square miles, Huntsville is now far larger than Birmingham at 147 square miles.

Add up the growth totals in Baldwin County, and you’ll see why the coastal county is No. 1 in numeric growth among Alabama counties. The estimates show Foley adding nearly 1,500 residents, Daphne more than 1,000, and Fairhope and Gulf Shores over 500 apiece.

The Birmingham-Hoover metropolitan area is still far larger than the next largest metro, Huntsville, with around 500,000 residents compared to Birmingham-Hoover’s 1.1 million. Over the past two decades, population growth around Birmingham has occurred chiefly in its suburbs.

However, according to the 2021 estimates, some traditional growth engines were idling. Trussville only added 172 new residents, and Hoover saw a net decrease of 98 residents. Homewood, Mountain Brook, and Vestavia Hills saw population declines. A bright spot for Jefferson County was Gardendale which posted a gain of 407. The growth in the Birmingham MSA occurred farther out in Shelby and St. Clair County. Calera added 742 residents; Chelsea, 478; and Helena, 465. Pell City, Moody, and Margaret town in St. Clair County also added residents. Nearby, Tuscaloosa added 658 residents and broke over the 100,000 population mark, coming in at 100,618.

Across a region, the biggest population gains were in north Alabama. In addition to Huntsville’s growth, Athens, in Limestone County, added over 1,300, and the City of Madison almost 1,000. Nearby, The Shoals added 424 residents, with growth in both Florence and Muscle Shoals continuing a positive trend. Across the entire northern tier of the state, almost all the cities and towns showed growth.

Southeast Alabama around Dothan saw modest growth, with Enterprise leading the way by adding over 500 new residents.

Anniston and Gadsden, however, continued a flat to declining population trend.

More broadly, most cities and towns in rural Alabama, from Northwest Alabama, through the Black Belt, and East Central Alabama, lost population.


State Parks Constitutional Amendment on May Primary Ballot

When voters go to the polls on May 24, they will be asked to vote on a single amendment to the Alabama Constitution of 1901, a proposal to borrow $85 million to pay for repairs and upgrades at Alabama’s 21 state parks.

Click here to read a detailed description and analysis of the proposed amendment.

Alabama has what is believed to be the world’s longest constitution at over 400,000 words, with 977 amendments. Oddly, 70% of the state constitution consists of amendments that apply to individual counties or cities. Alabama’s 1901 Constitution severely constrained government and consolidated power in Montgomery. The multitude of amendments is a long-lingering aftereffect of that approach to governing.

Having just one amendment to vote on is unusual. In November’s general election, 29 amendments will be considered, including amendments that would strike unconstitutional provisions and substantially reorganize the document.


PARCA Report Highlights Challenges of Municipal Financial Comparison, Examines City Tax Collections

Our 2022 edition of How Alabama Cities Compare (the tenth edition of PARCA’s study of Alabama city finances) introduces a new methodology, highlights the challenges of comparing municipal finances, and proposes a better way to collect the information in a standardized way that should produce comparable data more quickly. After building consensus and adjusting existing practices, such a system would save cities time and provide the data they need to manage their affairs.

Understanding a city’s revenues and expenditures in comparison to other cities is a fundamental tool for effective management.

By benchmarking against neighbors, a city may discover it is spending more than necessary. Alternatively, city leaders may conclude that a higher level of investment puts the city at a competitive advantage, providing a higher level of service and better quality of life for residents.

Unfortunately, making such comparisons is difficult in Alabama. Unlike other states, cities in Alabama are neither required nor encouraged to use a uniform chart of accounts, a standard system for coding revenues and expenditures.

Nor does Alabama have an effective system for publishing and sharing the kind of comparable data that could be produced with a uniform chart of accounts.

For instance, North Carolina, Georgia, and Florida have a statewide reporting system that makes city and county financial information available online in a downloadable format that allows for detailed comparisons between peer cities or counties.

If Alabama wants to gather this data and equip its cities with a tool for comparison, the U.S. Census Bureau’s Annual Survey of State and Local Finances provides an existing base of information already submitted by city governments.

In terms of tax collections, an analysis of the most recent data from the Census survey finds:

  1. Alabama cities heavily depend on sales tax, with almost 60% of revenue coming from that source.
  2. Of cities with populations more than 20,000, per capita tax collections range from $2,674 in Homewood to $402 in Prichard.
  3. Oxford has the highest per capita sales tax revenue at $1,502 per resident.
  4. Mountain Brook is the only city in Alabama to collect more in property taxes than in sales, with 46% of municipally collected revenue coming from the property tax.
  5. Birmingham leads the cities in occupational and business licenses taxes per capita, with that revenue contributing 42% of city tax revenue.

Meanwhile, on the expenditure side, the survey reveals:

  1. The governments in North Alabama spend more than governments in the rest of the state because they operate public utilities, including municipal electricity providers.
  2. Excluding utilities, Birmingham and Bessemer, both cities that receive an influx of commuters, spend more per capita on the broad range of municipal services. That includes topping the list for per capita spending on police and fire.
  3. Oxford tops the list in per capita spending on parks and recreation. Smaller cities that report the operation of municipal sports, arts, and recreation facilities rank high in this category.
  4. The data offers the potential to track spending on municipal courts, jails, solid waste disposal, and other categories of spending, but currently, cities appear to diverge widely in how they report that information in the survey.

Working with state officials and with assistance from the U.S. Census Bureau, Alabama local governments could develop a more streamlined system for generating and reporting this data. With closer agreement on how to categorize particular revenues and expenditures, the survey could provide clearer, more actionable comparable data. The survey includes questions on debt. Better reporting of this data can provide more transparency to the public. A more robust system could also provide better accountability and oversight, potentially avoiding bankruptcy and scandal.

However, it will take leadership, likely by state officials, to gather consensus and execute a system cities, counties, and other local entities are motivated to participate in.

Read the full report here: How Alabama Taxes Compare, 2022 Edition


The Economic Impact of Expanding Medicaid in Alabama

Expanding Medicaid coverage in Alabama could save the state almost $400 million per year over the next six years – more than enough to cover the cost of expansion – and have an average positive economic impact of $1.89 billion per year over that same time frame.

These findings are based on analysis conducted by the Public Affairs Research Council of Alabama and the Center for Economic Development and Business Research at Jacksonville State University.

The analysis was supported by the Daniel Foundation of Alabama, the Community Foundation of Northeast Alabama, the Community Foundation of Greater Birmingham, the Mike and Gillian Goodrich Foundation, and the Women’s Foundation of Alabama.

Medicaid is a federal healthcare program administered by the states. The federal government funds approximately 71% of Alabama’s current Medicaid costs. The state’s General Fund covers the balance.

Medicaid covers approximately 925,000 Alabamians – the majority are children. Low-income adults are only covered if they are caretakers of someone under 19, pregnant, over 65, legally blind, disabled, or in a nursing home. The income limits vary by program but can be very low. For example, the income threshold for a caretaker is 13% of the federal poverty level or $3,445 per year for a family of four.

Since 2014, states have been able to expand their Medicaid programs to cover adults earning up to 138% of the federal poverty level, $36,570 for a family of four. Initially, the federal government would cover 100% of the cost. From 2018 onward, the federal government covers 90%.

Alabama is one of 12 states which have chosen not to expand Medicaid. If Alabama chose to expand Medicaid, this would extend access to coverage to more than 280,000 people. The state would be responsible for 10% of the cost. Policymakers have expressed concern about the state’s ability to cover these increased costs – a reasonable concern given the troubled history of the state’s General Fund.

However, recent changes to federal law, including those in the various COVID relief packages, change the equation.

Our analysis finds that over the next six years, expanding Medicaid in Alabama could:

  • extend coverage to as many as 283,636 people.
  • create an average of 20,083 new jobs per year.
  • have an estimated positive economic impact of $11.36 billion.

Our analysis estimates covering that expanded population through Medicaid would cost an average of $225.4 million per year. However, expansion would result in the federal government paying $397.88 million in annual expenses currently paid by the state. As a result, the state could expand coverage, and at the same time, reduce or reinvest the amount paid to support healthcare for low-income Alabamians by $172 million annually.

Read the full report.


How Alabama Taxes Compare, 2021 Edition

Alabama had the nation’s second-lowest tax collections per capita in 2019. Only Tennessee had lower state and local tax revenue per resident than Alabama.

Since the early 1990s, Alabama had the lowest tax collections in the U.S. But beginning in 2018, tax cuts in Tennessee and economic growth in Alabama caused Tennessee to dip below Alabama in per capita collection.

During the period, Alabama’s economic growth has been strong. Between 2018 and 2020, per capita personal income in Alabama grew faster than it did in Tennessee. By late 2019 Alabama was experiencing its lowest unemployment rate ever. On top of that, the state’s labor force participation rate had improved, bringing more workers into the workforce. Meanwhile, Tennessee is in the process of phasing out what remains of its small income tax. It has also reduced its sales tax rate on groceries.

Despite outpacing Tennessee, Alabama still trails far behind other Southeastern states in the amount of state and local taxes collected per resident, which partially explains why Alabama struggles to provide the same level of public services as other states.

PARCA’s 2021 edition of How Alabama Taxes Compare describes Alabama’s tax system and how it compares with tax systems in other states, based on the latest data available from the U.S. Census Bureau and the Bureau of Economic Analysis.

In addition to the PDF version of the report, the interactive charts below allow you to explore the data on your own. For better viewing, expand to the full-screen view by clicking on the button on the bottom right of the display below. Navigate through the story of Alabama taxes using the tabs at the top of the interactive display.

Read the Print version.


Alabama Tax Revenues Surge in 2021

By the end of FY 2021, Alabama tax collections had grown at their fastest pace in recent history, fueled by economic recovery from pandemic shutdowns and by unprecedented injections of federal stimulus for governments, businesses, and individuals.

For the fiscal year that ended September 30, both the Education Trust Fund (ETF) and the General Fund grew by more than 11%, compared to historical averages of 3.5-3.7% for the ETF and 2-2.25% for the General Fund. Alabama’s percentage gain in tax revenue since the pandemic crash ranks 7th among the states, according to an analysis by the Pew Charitable Trusts.  The growth rates far exceed any year since at least 1995.

Printable Version

However, it is important to remember the growth comes in comparison to FY 2020, a year in which COVID shutdowns constrained growth. During FY 2021 (from October 2020 — September 2021), businesses were open throughout the year, though some were still affected by restrictions related to the virus.

The growth is also taking place in the context of rising inflation, meaning the revenue is based on higher prices, and the money collected won’t have the same purchasing power it previously did. Regardless, the growth was substantial.

The ETF took in $900 million more than in FY 2020, topping $8.6 billion. And that understates the gain. FY 2020’s total included over $300 million borrowed from the Budget Stabilization Fund for cash flow purposes. That money was returned to the fund later in 2020.

The General Fund took in almost $2.6 billion, an increase of $262 million over last year.

Where did the growth come from?

Based on estimates from the Federal Funds Information for States, Alabama budget analysts estimate that $30 billion in federal relief flowed to individuals and businesses in Alabama. In addition, $16 billion in federal relief was authorized and is in the process of flowing through the state out to agencies and local governments.

That extra money in the hands of consumers fueled spending. Gross sales tax collections increased almost 15%, driven by multiple rounds of economic stimulus payments to individuals and parents with children. Spending was also boosted by unemployment benefits, which provided roughly twice the minimum wage. For some laid-off workers, the benefits amounted to a raise. Aid from the paycheck protection program kept businesses solvent and employees on payrolls.

While the bulk of the sales tax is deposited in the ETF, the General Fund also benefited from the increased spending and changed consumer patterns. The Simplified Sellers Use Tax (SSUT), the tax on online sales, rose almost 40% over 2020 totals (and 2020 was 99% higher than 2019). The Legislature’s decision to deposit the bulk of the SSUT into the General Fund added a growth element to the General Fund that had been lacking. Instead of lurching from crisis to crisis, the fund has kept pace with the rising costs.

Gross individual income tax collections were also up, increasing 13%, despite the fact employment levels haven’t reached pre-pandemic highs. By the beginning of FY 2021, employment levels had rebounded to about 60,000 short of March 2020 employment. Since then, they have continued at that level. Meanwhile, wages have been on the rise as businesses seek workers in the face of a shortage of workers.

Surpluses and Temptations

Thanks to the additional revenue, the state covered the 2021 ETF budget and ended with a balance of $1.24 billion, which will be available for lawmakers when the lawmakers convene in 2022.

The General Fund ended with a surplus of $368 million, which has already been put to use, appropriated as part of the funding for new prison construction.

The surge in state tax dollars has come along with a surge in federal support for state government operations as well. In a typical year, federal funds provide almost the same amount the state raises in taxes. But with the pandemic, the U.S. government sent an estimated $17 billion in relief funding to Alabama to schools, hospitals, and other agencies. Some of that is flowing through the appropriation process, but much of it is flowing directly to the agencies, making it difficult to know whether it has been spent yet or not.

The danger comes when those federal relief funds dry up. Growth will taper. State agencies receiving federal relief cannot count on that level of funding to continue. Legislators will convene in 2022, in an election year, with a lot to spend. But they will also have to keep an eye toward an unpredictable future and not commit to unsustainable levels of recurring expenses.

Thus, it’s useful to look for clues in the FY 2021 collections.

General Fund Revenue Sources

A myriad of tax sources supports the General Fund. Traditionally, most of those sources saw little growth from year to year. The General Fund struggled to keep up with rising expenses in non-education expenses, like funding for prisons and the Medicaid program.

However, in recent years, some growth taxes have been added to the General Fund, and its rate of growth has been similar to the Education Trust Fund. Since 2017, General Fund receipts have increased 33%, while ETF receipts have increased 37%.

Big gainers

Insurance Co. Taxes: The largest tax in the General Fund, the tax on insurance premiums, contributed close to $500 million to the General Fund, increasing by $77 million or 19% over 2020 collections. As insurance rates go up, and as more people take out insurance, the tax brings in more. Also, $30 million of the tax had been going to the ETF. That ended with a law change in 2019, increasing the yield to the General Fund.

Simplified Sellers Use Tax: The SSUT continued a string of huge gains as the shift to online sales continued in FY 2021. An additional $55 million came in from this source, an increase of 39% over 2020 (In 2020, the increase was 99%). It has quickly grown into the third-largest source of revenue in the General Fund at $192 million. That represents 75% of the tax. The remaining 25% goes into the ETF. Some of the growth may be attributable to new retailers submitting the tax. Still, this year’s growth is likely attributable to both the increased spending power of consumers because of stimulus and rising wages and to the continuing shift to purchasing online for home delivery. Considering the decreased threat of Covid, the tax is expected to grow more slowly in the future.

Financial Institutions Excise Tax: Coming off a down year in 2020, this tax source jumped by $55 million, an increase of 156%. The big jump is attributable to a new law in 2019 that required banks to make payments quarterly rather than in a lump sum. It also changed how the tax amount due was calculated, bringing it more in line with the federal definition of taxable income. The big surge in collections was not expected, as the law changes were expected to be revenue-neutral. State budget officials think the shift in the schedule for payment of the tax may have resulted in a surge of revenue in FY 2021 will not continue.

Sales and Use Tax: a share of the sales tax on autos and boats is distributed to the General Fund, and each of those lines was up by more than $25 million, thanks to the strong demand and rising prices for both.

ABC Board: Liquor sales continued a rising trend posting a 12% gain over 2020, a year when ABC proceeds climbed by 14%. This may result from a continuing shift toward purchase for home consumption, as restaurant and bar operations continued to be somewhat curtailed in FY 2021. The revenue sent to the General Fund from the ABC sales increased to $157 million.

Mortgage and Deed Record Taxes: About $20 million additional came in through taxes related to home sales. Both prices and activity spike in 2021, reflected in a 34% increase in the mortgage tax, adding $15 million to reach a total of $58 million, and a 45% jump in the deed record tax, reaching $17 million. Continued low-interest rates led to more refinancing and home purchases.

Lodging Tax: This tax on hotels and vacation rentals was up 26% in 2021 after being down 15% in 2020, bringing in an additional $13 million compared to 2020. Gulf Coast rentals saw a record demand though some units were offline because of damage caused by Hurricane Sally in Sept. 2020. Convention and hotel traffic remained depressed compared to historic norms.

Interest on the Alabama Trust Fund: More accurately described as investment returns on the Alabama Trust Fund, the contribution from this source increased 8%, or $8 million, thanks to a strong market. Also known as the State’s savings account, the Alabama Trust Fund is at nearly full strength as amounts borrowed during previous downturns have largely been repaid.

Oil and Gas Production Tax: The oil and gas production tax was up 16%, recovering somewhat from a crash in FY 2020.

Court Costs: With the courts open again, court costs recovered some of the previous year’s drop, though FY 2021 collections were still behind 2019s. In FY 2021, proceeds from court costs contributed $60 million to the General Fund.

Big losers

Cigarette Tax: Though it remains a significant source of revenue, the cigarette tax continues to decline as smoking decreases. The taxes brought in $143 million to the General Fund in FY 2021, down by $5 million, a decline of 3%. Meanwhile, a Tax on Vapor products increased 28%, or $614,875, to $2.8 million.

Interest on State Deposits: The state earns interest on the cash it holds, but this source of revenue declined $31 million or 62% because of dropping interest rates. The state collected about $20 million from this source in 2021.

Mobile Telecom Tax: A dying tax, this tax applied to phone plans that sold talk time. For the most part, cellular plans now provide unlimited talk time at no charge but charge for data, which is not covered by this tax. Revenue continues to decline, bringing in just over $11 million, down another nearly $4 million or 26% lower than last year.

Education Trust Fund

The ETF supports K-12 schools, colleges, and universities. The state’s two largest revenue sources flow into it: the income tax and the sales tax.

Benefiting from growth taxes, the ETF has traditionally seen the most substantial ups and downs: rapid growth in good times and jarring contractions when the economy falters. However, more recently, the Legislature has spread some of the growth taxes and has imposed rules on how fast spending can grow. These restraints have thus far prevented mid-year budget cuts and have allowed the accumulation of reserve funds.

Big Gainers

Income Taxes: Net income tax deposited in the ETF was increased by a jaw-dropping 21%. The anemic growth of income taxes in FY 2020 is part of the story. FY 2021 full-year of full-time employment earnings produced a substantial gain in gross personal income tax collections, up $643 million to a total of $5.8 billion. But even more staggering was a 61% increase in corporate income taxes. Corporate income taxes increased $370 million to a total of $974 million. Explanations for such a large jump are not completely clear. Certainly, the recovering economy had businesses operating a full calendar year. Pent-up demand and the stimulus in the economy drove up sales bolstering income over a down 2020. Budget analysts also speculate that corporations may have realized more revenue in 2021 to avoid potentially higher federal taxes in 2022. After refunds and other adjustments, the income tax contributed $5.6 billion to the ETF, increasing $987 million over 2020.

Sales Taxes: The state received over $2.3 billion in sales tax revenue in 2020, and $325 million more than last year was sent to the General Fund, an 11% increase. Sales were robust at grocery and hardware stores as people continued to invest in home improvements. It’s also important to note that inflation has driven up the prices of some goods, which in turn drives up sales taxes, which are based on the total cost. With the dissipation of stimulus money, this pace of growth is unlikely to recur. But, with the pandemic under better control, activity continues to accelerate, Demand is strong. Unemployment is low, and wages are rising. That suggests income and sales taxes will continue to grow.

Simplified Sellers Use Tax: As in the General Fund, the contribution of this tax was up 40%, adding $18 million to the ETF, for a total contribution to the ETF of $64 million. The proceeds of the tax are divided, with the ETF receiving 25% and the General Fund 75%.

Big losers:

Insurance Premium Tax: Before FY 2021, $30 million from the Insurance Premium Tax was deposited into the Education Trust Fund. That ended because of a 2019 change in the law governing the distribution. The total amount is now in the General Fund.

The Utility Tax: Down 2% or $8 million, this is a tax on electric, water, telephone, and gas utilities. FY 2021 saw both a mild summer and winter and a wet one. That leads to decreased energy consumption and lower levels of water use. However, the extra rain provided more opportunities for hydropower generation, driving up receipts from the hydroelectric tax.

From the Year’s End Looking Forward

Both funds ended FY 2021 with substantial surpluses. FY 2022 budgets were built on the assumption of 3% growth over the 2021 budgets. Current conditions suggest the state should easily exceed those predictions.

Alabama is in an unfamiliar position of having to manage its way through unexpected excess revenue.

General Fund

  • FY 21 Budgeted $2,393,272,863
  • FY 21 Receipts $2,562,158,281
  • FY 22 Budgeted $2,637,874,471

Education Trust Fund

  • FY 21 Budgeted $7,217,422,487
  • FY 21 Receipts $8,643,813,063
  • FY 22 Budgeted $7,672,576,575

And that’s only part of the picture

The ETF and General Fund totals don’t even represent half the revenue that powers public agencies, state schools, universities, and hospitals. Nor does it represent the federal benefits that flow through state agencies like Medicaid, the Departments of Human Resources, Health, Mental Health, Labor, and Rehabilitation Services. The chart below gets closer to a picture of the scale of public spending in Alabama.

Reserve Fund Balances

Current conditions suggest continued recovery, But if things were to falter, Alabama has built up major reserves that are available to tap in case of an economic downturn. A recent analysis on state reserves and rainy day funds by the Pew Charitable Trusts estimated that Alabama $1.1 billion in rainy day funds or 11.2% of spending. The state could run on its rainy day funds for 41 days, Pew estimated. That puts Alabama well ahead of the 50-state median for the strength of its reserves.

  • ETF Budget Stabilization: $448,410,575
  • ETF Rainy Day: $484,979,764
  • ETF Advancement & Technology: $282,314,668
  • GF Budget Reserve: $75,303,255
  • GF Rainy Day: $263,994,883

Alabama Public Opinion Survey 2021

PARCA’s 2021 public opinion survey finds a growing majority of Alabamians support spending more on education but a lack of consensus on how to pay for the increase.

Among the findings:

Taxes

  • 61% of respondents say upper-income Alabamians pay too little in state taxes. The percent of respondents who believe upper-income earners pay too little increased by 10% from 2020.
     
  • 53% say lower-income earners pay too much, up from 40% in 2016.
     
  • 49% say they pay the right amount of taxes, compared to 57% in 2016.
  • Despite Alabama’s low per capita tax yield, 69% of residents believe they pay the same or more taxes than people like themselves in other states.

Public Education

Alabamians believe education is the most important service state government provides, but its lead over other services is declining.

  • 44% rank education as the most important service, while 31.3% rank healthcare No. 1.
  • 78% believe the state spends too little on education, compared to 74% in 2019 and 68% in 2013. Large majorities in every subpopulation have this belief.
     
  • 69% support increasing taxes to support education, but no single tax increase option garners majority support.
  • This year, respondents were asked what supplemental programs might improve education. No program received a majority response, but the top priorities were expanded tutoring, increased technology funding, and more mental health counseling.

  • When asked what respondents’ top priority for new education funding would be, the highest percentage (41%) said that new revenue should go to increasing salary and benefits for teachers 

  • 59% say local boards of education are best suited to decide how education dollars are spent.

  • Respondents believe that the local board of education are best suited to decide school spending, school policy, and school closings.

Other notable education findings:

  • 77% believe that taxes on Internet sales should be distributed to local schools in the same way as sales tax revenue from brick-and-mortar sales.
     
  • Alabamians are almost evenly split on tax-funded vouchers to pay for private school tuition. However, 61% of Alabamians believe vouchers, if allowed, should be available to all students. 

Trust in State Government

Alabamians’ trust in state government improved slightly compared to 2019 but is still well below rates reported in the early 2000s.

  • 77% support keeping the General Fund and Education Trust Fund separate, down from 80% in 2020 and 82% in 2019, but still well above the 69% reported in 2016.
     
  • 63% believe state government officials do not care about their opinions, down from 66% last year. This compares to a low of 55% in 2008 and a high of 74% in 2010.
     
  • 61% believe they have no say in state government, up from 55% last year, but well above the low of 43% in 2008.

Download the full report here.


Deaths Exceed Births but Surge in Domestic Migration Powers Alabama Population Growth

Recent data from the U.S. Census Bureau indicate a growing number of people moving to Alabama prior to the Covid pandemic, which helped offset population loss due to a rising death rate and declining birth rate. The estimated number of net new domestic migrants was 13,115 in 2020, the largest inflow of the decade.

That estimate data, released earlier this month, is generated annually by the Bureau. Those estimates use the 2010 Census count as a base and attempt to capture population change by tracking births, deaths, and migration. The actual census count, conducted in 2020, showed even stronger growth than the estimates have indicated.

By April 1, 2020, Alabama’s statewide population had climbed above 5 million, according to the official 2020 Census enumeration. That total, 5,024,279, exceeds by more than 100,000 the Census Bureau’s estimate of Alabama’s population for July 1, 2020. Going forward, estimates will be re-calibrated using the Census count as a basis. On the basis of the count, Alabama kept all seven U.S. House Districts. According to the official Census count, Alabama added 244,543 residents since 2010.

According to the counts, Alabama’s population grew by 5% from 2010 to 2020. The Carolinas, Tennessee, and Georgia grew at about twice that rate, but Alabama grew faster than Mississippi, which lost population, and Louisiana and Arkansas, both of which grew at a rate of 3%. Florida’s population grew by 15%, adding a staggering 2.7 million new residents.

Components of Change

Though Census population estimates were off compared to the actual 2020 count, the estimates and components that drive the estimates provide insight into the drivers of population change in Alabama throughout this past decade. The newest estimates, released earlier this month, and the estimates from prior years present some patterns:

  • Over the course of the decade, Alabama birth rates fell, and death rates climbed as the population aged.
  • International migration provided growth in the early part of the decade.
  • As international immigration faltered in the final years of the decade, domestic migration to Alabama surged.

Aging and Fertility

The most fundamental elements of population change are births and deaths. Census estimates are based on the number of birth and death certificates issued, with some short-term projection built-in since there is a two-year lag in getting the actual county-level data..

According to Census estimates, over the course of the decade, Alabama and the U.S. saw a decline in the number and rate of births and a rise in the number and rate of deaths. For the first time in 2020, the Census Bureau estimated that more people died in Alabama than were born.

If the estimates accurately captured the trend, deaths will likely exceed births in Alabama again in 2021. The math that drives these numbers has to do with the size of generations and the size of families. Members of the Baby Boom Generation, the extra-large cohort born between 1945 and 1965, have entered years of increased mortality, causing a rise in the death rate. Meanwhile, younger generations, with fewer members, have had children later in life and are having fewer children. In addition, the Covid-19 pandemic led to increased mortality, between March and July 1, 2020. The Census Bureau made a national-level adjustment for increased mortality from Covid-19 between March and July of 2020. That will factor into population change this year as well.

But the effects of these changes in fertility and mortality play out unevenly across the U.S. and across Alabama counties. Places that have attracted younger residents have a lower median age and a higher share of births. Places that are losing population tend to retain a higher share of older individuals and consequently see higher death rates. Birth rates are highest in the counties with urban centers, or universities, or cities’ suburbs. Death rates are highest in rural communities where the population is older. The social, ethnic, and racial composition of a community affects birth rates as well. Hispanic and Black families tend to have more children.

The visualization above allows you to explore how the differences play out in different states. The visualization below allows you to explore those differences among Alabama counties.

For example, Blount County has a pattern that reflects the state as a whole. However, using the selector on the right, toggle to Madison or Shelby County, and observe a different pattern: The number of deaths is still rising, but so is the number of births as young families move in, producing a positive rate of natural increase. Conecuh County, by contrast, shows a steep fall in births and a rise in deaths, producing a population decline through natural factors.

Migration

Beyond births and deaths, population change is driven by who is moving in and who is moving out, measures of migration. The Census Bureau develops estimates of movement within the United States (domestic migration) and between the U.S. and other counties (International migration). Over the past decade, general regional migration patterns emerged: Southern and Western states have gained through domestic migration. Northeastern states and California have gained through international migration. Rural counties in the interior South, Rust Belt, and the Plains States have seen moderate growth or some population decline. In the end, all states except Mississippi, Illinois, and West Virginia added population between 2010 and 2020, with gains concentrated in the cities and metropolitan, suburban counties, and retirement and recreational destinations.

According to the estimates, Alabama experienced two different periods of migration since 2010. In the first part of the decade, rising international in-migration offset weak growth and even population loss through domestic migration. Over a span of years, Alabama had more residents moving away than arriving from other states. But late in the decade, those factors flipped: a surge in domestic in-migration replaced faltering international immigration as the driver of population change.

Time will tell whether that surge in domestic migration will resume or even accelerate after the Covid pandemic. Early indications suggest it might. Unemployment in Alabama is down close to pre-pandemic levels, historic lows that should attract movers. There are indications that movements already underway are continuing and even accelerating. The Wall Street Journal analyzed data from permanent change of address forms filed with the U.S. Post Office. The results suggest that during the pandemic, there has been a movement out of dense urban areas in the Northeast towards the South and toward smaller metros and suburbs. The pandemic has accelerated retirements and migration to retirement destinations, adding fuel to the strong growth in Alabama’s Baldwin County, for instance.

As has been the case throughout the decade, estimates indicate that most of the growth in Alabama is occurring in a handful of counties, led by Baldwin and Madison, home to Huntsville. A second tier of growth magnets consists of Lee County, home of Auburn University; Shelby County, south of Birmingham; Limestone County, adjacent to Huntsville; and Tuscaloosa, home to the University of Alabama.

In the estimates for 2020, more counties in Huntsville’s orbit, including Colbert and Lauderdale in the Shoals and Morgan, are showing population gains. Meanwhile, in Southeast Alabama, counties around Dothan, including Houston and Coffee, appear to be picking up residents, as well.  

Jefferson, Montgomery, and Mobile counties all lost population in 2020, according to the estimates. All three counties have been net exporters of domestic migrants throughout the decade but have made up for the loss through natural increase and the arrival of residents from other countries. However, with the clampdown on immigration during the Trump years, made even more acute by the pandemic, all three counties saw sharper losses. That was particularly true in Jefferson, which had a rising number of deaths, a lower number of births, a depressed level of international immigration, and a higher net loss through domestic migration. Jefferson was estimated to have 3,197 fewer people living in the county in July 2020 than in July 2019, the biggest numeric loss among Alabama counties.

Dallas County continued to lose population with an estimated 1,084 fewer residents in 2020. According to the estimates, Dallas County had a population of 36,098 in 2020, a cumulative loss of 7,715 people since 2010. Dallas experienced the second-fastest rate of decline since 2010, 17.6%, among Alabama counties. Only Perry County, at 17.9%, had a greater rate loss. Perry’s population, estimated at 8,698 in 2020, is second lowest in Alabama, outranking only Greene County’s 7,990.

Prior to the pandemic, with unemployment at a historic low, Alabama was on the verge of a labor force shortage. Perhaps in response, the state appears to have begun drawing increased numbers of new residents. For Alabama to reach its economic potential, the state will need to continue to draw migrants. The existing population is aging, with the Baby Boom generation headed for retirement.

Drawing more workers into the state may help Alabama meet the goal established for the state workforce system: add 500,000 highly-skilled workers to its workforce by 2025. But reaching that goal will also require bringing more Alabamians back into the workforce, increasing labor force participation by increasing access to training and education.