How Alabama Taxes Compare

Since late 1988, the Public Affairs Research Council of Alabama has produced an analysis of Alabama’s tax revenues. Relying on the U.S. Census Bureau’s annual survey of state and local governments across the country, we are able to determine how Alabama taxes and revenue compare to other states. In the analysis, state and local spending are considered together, because states vary greatly in how they divide up the responsibilities for funding government services. This report considers data from 2015, the most recent year available.

Alabama’s state and local governments collect less in taxes than state and local governments in any other state in the union. This has been a basic fact of life in this state since the early the 1990s. It lies at the root of our perpetual struggles to balance state budgets. It underlies the difficulties we face when trying to provide to our citizens the level of government services enjoyed by citizens in other states.

As a bottom line, Alabama governments have less tax money available finance the operation of services like schools, roads, courts, health care, and public safety.

Explore our latest report, How Alabama Taxes Compare, and see how Alabama’s tax system fares against our southeastern neighbors, and what that means for our state. If you want to compare Alabama’s per capita taxes to those in other states, PARCA-designed interactive tables are available online. 

Progress Made on Remedial Education

The latest statistics from the Alabama Commission on Higher Education (ACHE) show that Alabama high schools are making progress in producing graduates who are ready for college-level coursework.

According to the new report from ACHE, the percentage of high school graduates who had to take remedial courses upon entering Alabama colleges decreased to 28.8 percent for the graduating class of 2016, down from 30.4 percent in 2015 and 34.6 percent in 2011.

Why is remediation an issue?

In a perfect world, any student graduating from an Alabama high school who wishes to enter college would receive a level of education in high school that would prepare them for college-level courses.

However, that is often not the case. When colleges assess incoming students, the colleges often find that the students are in need of a catch-up course at college before they’re ready to tackle college-level work.

These remedial courses don’t count toward attainment of a college degree. They impose an expense on the students and the colleges, an expense that adds to the time and cost of attaining a college degree.

Alabama’s strategic plan for improving K-12 education, Plan 2020, set a goal of decreasing the remediation rate. When high schools do a better job of preparing students for college-level work, it produces savings for the student, their parents, and the education system in general.

While the goal set in Plan 2020 to reduce the remediation rate by approximately 3 percent a year has not been attained, K-12 schools have made progress.

To explore the statics for remediation and college going for local systems, follow this link. Bear in mind that the ACHE report only captures high school graduates who enrolled in the fall after their graduation in Alabama public colleges. The college-going and remediation rates for schools that send significant numbers of students to private colleges or to out-of-state colleges will not necessarily reflect the outcomes for the entire graduating class.

Progress Being Made

According to the ACHE data, the number of high school graduates in Alabama increased from 44,086 in 2011 to 49,953 in 2016, as the population has grown, and the graduation rate has improved.

The number of high school students enrolling at in-state public colleges has increased as well, though in 2016 the total enrollment number was down slightly in comparison to 2015.

However, the percentage of high school graduates enrolling in Alabama public colleges in the fall after graduation has declined slightly.  In 2016, 48 percent of high school graduates enrolled in Alabama higher education the following fall, compared to 53.4 percent in 2011. Data from other sources indicates that the total post-high school college-going rate for Alabama is around 62 percent (Unlike this set of ACHE statistics, those statistics capture students who go to private colleges or who go to college out-of-state).

In 2016, about half of the enrollees went to a two-year college and the other half to four-year colleges.

Remediation rates are calculated for two subjects: math and English.

The most progress has been made in decreasing the percentage of students having to take remedial English. In 2016, the percentage of students needing remedial courses in English dropped to 13 percent, down from 17 percent in 2013.

The percentage of enrolled students taking remedial math also declined to 24 percent in 2016, compared to 26 percent in 2013.

High School Graduation Rates

Remedial rates and college-going rates are affected by changes in Alabama’s high school graduation rate.  At the same time that the remediation rate has gone down, Alabama high schools have improved the high school graduation rate. In 2011, only 72 percent of students in Alabama high schools graduated on time. In 2016, the most recent year available, 89 percent of students graduated on time according to Alabama’s definition of graduation. To see PARCA’s presentation of 2016 high school graduation rates for the state and local schools, follow this link. 

The rapid rise in Alabama’s graduation rate has sparked some concern about whether Alabama’s rate had become inflated, that Alabama schools had lowered their standards for awarding high school diplomas. In trying to improve graduation rates, the state and local schools had made several changes. Alabama instituted a credit recovery system that allowed students who had failed the class to take targeted instruction to improve their areas of weakness rather than having them repeat the entire course. Alabama also dropped its high school exit exam, which had, in the past, prevented some students from graduating. Finally, the state also changed the way it defined who was eligible to receive a diploma and began allowing special education students taking “Essentials” courses (courses not fully aligned with Alabama academic standards) to count those courses toward graduation.

In 2016, the U.S. Department of Education launched an inquiry into Alabama’s standards for granting high school diplomas. As a result of the investigation and an audit of records, some of the students who took the Essentials classes should not have been counted as graduates under the federal definition of a graduate. After a thorough audit of student records, the 2016 graduation was recalculated removing some of those students in the Essentials pathways from the total counted as graduates. In the end, the graduation rate re-calculated for federal reporting was two percentage points lower than Alabama’s definition of who is a graduate.

The 2016 graduation rate report now includes both a state graduation rate and a federal graduation rate.  The most significant difference between the two rates is found among special education students. According to Alabama’s definition, 72 percent of special education students were counted as high school graduates in 2016. Under the federal definition which excludes the Essentials courses, only 54 percent of special education students were counted as graduates. That’s 1,106 fewer special education students counted as graduates under the federal definition.

Despite the concerns about the graduation rate, the new improved, lower remediation rate reported in the ACHE reports provides evidence that Alabama high schools are providing higher levels of preparation for graduates headed into higher education. However, the decline in the college-going rate also bears watching. The lower Alabama public college-going rate may indicate that some students are going straight into the workforce thanks to improvements in the economy.  It may also indicate some graduates don’t feel adequately prepared to immediately enter college. The cost of college has also continued to rise which may discourage some high school graduates from entering college.

Where do we go from here?

Alabama high schools should continue to increase the quality of education delivered in high school so that students enter college prepared for college-level work. High schools and colleges should also continue to improve efforts to help students apply for and finance a college education. According to the latest available statistics from the National Center for Higher Education Management Systems (NCHEMS), Alabama’s rate for college going immediately after high school is 62.1 percent, slightly behind the national average of 62.6 percent. However, Alabama’s rate is lower than any other Southeastern state, indicating room for improvement.



How Alabama Roads Compare, 2017

PARCA’s latest report, How Alabama Roads Compare, provides an in-depth analysis of the conditions, funding and future of our state’s roads and bridges. Data presented in the report can also be viewed through interactive tables here.

Alabama Roads: Where are we now?

Alabama’s roads and bridges are in relatively good condition compared to other Southeastern states. The percentage of roads in good condition is higher than most other states and the percentage of roads in poor condition is lower than most other states. The percentage of bridges in need of replacement because of deficiency is about average for the Southeast.

However, those generally good conditions on existing roads have come at a cost.

The Alabama Department of Transportation has had to devote an increasingly large share of its budget to preserving the existing road system, with a shrinking pool of money available for new projects to address congestion or expand the road system to foster transportation improvements and economic development.

Currently, only $150 million per year is available for system enhancement and expansion projects, a drop in the bucket considering the billions of dollars in projects needed to address existing congestion issues, much less the additional billions that would be needed to finance aspirational projects like Birmingham’s Northern Beltline, a new Mobile River bridge, and variety of other projects desired by communities large and small.

Alabama’s road spending in recent years has been supplemented by more than $1.3 billion in borrowing. That has allowed state and local governments to tackle needed improvements and perform in the present projects that will pay dividends in the future. However, that borrowing authority has been exhausted, and future road spending will be curtailed. The infusion of borrowed money is ending and the demands of paying back what has already been borrowed money will consume a greater share of road money.

This impending road revenue crunch is rooted in a fundamental problem in how we pay for roads: a set 18-cents per gallon motor fuels tax. Per-gallon motor fuels taxes were last raised in the early 1990s. The buying power of that 18 cents on each gallon has eroded due to inflation. On top of that, the greater fuel economy of cars and trucks on the road today means that less gas in being purchased to fuel more miles of travel.

The wear and tear of traffic on the roads continues to increase, but revenue from per-gallon taxes is not keeping pace. Per vehicle mile traveled, Alabama is collecting half what it did in the early 1990s, when adjusted for inflation.

In the immediate term, the 2018 transportation budget will contain about $200 million less in revenue than it has enjoyed for the past 5 years, revenue provided through the ATRIP borrowing program. The debt service required to pay that borrowing back has been steadily climbing. In 2018, it will leap to $114 million, almost $50 million more than the 2017 total, and remain locked in for the next 19 years. As a bottom line, in 2018, there will be about $250 million less to spend on roads than there was in 2017.

Where do we want to be in the future?

Alabama needs sufficient revenue to pay for the upkeep of its current system, plus an adequate pool of money available to add capacity to address congestion problems and to improve the transportation network. That revenue for roads also needs to cover the cost of paying back the money the state has already borrowed.

How do we get there?

Alabama hasn’t raised its per gallon gas tax in 25 years. Only 8 other states have gone as long without an increase. In recent years, most states have raised per gallon taxes and have also adopted mechanisms to address the drain on buying power created by inflation and greater fuel economy.

In the past several legislative sessions, Alabama lawmakers have introduced various proposals to address the impending shortfall in road funding but none of those proposals have gathered sufficient support.

As those proposals resurface in subsequent sessions, attention should be paid not only to preventing the immediate shortfall but to preventing the perpetual erosion of road dollars. Many of our Southeastern neighbors have crafted long-term approaches to road funding from which Alabama could learn.

Click here to read the full report, including information on traffic vs. capacity, construction and maintenance, road debt and more.