Alabama relies on federal spending—Alabama residents do, too.

Alabama residents receive over $60 billion from the federal government—23% of all personal income.

These figures are based on a September 2024 report, The Great Transfer-mation: How American Communities Became Reliant on Income from Government, by the Economic Innovation Group (EIG).

These payments, known as transfer payments, include Social Security, Medicare, Medicaid, veteran’s benefits, unemployment, Pell Grants, and others.*  The report explains how an aging population and shrinking economic opportunities have shifted many communities into reliance on these transfer payments.

To put the $60 billion in perspective, Alabama’s four automakers generate $6.4 billion in total compensation, according to a report from Autos Drive America and the American International Automobile Dealers Association, as reported by al.com. That’s about one-tenth of the amount received from federal transfer payments.

In other words, a 10% reduction in these payments would have a similar economic effect on personal income as shuttering Alabama’s entire auto industry.

The impact is more pronounced in rural areas. The EIG report notes, “The transfer share of total personal income tends to run much higher in rural areas than in large population centers.” Looking at Alabama, this appears to be a consistent pattern, with most urban counties with low income from federal transfers and rural counties with higher percentages of income from federal transfers.

These trends evolved over decades, having a widespread economic impact that has grown steadily as the population ages.

Meanwhile, these programs are under increasing scrutiny in the current administration. Reducing them would have a profound impact on local communities.

Explore the chart below to see the amount of transfer payments in each county and the share of total income those payments represent. 

*Some of these payments, like Social Security, are made directly to individuals. Other payments, such as Medicare and Medicaid, are made to providers to pay for services on behalf of individuals.

For details on the calculation of personal income and transfer payments, see this post on Github:
https://github.com/EIG-Research/EIG-Great-Transfer-Mation.

PARCA is re-examining Alabama’s Constitution in light of the 2022 passage of a revised and reorganized version of the state’s fundamental law.

The approval of the Constitution of 2022 was the culmination of decades of advocacy. Some important changes were achieved, including a substantial reorganization and the removal of racist and unconstitutional provisions central to the spirit of the state’s 1901 Constitution.

And yet, the Alabama Constitution of 2022 maintains the fundamental shackles on government from the 1901 Constitution. Embedded in the Constitution is a tax system that is inadequate, inefficient, and inequitable.

Since the early 1990s, PARCA’s How Alabama Taxes Compare analysis has found that Alabama state and local governments consistently collect less per capita in taxes than almost all other states. After occupying the bottom spot for most of the past 30 years, Alabama has traded back and forth with Tennessee for last place since 2018. This year, Tennessee’s per capita collections came in $4 lower than Alabama’s, resulting in a rank for Alabama of No. 49.

Alabama continues to collect less per capita in state and local property taxes than any other state. Property taxes are strictly limited by provisions in the state constitution.

Low taxes create some advantages. Low property taxes on land and homes are attractive in some regards, decreasing the cost of homeownership and shielding rural land and farms from development pressure. Lower taxes also can be attractive to businesses and individuals moving to the state.

However, low property taxes come at a cost, creating a greater reliance on other taxes, mainly sales taxes. Those sales taxes put a particular burden on low-income Alabamians. Low tax collections also mean that Alabama state and local governments have less to invest in services such as education, health, public safety, and the justice system. That is in a state with high poverty rates, low educational attainment, poorer health outcomes, and higher rates of violent crime than most other states. In turn, high poverty and less economic activity mean less wealth to tax and, thus, lower tax collections.

Inadequate

In contrast to other states, where the state legislature and local governments generally have the power to adjust tax rates, Alabama’s constitution sets limits, rates, and procedural restraints on state and local taxes. That makes taxes hard to raise, adjust, or rebalance. In the end, Alabama’s lower base of wealth and structural and cultural resistance to taxes mean that governments here have less to spend on providing vital public services, placing Alabama in the bottom ten states in most spending categories.

Continue reading the full report here: The Alabama Constitution’s Impact on Taxes and Spending

———-

This report is one of a series of reports examining Alabama’s current constitutional framework, identifying remaining obstacles to a modern constitution and possible paths forward in areas such as education, economy, healthcare, democracy, liberty & justice, finances, and related areas. Other reports in the series include The Government Closest to the People? The Statehouse, the Courthouse and City Hall and How Alabama Democracy Compares.

The project is supported, in part, by the Alabama Citizens for Constitutional Reform (ACCR). Both ACCR and PARCA are nonpartisan organizations, and our members and supporters are Republicans, Democrats, and independents. Former Governor Albert Brewer and former Samford University President Thomas Corts, both deceased, were founding leaders in both organizations.

Leaders from city and county government, education, philanthropy, social services, and community are launching a new partnership to decrease violence and increase health and opportunity in Jefferson County.  

Coming in the wake of a record-setting year for homicides in the City of Birmingham, the Birmingham-Jefferson County Justice Governance Partnership (BJC-JGP) seeks to build a coordinated and sustained effort to understand and address the conditions that give rise to violence and the underlying vulnerabilities of the neighborhoods where violence is concentrated. The partnership grows out of a recognition that law enforcement alone cannot solve the problem and that community members and an array of agencies play a part in the solution.    

The Justice Governance Partnership is being launched with the support of the Aspen Institute’s Criminal Justice Reform Initiative (CJRI). The Aspen Institute is a nonpartisan educational and policy studies organization based in Washington, DC. Aspen is known for convening thought leaders from across the country to address complex public policy problems. Its Criminal Justice Reform Initiative brings together national experts in criminal justice, education, and budgeting with the aim of helping local communities develop more effective approaches to public safety. 

Birmingham is among a handful of communities piloting the Justice Governance Partnerships model. Aspen’s CJRI is also working with Grand Rapids, Michigan, and in rural South Carolina, and North Charleston, S.C. 

The formal launch of the JGP follows the release of the Birmingham Crime Commission Report, commissioned by Mayor Woodfin. The commission’s report called for the implementation of evidence-based violence reduction strategies, community engagement and investment, and sustainable governance to implement, monitor, and maintain short-term and long-term solutions. 

The Justice Governance Partnership serves as a vehicle for cooperating around implementation and monitoring progress. Partners across the cooperating organizations provide wide-ranging data to produce a Justice Audit, which quantifies conditions and identifies needs. The Audit is regularly updated to track progress.  

Meanwhile, the ultimate goal is to devise a Justice Reinvestment Plan, which identifies preventive investments that can improve neighborhood conditions and drive down the need for costly emergency responses. The Audit and Reinvestment Plan are tools that aim to identify actionable solutions to improve economic conditions, address violence, and mitigate other risk factors at the local level, focusing on under-served neighborhoods. 

About the Birmingham-Jefferson County Justice Governance Partnership 

The Birmingham-Jefferson County Justice Governance Partnership is a coalition dedicated to fostering a transparent, equitable, and effective justice system in Birmingham and Jefferson County. Through collaboration, policy innovation, and community engagement, the BJC-JGP seeks to address systemic challenges and create lasting change for the benefit of all residents. For more information, visit parcalabama.org/bjc-jgp.

Each year, PARCA uses data from the U.S. Census Bureau’s Annual Survey of State and Local Finances to compare Alabama’s tax collections to the other 50 states. The most recent data comes from the 2022 Fiscal Year. 

Key Findings from this year’s report, How Alabama Taxes Compare, 2024:

• In FY 2022, adjusted for population, Alabama collected less in state and local taxes than all but one other state, Tennessee. 

• Alabama’s per capita property tax collections are the lowest in the nation. That helps owners of homes, farms, and timberland but creates a revenue deficit, leaving state and local governments with less to spend on providing government services such as education, health, and public safety. 

• Alabama’s state and local sales tax rates are among the highest in the U.S., compensating for low property taxes.  

• Alabama’s income tax does not provide the balancing effect income taxes in other states do. Low-income workers begin paying taxes at a lower threshold than any other state. At the other end of the spectrum, Alabama is the only state that allows a full deduction for federal income taxes paid, a tax break that benefits high-income earners. 

Alabama’s rankings in per capita state and local tax collections were generally consistent with rankings in prior years.  

For most of the past thirty years, Alabama has consistently ranked last in the Southeast and last in the U.S. in terms of per capita tax collections. In recent years, Alabama has traded that last-place spot back and forth with Tennessee, thanks to tax-cutting measures in that state. This year, according to the Census survey, Tennessee returned to the bottom spot, collecting $4 less per capita than Alabama. Tennessee’s income tax on dividends continues to decrease as the state phases it out.

Read the full report below or click the link here.

Alabama voters adopted a revised and reorganized Constitution in 2022.

However, the “new” Constitution preserved the fundamental attitudes and mechanics of the previous Constitution.

Adopted in 1901, that constitution was designed for an agrarian state, strictly limiting government power to tax land. It forbade the state from engaging in “internal improvements” and disenfranchised blacks and poor whites. Some of those provisions were loosened through amendments over time. Others were found unconstitutional and struck down by the federal courts.  

But one of the essential elements remains its concentration of power in the state government, the Legislature in particular.

Local governments were granted only the powers the Legislature or the Constitution explicitly permitted.

The ruling elite of the time looked with disdain at local government officials. Thomas L. Bulger of Dadeville, a delegate to the Constitutional Convention of 1901, expressed the prevailing attitude during the constitutional debates:

“No gentleman on this floor will contend that his Commissioners’ Court at home is more capable of legislating for the people of his county than the General Assembly, composed of 100 select men,” Bulger said.

And thus, to this day, a sizeable portion of the state Legislature’s business pertains to matters that are specific to particular counties or cities, not the state itself.

More than 35,000 local laws govern everything from local taxes to whether a sheriff’s deputy can keep his gun and badge upon retirement. Over time, in a confusing and convoluted process, the Constitution was amended over 1,000 times to meet the needs of modern life, swelling the document into the longest state constitution in the nation. It is believed to be the world’s longest constitution, and even with the 2022 reorganization, it will continue to grow.

The bulk of the state’s fundamental law is now made up of exceptions and exemptions to the general framework and principles a constitution is supposed to enumerate. Two-thirds of Alabama’s constitutional amendments apply to individual cities and counties. In effect, every county has its own version of the Constitution. And counties and cities still must ask the Legislature for the tools they need to manage basic affairs.

In many ways, though, the lack of home rule in Alabama reflects how Alabamians feel about government. They want limited government. They want limits on taxation. They do not trust governments to carry out their wishes. And they want to be left alone.

That is, until they demand that government step in and solve a problem. And, often, that requires a trip to Montgomery.

The balance of power and responsibility between state and local officials is an eternal struggle.

In the 1901 debates, Bulger was answered by John A. Rogers of Gainesville in Sumter County, who asked:

“Why is it that these people can select such fine representatives to the Legislature, and yet it is feared that they won’t be able to select satisfactory County Boards to handle these matters?”

Perhaps in the 21^st century, it is time to revisit Roger’s thoughts and consider whether the same voters who elect Alabama legislators to enact state policy can be trusted to vote for local officials from their own communities who will reflect citizen wishes on local matters.

Read the full report here: The Government Closest to the People? The Statehouse, the Courthouse and City Hall.

———-

This report is one of a series of reports examining Alabama’s current constitutional framework, identifying remaining obstacles to a modern constitution and possible paths forward in areas such as education, economy, healthcare, democracy, liberty & justice, finances, and related areas.

The project is supported, in part, by the Alabama Citizens for Constitutional Reform (ACCR). Both ACCR and PARCA are nonpartisan organizations, and our members and supporters are Republicans, Democrats, and independents. Former Governor Albert Brewer and former Samford University President Thomas Corts, both deceased, were founding leaders in both organizations.

Alabama tax revenues continue to trend toward more normal patterns after a wild post-pandemic ride. The Education Trust Fund, powered by state income and sales taxes, grew modestly, collecting 2.2% more than the previous year. Meanwhile, growth in the General Fund cooled but still posted an unusually high increase of 7%, boosted by high interest earned on state deposits and continued growth in tax revenue from online sales, insurance, and property taxes.

The General Fund (GF) supports non-education spending, while the Education Trust Fund (ETF) supports spending on K-12 schools, colleges and universities. From FY 2021 through FY 2023, the two funds saw unusual surges of growth related to post-pandemic economic conditions and shifting patterns of consumption.

In 2024, the GF maintained its winning streak. Thanks to budget surpluses, replenished stockpiles of rainy day reserves, and federal relief and investment funds deposited in state accounts, Alabama has a growing body of cash in its accounts, which earn interest. At the same time, interest rates have stayed high as the Federal Reserve tries to cool inflation. As a result, the state revenues from interest grew by more than $150 million, up to $557 million.

Scroll below or click this link to continue reading PARCA’s latest report, Alabama State Tax Collections, 2024: Increases, Decreases and Trends in the Revenue Supporting the State Government.

When Alabamians vote on November 5, they will be asked to vote on one statewide amendment.

“Proposing an amendment to the Constitution of Alabama of 2022, to grant certain sixteenth section and indemnity school lands that are owned in fee simple by the Franklin County School System, are located in Fayette County and Walker County, and are for the exclusive use of schools in the Franklin County School System to the Franklin County Board of Education; and to provide for the distribution of any proceeds and interest generated by this land.”

Proposed by Act No. 2024-301 (House Bill 302, 2024 Regular Legislative Session)
Bill Sponsor: Representative Kiel

This proposal seeks to amend the Constitution of Alabama of 2022 to address the management of a piece of land in Fayette and Walker Counties that is to benefit the Franklin County Board of Education.

Since this Amendment concerns land owned in two counties and a school board in a third county, it requires a statewide vote.

The land in question is designated to support public education and stems from an eighteenth-century practice where the federal government designated land in each county for the support of public education in that county. These designations predate Alabama’s statehood.

In the late nineteenth century, the Alabama Legislature gave some school boards, including Franklin County, additional land, sometimes outside their home county, to ensure each school board owned land of approximately equal value.

State law stipulates that such lands are held in trust by the Alabama State Department of Education and managed by the Alabama Department of Conservation and Natural Resources. The Department is empowered to lease or sell the land, with revenue provided to the school system the land is designed to support.

Amendment 1 concerns land located in Fayette and Walker Counties that is to benefit the Franklin County Board of Education. The Board cannot independently manage the land and cannot sell the land without the approval of the State Superintendent of Education and the Governor.

Amendment 1, if approved, enables the Franklin County Board of Education to manage and sell the land without prior approval and retain all revenue.

Continue reading the full analysis of Amendment 1 here.

In recent years, Alabamians’ rate of participation in elections has lagged behind other states as electoral competition has decreased and as the state has failed to adopt measures other states have that increase the convenience and access to voting. According to political scientists, Alabama “cost of voting” is among the highest in the country, ranking No. 46 among the 50 states. Meanwhile, most other states now provide measures like early in-person voting and no-excuse absentee voting, measures that correlate with increased participation.

A new report by PARCA, How Alabama Democracy Compares, provides a detailed comparison of Alabama’s approach to voter registration, access to ballots, and democratic participation with those of other states.

This report is an installment of PARCA’s yearlong series on the unfinished work of reforming Alabama’s Constitution. This project is supported, in part, by the Alabama Citizens for Constitutional Reform (ACCR) Foundation.

Alabama has a history of limiting participation in the democratic process. The state’s 1901 Constitution disenfranchised blacks and poor whites for more than half a century, until, inspired by the Civil Rights Movement, the U.S. Congress and federal court swept away discriminatory barriers to voting.

In 2022, Alabama adopted a revised and reorganized state constitution, deleting the last written relics of the original discriminatory language on voting rights. However, the report makes clear that Alabama has not kept pace with other states’ adoption of measures that make it easier and more convenient to register and vote.

In addition to the report, PARCA’s data dashboard includes interactive versions of the charts, with information drawn from the National Conference of State Legislatures, the U.S. Census Bureau, and the University of Florida Election Lab.

More Alabama high school students graduated ready for college or careers in 2023, according to data recently released by the Alabama Department of Education.

Printable PDF available here.

Students in the Class of 2023 made gains on all measures, bouncing back from the setbacks suffered during the pandemic and closing the gap between the percentage of students receiving a diploma and the percentage of students meeting the definition of college and career readiness: 91% of seniors graduated, 84% of seniors were college and career ready. That’s the highest readiness rate ever recorded.

The results show progress toward a goal established by the state Legislature and adopted by the State Board of Education that all students demonstrate college and career readiness in order to graduate.

More seniors graduated in 2023, even though this cohort of seniors was smaller than the Class of 2022. Alabama’s college and career readiness rate (CCR) increased by five percentage points over the levels recorded in 2022.

In percentage terms, student readiness increased on every measure. However, college readiness, as measured by scores on the ACT, is still lower for the Class of 2023 than it was for graduating classes before the pandemic.

Still, improved performance on the ACT accounted for the biggest gains in the number of students reaching the CCR benchmark. Follow this link for PARCA’s analysis of ACT Scores for the Class of 2023.

Close behind were big gains in the number of students earning the CCR by successfully completing career-oriented courses taught at high schools, vocational centers, or community colleges, courses known as career technical education. Also, the number and percentage of students earning a career-ready score on ACT’s WorkKeys test increased. A deeper dive into 2023 WorkKeys results is available here. The number of students earning credit through dual enrollment courses at community colleges or universities also increased.

Alabama’s high school graduation rate is among the highest in the country, though that is a relatively recent phenomenon. In 2012, Alabama’s high school graduation rate was 75%, trailing the national average of 80%. By 2018, Alabama’s graduation rate had climbed to 90%, exceeding the U.S. rate of 85%. In 2022, the most recent available year for comparison, Alabama’s graduation rate was tied with the U.S. at 88%.

With the sharp rise in the graduation rate came concerns that some students were being awarded diplomas but weren’t prepared for the next step. In 2018, despite that 90% graduation rate, Alabama’s college and career readiness rate was still at 75%.

Pressure to close that gap between graduation and college and career readiness has been building. Last year, the Legislature passed a requirement that by 2026, all students, in order to graduate, must have met one of the Alabama Board of Education’s definitions of college and career readiness. The Legislature subsequently provided $25 million in FY 2024 to support schools in expanding opportunities for college and career readiness. Last year, Gov. Ivey’s Commission on Teaching and Learning recommended allocating $25 million in ongoing support for the grant program.

Students can demonstrate that they are ready for college or the workforce in several ways:

1. Achieve a benchmark score in one subject on the ACT. Benchmarking on the ACT indicates that a student is likely to succeed in a college class in that subject.
2. Earn a Silver Certification or above on the ACT WorkKeys test. WorkKeys is a test of knowledge, communication, and comprehension as they are applied in the workplace. Scoring Silver or above indicates a student is ready to enter the workforce in most career fields.
3. Earn college credit through Advanced Placement or International Baccalaureate courses taken in high school.
4. Earn college credit through dual enrollment. A high school student can complete courses at a community college or university while in high school. These can be academic or career-related courses.
5. Complete a progression of Career Technical Education courses in a field.
6. Earn an Industry Recognized Credential as part of a career technical education course.
7. Participate successfully in an In-School Youth Apprenticeship Program approved by the Alabama Office of Apprenticeship.
8. Successfully enlist in the military.

While progress is being made, gaps remain.

In 29 school systems, all graduates were college and/or career-ready. In 20 of those systems, more seniors were college and career-ready than graduated.

On the other hand, in six school systems, the CCR rate was 20 percentage points lower than the graduation rate, indicating that 20% or more of the students who received diplomas hadn’t demonstrated readiness for college or the workforce.

The gaps in graduation rates between subgroups within the school population are relatively narrow: 93% of White students graduate compared to 89% of Black Students and 87% of Hispanic students. Gaps are wider when it comes to college and career readiness: 89% of White students graduate college and career-ready, but only 76% of Blacks and 79% of Hispanics do. Looking at the individual CCR measures, the gap between Blacks and Whites is highest in the percentage of students benchmarking on the ACT. It’s narrowest in terms of the percentage of students earning credit through career technical education. In that category, Black and Hispanic students have a higher CCR rate than Whites.

Using the tabs and menus in the visualization, you can explore the results for individual schools and school systems.

---

Please consider supporting PARCA. A contribution to PARCA is an investment in our state’s future. As a 501(c)3, charitable contributions allow PARCA to maintain its independence and ability to provide non-partisan support to communities throughout the state. All donations are tax deductible.

VOICES for Alabama’s Children published the 2023 Alabama Kids Count Data Book today, marking the 30th edition of the book published by the nonprofit. For the 8th year in a row, PARCA worked with VOICES as a data partner for the project.

– Children of color and children in poverty are shown to have much poorer outcomes and much poorer achievements in education.

– Child population continues to decrease. Over the last year, the number of children grew in only 20 of 67 counties.

– Children in Alabama are becoming increasingly more diverse ethnically and racially. While white and Black child populations are declining, since 2000, Hispanic children grew approximately 276%. The Asian/Pacific Islander population grew by 120%.

– The infant mortality rate has slightly decreased from 8.1 to 7.6 per 1,000 live births from 2011-2021. In real numbers, that means that 443 babies did not live to their 1st birthday in 2021. Maternity care is critical. 34.3% of Alabama counties are defined as maternity care deserts. More than 28% of Alabama women had no birthing hospital within 30 minutes, which is more than double the U.S. rate.

– In 2022, the percentage of Alabama high school students meeting college and career ready requirements was 79.1% from 76.5% in 2021.

– 2023 Work-based learning programs (Dual Enrollment and Career Training Programs) are estimated to have had an economic impact of $420,209,126.

– From 2015-2023 there has been a 16.9% increase in the number of children entering foster care services. Parental drug use is the leading reason for children entering foster care, making up 44%, followed by neglect at 22%.

– 10.4% of children in the state are living in extreme poverty. Black and Hispanic populations are disproportionately affected (38.3% and 36.7% respectively), while white children make up 13.5% of children in extreme poverty.

See how children in all 67 counties of our state are faring in education, health, economic security, and more. VOICES believers that every child in Alabama should have access and opportunity to thrive and become all they can be, and hopes that by utilizing this book’s insights, we can identify the challenges, set priorities, track our progress, and achieve real outcomes for children and families.

Access the 2023 Alabama Kids Count Data Book here.

Want to see this data at the national level? Visit the national KIDS COUNT Data Center to access hundreds of indicators, download data and create reports and graphics!