People are moving to Alabama, and according to most recent population estimates, the growth is more widespread than it has been. Out of 67 counties, 36 saw population growth between July 1, 2021, and July 1, 2022, the period covered in the latest Census Bureau release. In the prior year, only 29 counties saw positive growth. Throughout the 2010s, only 24 counties grew.

Fig. 1. Numeric Change 2021-2022

The growth is particularly noteworthy because four factors were putting downward pressure on population growth:

• Death rates were still elevated in the wake of the Covid-19 pandemic
• The large Baby Boom generation is entering years of increased mortality
• Smaller succeeding generations have lower birthrates
• International immigration is still lower than historical norms

Printable PDF available here.

But in the counties that grew, and for the state as a whole, domestic migration — a net positive number of U.S. residents moving into the state — overcame the headwinds.

Fig. 2 Domestic Migration 2021-2022

The strongest growth was among the usual suspects: Baldwin County in the south and Madison and Limestone counties in the north, with Lee, Shelby, and Tuscaloosa counties also continuing positive growth trends. The Huntsville area’s growth continues to spread across North Alabama, with population growth accelerating in The Shoals (Lauderdale and Colbert), Cullman, Morgan, and Marshall counties.

The Wiregrass and Northeast Alabama counties also grew, including Calhoun County, which had been on an extended population losing streak. Calhoun added over 600 new residents through domestic migration for a net population gain of 111. Etowah County attracted 524 new residents, but since deaths exceeded births, the population total declined slightly, down just 55 residents.

In percentage terms, Limestone County grew the fastest. That’s likely growth not only in Athens, the county seat, but also from Huntsville and Madison, which have spread from Madison County into Limestone. Generally, counties along the Interstate corridors are growing, as well as counties bordering Tennessee, Georgia, and Florida. On the western border with Mississippi, most counties are losing population.

Urban losses

Alabama’s traditional urban centers — Jefferson, Montgomery, and Mobile — lost population, primarily due to domestic outmigration.

That population loss parallels national trends among urban counties: in the wake of the pandemic, most population centers lost population. According to the estimates, Jefferson County’s population decreased 4,588 in 2022. Since the 2020 Census, Jefferson County’s population has decreased by almost 9,000.

Rate of Domestic Migration, 2021-2022

There are signs of a turnaround, though. Nationally, large urban centers began seeing population recovery in 2022. Jefferson County’s population loss was lower in 2022 than in 2021. International immigration and natural increase helped fuel population growth in urban centers elsewhere, including among Southern neighbors. Alabama’s big cities saw some population growth through international immigration. However, Alabama generally sees much lower rates of international in-migration.

Rate of International Migration, 2021-2022

Divergent Rates of Change

Alabama’s Black Belt and other more remote rural counties continued to lose population through residents moving away and through higher death rates. According to the estimates, Lowndes, Perry, and Greene Counties are each now below 10,000 in population, with Greene being the least populous at 7,422. Bullock, Coosa, and Wilcox are close to 10,000. Nationally, about 1,000 of the more than 3,000 counties in the U.S. have 10,000 or fewer residents.

Population Estimates, 2022, U.S. Census Bureau

In addition to outmigration, rural counties tend to have negative rates of natural change: in other words, more deaths than births. Those counties tend to have a higher median age, with a higher share of the population over 60. That’s a population that has an increased risk of death from natural causes.

Rate of Death, 2021-2021

On the opposite end of the spectrum are counties with a higher proportion of the population who are young adults or in their child-bearing years. In only eight counties have births outnumbered deaths since 2020: Lee, Shelby, Madison, Montgomery, Tuscaloosa, Limestone, Marshall, and Autauga.

Rate of Natural Increase, 2021-2022

The tabs above the images allow you to explore statistics for individual counties for births and deaths, and domestic and international migration, as well as numeric change over time.

The National Picture

Alabama’s population change is occurring in the context of national trends that are visible when zoomed out to the national level. Population losses in Alabama’s Black Belt are connected to patterns along the Mississippi River from Mississippi and Louisiana, Arkansas, Missouri, and even Illinois. Baldwin County’s growth rate has echoes along the coasts of Florida, Georgia, and North and South Carolina coasts. Huntsville’s growth sits at the edge of the mountain interior southern region stretching across Tennessee, North and South Carolina, and Northern and Central Georgia.

Gov. Kay Ivey identified affordable and high-quality child care as a key priority in her speech to the Public Affairs Research Council’s Annual Forum, held Friday, March 10, at the Harbert Center in Birmingham.

“Many Alabamians and others across the country face a dilemma in finding safe, reliable childcare,” Ivey told the crowd of close to 400, “As more and more Alabamians join the workforce, which is a very positive development for our state and quality of life, more working families will also be in need of childcare services. There is no better time than right now to address this fundamental need facing this state.”

Friday’s Forum featured researchers, parents, childcare providers, and employers discussing the state’s challenges in fostering an adequate supply of affordable, convenient, and high-quality care for young children and their working parents.

Below you can find the program for the event, which includes biographies of the featured speakers.

Speakers included Alison Hooper, an assistant professor of early childhood education at the University of Alabama’s College of Education, whose research has mapped childcare availability and access across the state, and Cynthia Osborne, the executive director of the Prenatal-to-3 Policy Impact Center and professor of Early Childhood Education and Policy at Vanderbilt University’s Peabody College of Education and Human Development.

Osborne’s center has developed a 50-state comparison of key policies that relate to childcare, plus statistical comparisons of child well-being and policy options for delivering additional support to children and families. That includes a summary of findings for each state, including Alabama.

Both presentations are embedded below.

The Forum also included a panel facilitated by Janina Nobles, Child Development Instructor and Program Advisor at Bevill State Community College. The panel included a collection of parents, a childcare provider, and an employer to provide a range of perspectives on the issues happening in childcare.

PARCA’s How Alabama Taxes Compare, 2022 Edition, uses data published by the U.S. Census Bureau’s Annual Survey of State and Local Finances to compare tax revenues across the state. This most recent set of revenue and expenditure data cover state and local fiscal years ending between July 1, 2019, to June 30, 2020, identified as the fiscal year 2020. That means the state of Alabama’s data is from the fiscal year that ended September 30, 2019.

Key Findings

• In 2020, Alabama had the nation’s second-lowest state and local tax collections per capita.

• Alabama has the lowest per capita property tax collections in the nation.

• Alabama has among the highest sales tax rates in the U.S.

• Alabama is now the only state that allows state individual and corporate income taxpayers to fully deduct federal income taxes paid. That provides a tax advantage for high earners.

• Despite a recent change that provides some relief, Alabama begins taxing income at the lowest threshold in the U.S.

Alabama state and local taxes collections are low due to two factors: lower rates and a smaller resource base to tax. Alabama’s Per Capita Gross Domestic Product, the total value of all goods and services produced, ranks in the bottom five of states, meaning we have a lower resource base to tax. However, these other states make a greater tax effort and, thus, generate more money to provide services.

This gap between Alabama and other states will not be so obvious when newly elected lawmakers convene in March to craft budgets for FY 2024. A strong inflationary economy, high employment levels, and a flood of federal relief have supplemented state spending and stimulated record levels of state and local tax collections in the most recent year.

But as proposals are floated to make changes to tax rates, it’s important to understand the tax system in context, including a history of underinvestment compared to other states. Any changes should ensure adequate revenue, promote fairness and opportunity, and increase ease of collection and compliance.

How Alabama’s Taxes Compare, 2022 Edition, explores Alabama’s tax system in more depth and context.

Printable PDF version available here

Below are interactive versions of the charts in the report.

Alabama tax collections grew at an eye-popping rate in the 2022 fiscal year, with particularly strong growth in income tax collections (up 27% over 2021) and online sales (up more than 20%). The strong collections produced surpluses in both primary state accounts, the Education Trust Fund (ETF) and the General Fund (GF).

Printable PDF available here

While the growth is sparking talks of rebates and tax cuts, it will be important for legislators to keep in mind that inflation will increase the cost of operating state government. At the same time, rising interest rates and diminishing levels of federal relief will likely slow growth going forward.

Alabama has had a string of record years when it comes to tax collections, with no discernable drag caused by the pandemic shutdown and the subsequent recovery. Preceding the pandemic, Alabama experienced historically low unemployment and was beginning to increase labor force participation rates, drawing discouraged workers off the sidelines and contributing to income gains.

While the pandemic sent a sudden jolt through the economy, federal relief kept paychecks coming for many and provided stimulus money to households as well. Alabama’s dip in the second quarter of 2020 wasn’t as sharp as some states, and the economy reopened more quickly than some.

In FY 2021, the continued federal stimulus and the recovering job market produced record growth in tax collections. And in FY 2022, total collections grew even faster, 18% across both funds, with the strongest growth in the Education Trust Fund.

The Education Trust Fund

The ETF receives the receipts of state sales and income tax, plus a handful of other revenue streams.

Income and sales tax collections rise with a growing economy and can shrink when the economy contracts and goes into recession. Inflation, which has averaged below 3% over the past 20 years, averaged over 7% during 2022. Since people spend more, sales taxes rise, and tax collections also grow.

Income taxes

At the same time, during FY 2022, there was a strong demand for workers, with historically low unemployment. To attract and retain employees, employers increased wages. Alabama’s workforce returned to and exceeded pre-pandemic numbers in FY 2022. Alabama’s labor force participation rate is still 5% lower than the U.S. rate, but the strong job market has drawn more people back into the labor force.

During FY 2022, the number of people working in Alabama surpassed pre-pandemic peaks, though that didn’t occur until July 2022.

With more workers receiving higher pay comes higher income tax collections. The income tax receipts were up 27% in FY 2022, contributing a total of $7.2 billion to the ETF, up $1.5 billion from 2021. And 2021 wasn’t a down year. Income tax collections increased 21% in 2021. Even in FY 2020, the fiscal year that included the pandemic contraction, income tax collections rose almost 7%.

Rising income tax collections resulted from a variety of factors. In addition to rising wages, corporate profits have been, and continue to be, high. Alabama corporate income tax collections were up 33% in 2022, an increase of $325 million over FY 2022.

Another likely contributor to the substantial 2022 collections was stock market gains in 2021, a year in which the S&P 500 was up by 27%. Taxes on those gains would have flowed in during the 2022 fiscal year.

Considering the poor stock market performance in the 2022 calendar year, revenue from that source will be down in Fiscal Year 2023.

A final contributing factor to the growth of income tax collections is the return to a normal level of auditing by the government after pandemic-related restrictions on face-to-face interactions slowed those efforts. Some of the gains may be attributed to settlements from prior years and increased compliance in the current year.

Sales taxes

Meanwhile, state sales tax collections were up 7.66%. Inflation over the period is estimated to have been 7.7%. The state makes some adjustments to the sales tax before making a final deposit in the Education Trust Funds, which slightly decreased the percentage gain to the Education Trust Fund. Ultimately, revenue from sales taxes flowing to the ETF increased 6.8%, or $159 million. The Use Tax, a companion to the sales tax but assessed on out-of-state purchases of goods and machinery, was up 18%, contributing an additional $35 million to the ETF.

The state portion of the Simplified Sellers Use Tax (SSUT), a tax on online purchases, was up 21%, suggesting a continuing migration toward online shopping. Overall, the SSUT brought $311 million, but 75% of the proceeds went into the General Fund. The SSUT contributed $78 million to the ETF, $13 million more than in 2021.

Overall, the Education Trust Fund grew 21%, an increase of $1.78 billion, with total collections at $10.42 billion.

Because of the Rolling Reserve Act, the ETF is budgeted conservatively, with spending capped by a formula. That formula computes a historical growth rate for the fund, keeping lawmakers from overspending in periods of high growth and preserving funds for lean times. It more than did its job in FY 2022. The ETF bought in $2.75 billion more than the state budgeted for education spending in FY 2022.

When the Legislature convenes in March of 2023, the body will decide what to do with that surplus. While some are proposing tax rebates or cuts, others are urging caution.

The massive injection of federal aid for education, which amounts to over $3 billion over three years, will be tapering off in 2024. Teacher compensation will need to increase to keep pace with inflation and to attract young people into the profession. Regardless, the state has healthy reserves and has continued to budget conservatively with state funds. The FY 2023 ETF budget calls for spending $8.3 billion out of the ETF, $2 billion less than what was collected in FY 2022.

The General Fund

The General Fund also grew, but not at the same rate. This has been typical of the General Fund compared to the Education Trust Fund performance pattern. The Education Trust Fund grows fast when the economy grows, while the General Fund sees a slower growth rate. The General Fund is made up of a hodgepodge of revenue sources. It supports the operation of all the government’s non-education agencies, including Medicaid and the state prison system.

The Legislature has made several adjustments in recent years to increase growth in the General Fund. That’s important because expenses inevitably rise. Not only that, the state has chronically underinvested in some supported by the General Fund, the Department of Corrections, for example. A stable, growing revenue base is needed to address longstanding needs.  

Simplified Seller’s Use Tax

The most successful of those adjustments was the establishment of the Simplified Sellers Use Tax (SSUT). The Legislature chose to devote 75% of this tax on Internet sales to the General Fund, which has been one of the state’s fastest-growing revenue sources. The move continued to pay dividends in Fiscal Year 2022.

Revenue from the SSUT was up 21%, an increase of $40 million, for a total contribution to the General Fund of $233 million.

While it continues to grow rapidly as more commerce moves online, the SSUT’s growth rate is slowing. Between 2019 and 2020, revenue from the SSUT doubled, then grew by almost 40% in 2021. In the first years of the tax, revenue grew quickly as vendors who previously hadn’t collected online sales taxes joined the system. Digital commerce also grew especially quickly during the pandemic. The shift toward digital commerce will continue, but revenue gains won’t likely advance as rapidly going forward.

Other sources

Insurance company taxes also provided a major boost to the General Fund in 2022, up 13% or $65 million more than it did in FY 2021. The tax is assessed on the value of insurance premiums issued. The Insurance Company tax is the largest tax source in the General Fund at $554 million in FY 2022. Before FY 2021, $30 million of the Insurance Company Tax was transferred to the Education Trust Fund. That has ended, providing more support for the General Fund.

The Use Tax, at $272 million, was the second largest contributor to the General Fund. This is a tax on purchases of cars, machinery, boats, mobile homes, or other goods in other states for use in Alabama. A 2015 change in the distribution formula for the Use tax has allowed a greater portion of the tax to flow to the General Fund. In 2022, revenue to the General Fund from the Use Tax increased by 18%, providing an additional $35 million than in 2021.

Rising interest rates increased revenue from the interest earned off State deposits. Revenue doubled, increasing by $20 million to $40 million.

Higher energy prices boosted the tax revenue from Oil and Gas Production taxes, up by 80%, an increase of $17 million.

Total growth in the General Fund increased 8.4%, a slightly higher rate of increase than the inflation rate during the period. Total collections increased from $2.56 billion to $2.87 billion, up $31 million. By the end of 2022, receipts to the General Fund were $351 million above FY 2022 budgeted expenses. The Legislature anticipated the surplus and applied it to the 2023 budget.

The Big Picture

The revenue flowing into the General Fund and the Education Trust fund presents only a portion of the state government spending in Alabama. In addition to the taxes earmarked for the Education Trust Fund and the General Fund, other state revenue streams flow directly to agencies. For example, taxes on motor fuels flow to the Alabama Department of Transportation for highway building. State colleges and universities collected tuition. Federal funds help pay for highways, Medicaid, education, and social services.

About half of Alabama’s public spending is for education, and half is for non-education agencies.

Rainy Day

If a recession does cause a contraction in revenues, Alabama is in a better position to weather a downturn than in the past. According to a recent analysis by Pew Charitable Trust, Alabama has the 20th strongest reserves, with $1.4 billion stashed away in Rainy Day Funds. According to Pew’s calculations, Alabama could run 49 days on the amount it has in reserve.

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.

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.

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.

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.

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

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.