For those unaware, the state of Alabama faces an immediate deficit of around $265 million with a longer-term $700 million due. Unlike the federal government, which can issue debt through various treasuries, the state of Alabama cannot issue debt to pay down present obligation.
The combination of the inability to write IOU notes and the constitutional balanced-budget amendment, which prohibits the state from spending more than its income, forces Alabama to generate new revenue quite quickly to fix a massive fiscal hole. Add in Alabama’s inability to change for the better without some sort of federal oversight and, voila, we’ve got ourselves a good ol’ crisis.
The origins of this fiscal crisis starts with Alabama’s ridiculous tax system. In 1988, The Public Affairs Research Council of Alabama published it first research paper. They wrote, “Alabama collects less in taxes per resident than all but two states, Mississippi and Arkansas.” (In the age old tradition of being an Alabamian, let’s take a moment and thank our neighbor to the west and Arkansas for being worse than us.) By 1994, Alabama earned the title it still holds to this day: the nation’s lowest tax revenue per capita.
What little tax revenue that is collected is earmarked according to Alabama’s State Constitution in specific allocations to specific departments. To make matters worse, Alabama earmarks 90 percent of tax revenue, compared to the next highest 63 percent of Michigan and the national average of 24 percent, according to the National Conference of State Legislatures. So not only do we fetter ourselves by having the lowest taxes per capita in the nation, but we inefficiently distribute money to departments based on the longest Constitution in the world. The PARCA report of 2013 aptly concludes, “This may seem the ideal recipe for limiting government and keeping its burden light. But cheap government is not necessarily efficient government.”
The years of government inefficiency and willful, conscious negligence of fiscal management hindered our state’s economic growth and potential because the state continually removed funding from critical areas of public need like education, mental health, prisons and courts and continues to do so. Since 2008, Alabama has made the second largest cuts to per-pupil funding for K-12 students in the nation and slashed higher education funding by more than $556 million, a 28 percent decrease in a few years.
Such deep cuts in education partially explains the annual rise in tuition across the University of Alabama System. Indeed, the University’s tuition from 2008 to 2014-15 has increased 72 percent for in-state and 51 percent for out-of-state students. It’s just basic mathematics: if one variable (state funding) in an equation decreases, another variable (tuition) must increase to ensure equality in University operations, all else constant. But the ramifications of years of the Alabama legislature cutting funds from education and the University gradually increasing tuition extend far beyond a basic math equation. The state of Alabama’s leaders will reap what they sow. And they shall have only themselves to blame.
Patrick Crowley is the Opinions Editor of The Crimson White. This column is part one of a two part series. Part two will be published next Thursday.
