Legislators hope economy bounces back or it's trouble

MONTGOMERY - Legislators who propped up next year's two state budgets using federal stimulus money hope the economy rebounds. Otherwise, their joy at dodging the bullet for another fiscal year will become a nightmare.

The general fund and the education trust fund budgets that will pay for state government operations and public schools beginning Oct. 1 used more than $1 billion in federal money to prop up spending and keep teachers from being laid off and programs from being cut.

At about this time next year, the Legislature in the 2010 session will have used the other half of the two-year federal appropriation for the budget year that begins Oct. 1, 2010.

If the economy doesn't improve by 2011 when federal funds run out, it's not going to be a real fun time in Montgomery for the new Legislature and a new governor elected in 2010 who will be choosing between a budget rock and a hard place.

"We'll be in crisis without the assistance," said Rep. Marcel Black, D-Tuscumbia.

The Legislature adjourned the 2009 legislative session Friday with the two state budgets as its paramount accomplishment.

The education trust fund that helps fund education from kindergarten through college was $6.7 billion last year, $5.82 billion after proration this year, and is budgeted to be $5.73 billion next fiscal year. The budget relied on half of the state's allotment of federal funds and an optimistic revenue estimate to be balanced.

Rep. Richard Lindsey, D-Centre, is chairman of the House Education Appropriations Committee. "I'm optimistic since we only used 50 percent of the stimulus funds, we still have 50 percent left for next year," Lindsey said.

Sen. Hank Sanders, D-Selma, chairman of the Senate Finance and Taxation Education Committee, is optimistic but realistic.

"I fully expect the economy to rebound so that the students will not suffer," he said. "If it doesn't improve, we will take what we have and make what we need."

Last year's general fund was $1.89 billion. It is $1.96 billion this fiscal year after Gov. Bob Riley's 10 percent deficit reduction plan that amounted to de facto proration without the legal requirements.

Next year's general fund budget is $2.56 billion, but that includes about $1 billion in federal funds that are displacing hundreds of millions in state funds.

Next year's general fund was especially dependent on federal stimulus funds since it's about $600 million more than this year's state-funded budget.

Senate general fund committee chairman Roger Bedford, D-Russellville, didn't hesitate when asked what happens if the economy doesn't rebound and start refilling state coffers. "The national economy is beyond our control," he said.

Rep. Jack Page, D-Gadsden, vice chairman of the House government appropriations committee, said despite the state and nation's financial problems caused by the recession, essential services were maintained in next year's budget.

Riley amended the general fund budget over concerns about the Department of Corrections budget, but the Legislature overrode his veto.

Page said the prison system is getting slightly more money next year than this year because of $118.6 million in federal stimulus funds and what the Legislature did was merely reduce Riley's proposed increase.

The department's budget this year, after 10 percent in spending cuts, is $359 million. With state funds, the department's budget next year will be $366 million.

"Our concerns are three years down the road, and we hope by then the economy will turn around," Page said.

Two-term state Rep. Robert Bentley, R-Tuscaloosa, isn't seeking re-election in 2010, but is running for governor. If elected, he would have to manage the first post-federal stimulus budgets. The new governor will have a new Legislature to work with on his or her budgets for 2011-12, the first budgets without federal stimulus money.

"I think the governor in two years is going to have to be a wise steward of money," Bentley said.