“The best things in life are free, but you can give them to the birds and bees. I need money. That’s what I want.” – Berry Gordy and Janie Bradford

Last week we discussed some of the positive developments from this year’s state legislative session. There was one major positive development I left out because we tend to take it for granted every year.

Alabama’s executive and legislative branches created and passed a budget, so our state agencies and public education entities can function for another year.

Maybe this is an opportune moment to discuss how state government is funded. The challenge lies in getting you all the way through an article about budgeting before you nod off in your recliner.

Right off the bat, I need to clarify the Alabama Legislature does not pass one budget but instead passes two main appropriations bills each year. Appropriations is just a fancy word for funding.

One funding bill is for the education trust fund which provides money to everything involving public education in the state. The second funding bill is for the general fund which provides money to almost all government functions in the state outside of education, such as transportation, health, agriculture and many other areas.

According to the Urban Institute, Alabama and Utah are the only two states to divide their funding budgets between a general fund and an education fund. Most states just have one major budget bill they pass to keep the lights burning.

If you think having two major appropriations bills is too complicated – and there are arguments Alabama should combine the two appropriations into one big budgetary bill – keep in mind the federal government has to pass 12 appropriations bills every year.

Something else you may not realize is there are 19 states that only pass a budget every two years, according to the Council for Community and Economic Research, though most of those states specify how much is to be provided in each year.

Alabama passes a yearly budget, but the budget process, from planning in advance to spending all the allocated funds, takes about two years.

State agencies and public colleges began formulating requests in late summer and early fall of 2023 for the funding approved by the legislature a few weeks ago. Their budget requests were provided to the governor’s Executive Budget Office by Nov. 1.

This office then compiles all the information received, develops projections for how much revenue the state is expected to collect in the next fiscal year, communicates with the agencies and institutions about possible adjustments, and submits a detailed budget to the legislature by the beginning of its session.

The legislature works from the governor’s proposed budget to decide how much to spend on the general fund and education fund.

The legislature deals with these budgets just like a regular legislative bill. A general fund appropriations bill is introduced as well as an education trust fund appropriations bill. Those bills are studied and discussed in committees in both the house of representatives and the senate, just like any other bill, and both chambers have to pass identical versions of both funding bills.

Also just like any other bill, the two budget bills can be vetoed totally or partially by the governor. Though the governor makes clear the amount of funding she wants the legislature to provide in her proposed budget, the legislature can, and often does, make large and small adjustments to the governor’s original proposal, so a veto is possible.

The funding just approved by the legislature will be made available to agencies and institutions beginning in October of this year, so the funding is meant to sustain state agencies and institutions from Oct. 1, 2024, through Sept. 30, 2025.

Alabama’s constitution forbids the state from spending more than it brings in. Should revenues fall short of expectations – usually when the economy takes a downturn – state agencies and institutions will have to make cuts, also known as prorations, to make ends meet through the budget year.

This year the general fund has been budgeted around $3.4 billion and the education trust fund has been budgeted approximately $9.3 billion. Both are increases from the previous year.

States have benefitted from extra federal funding from the COVID-19 stimulus package in recent years. The funding dries up at the end of this year, so how Alabama adjusts to getting less federal money will be something to keep an eye on in future budgets.

Did you make it to the end? Congratulations! I knew you would not skim through the middle part. Budgeting may not be as exciting as hot-button issues, but we should never take for granted when the legislature is able to accomplish its main function.