Alabama

During the hot summer days of 2003, Alabama Governor Bob Riley made an audacious proposal. Alabama, he proclaimed, would never be fiscally able to support critical services — including education — if the state didn’t have more money. He called for a $1.2 billion tax increase to erase a $675 million projected deficit and to help pay for more ambitious efforts in education and health care.

The legislature passed the proposal, subject to a referendum by Alabama residents. The citizens, however, voted 2-to-1 against the package. This was taken by some as a sign that Alabamians don’t believe in tax increases under any circumstances. But others interpreted the vote as a simple lack of faith in state government. “The voters said they believed Alabama already had money that wasn’t being used wisely,” says Don-Terry Veal, associate director of Auburn University’s Center for Governmental Services.

Although Alabama voters may have been shortsighted in their rejection of the tax package, their lack of faith may not be off base. “We have a lack of capacity to make good decisions here,” says one highly placed observer. “The legislature just brokers between opposing interests. And nobody is paying attention to minding the store, because there isn’t any institutional capacity to do that.”

Money C Long-Term Outlook Budget Process Structural Balance Contracting/Purchasing Financial Controls/Reporting People C+ Strategic Workforce Planning Hiring Retaining Employees Training and Development Managing Employee Performance Infrastructure D Capital Planning Project Monitoring Maintenance Internal Coordination Intergovernmental Coordination Information C Strategic Direction Budgeting for Performance Managing for Performance Program Evaluation Electronic Government • Population (rank): 4,447,100 (23) • Average per capita income (rank):    $26,338 (40) • Total state spending (rank):    $17,966,418,000 (27) • Spending per capita (rank):    $4,018 (33) • Governor: Bob Riley (R) • First elected: 11/2002 • Senate: 35 members: 25 D, 10 R • Term Limits: None • House: 105 members: 63 D, 42 R • Term Limits: None

Consider Alabama’s acquisition of new technology. The state is trying to coordinate the purchase of new IT systems, but historically, major IT acquisitions have been made without thought or analysis outside individual agencies. “The acquisition was only considered when the purchase order was made,” says Rex McDowell, director of the Finance Department’s IT office. “If you wait until the purchase order, the agency has already invested a bunch of time or money in the decision. And by then, it’s way too late to stop anything.”

In the wake of the 2003 tax defeat, Alabama’s efforts at fiscal reform struggle on. Its education fund — which receives the vast majority of the state’s sales and income tax revenues — is in structural balance, even if it’s not financed with much generosity. But the smaller general fund, which takes care of much of the remainder, including health care, is in trouble. “It’s a hole that we have to get out of,” admits Joyce Bigbee, the legislative fiscal officer.

The general fund was cut by 17 percent in 2004 and another 8 percent in 2005. Even the budget office was slashed by 25 percent over two years. Statewide, there’s been a hiring freeze since 2003. “It’s hard to retain people, good quality people, when they say they’ve gone two years without a raise and the future doesn’t look too good either,” says Bigbee.

Meanwhile, the state’s roads and bridges are in alarming shape. There’s a maintenance backlog estimated at $1.6 billion, and each year maintenance falls at least an additional $50 million behind identified needs. Officials insist that safety is not yet a major issue, but that may just be a matter of time.

Amid all these harsh realities, however, there is a glimmer of hope in Alabama government. When Riley’s tax program was turned down, the governor decided it was time for the state to provide proof of its efficiency so that the result might be different in the future. Thus was born Alabama’s new Smart Budget program — one of the current administration’s top priorities. It is an attempt to use a rigorous performance budgeting process to justify the way the state’s dollars are being spent. This is the first significant effort ever launched in Alabama to encourage strategic planning or performance budgeting.

All the state agencies have submitted strategic plans with measurable goals and these have been reviewed and rewritten. “We want to have a plan that measures what results cost,” says Jim Williams, executive director of the Public Affairs Research Council of Alabama. “And if some of those results aren’t very good — if you admit you can’t accomplish your statutory mission 50 percent of the time because you don’t have a well-financed state government — then it’s hard for people to ignore that.”

For additional data and analysis, go to: http://results.gpponline.org/alabama

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