State Budget Practice Report Cards and Budget Resource Guide
Alabama’s budgetary practices are among the nation’s weakest. In the five budget categories graded by the Volcker Alliance from fiscal 2015 through 2017, the state did slightly worse than nearby Arkansas and far less well than neighboring Mississippi, with which it is often compared.
In budget transparency, Alabama (along with only two other states—Arkansas and New Mexico) received D grades in all three years studied. Like Arkansas, New Mexico, and Oklahoma, Alabama failed to produce a consolidated budget website. Having such a site is a best practice that can give taxpayers, policymakers, and others an opportunity to learn critical facts about a state’s budgetary status via a single online portal.
Alabama earned even worse grades in budget forecasting, getting straight D-minuses. It lacked consensus revenue forecasts that can give the executive and legislative branches a single number upon which to build a budget, didn’t provide multiyear expenditure forecasts or revenue forecasts, and failed to provide a detailed rationale to support revenue growth projections. Such shortcomings hamper Alabama’s ability to plan for the future.
One area in which the state performed better was the level and management of its fiscal reserves, where it earned a B in each of the years studied. Although Alabama did not adhere to the Volcker Alliance’s recommendation that general fund or rainy day account balances should be tied to historical revenue volatility, it has maintained a positive reserve balance and, unlike some other states, has formal policies for disbursing and replenishing its reserve funds.
To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.
The report cards found here contain grades of the state's budgetary practices during the fiscal years of 2015 through 2017. Each state received marks in five critical categories, based on their adherence to best practices in several key budgeting indicators. The five categories covered methods used to achieve budgetary balance as well as how budgets and other financial information are disclosed to the public.
States received grades of A to D-minus (there are no “failed states”) for their procedures in estimating revenues and expenditures; their use of one-time actions to balance budgets; how they oversee and use rainy day funds and other fiscal reserves; the adequacy of their funding of public worker retirement and other postemployment benefits; and the quality of transparency of budget and related financial information. The grades are based on research conducted by public finance and budgeting professors and students at eleven US schools of public administration or policy. The universities’ research efforts were augmented by Volcker Alliance staff, data consultants at Municipal Market Analytics, and special project consultants Katherine Barrett and Richard Greene.
State Budget Sources
State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses is a resource published by the Volcker Alliance designed to help public officials, policy advocates, journalists, academics, and concerned citizens fully understand the critical fiscal decisions that governors and legislators must make. The guide includes the links below to budgets for this state as well as legislative analyses of budget bills and treasurers’ or comptrollers’ monthly state cash-flow statements; capital spending plans; reports on public-worker pension funding and returns; and reports by local and national fiscal research organizations, bond rating firms, and associations of state fiscal and finance officials.