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Tuesday, February 8, 2011

State finance chief: expect cuts, layoffs

The new state finance director said he does not see a way to avoid laying off state employees in the 2012 fiscal year, which begins Oct. 1.
"I haven't found any options that would avoid layoffs entirely," finance director David Perry said to legislators.
Lawmakers are hearing from state budget officials and agency heads this week as they begin to look at shaping budgets for the 2012 fiscal year. Legislators begin crafting the budget for the 2012 fiscal year when they convene on March 1.
Perry and Joyce Bigbee, director of the Legislative Fiscal Office, also talked about the likely need for cuts this year to ensure the budget is balanced.
Perry and Bigbee said the economy is improving, but they foresee a tough 2011 and a tougher 2012, especially without the infusion of billions in federal stimulus funding that has helped balance the budgets in the last two years.
Medicaid, corrections and the state court system account for more than half of the money in the current general fund, Perry said. And the court system, through a vote of the Alabama Supreme Court, has protected itself from many cuts, he said.
Level-funding Medicaid alone would eat up more than half of the 2012 general fund budget, Perry said.
Perry said the general fund budget and the education budget have each been cut about 20 percent in the last two years as the recession has ravaged revenue coming into the state.
He said difficult decisions must be made. With the state's fiscal condition, Perry said "everything must be on the table at this point." Strategically, state officials should look at whether they should continue certain programs because there are some programs they will not be able to sustain, he said.
Perry said the general fund, which is the budget for most non-education entities, is in much worse shape than the education budget, which is more likely to avoid layoffs.
Perry, the finance director for new Gov. Robert Bentley, said they are not just looking at cuts, although that is the primary focus. He said, as Bentley talked about during the campaign, they also want to try to collect taxes that are on the books that people are currently not paying, such as the use tax on web purchases.
Perry said he has been meeting with agency heads in his office about the effects of cuts on those agencies and to determine which agencies can absorb those cuts without "significant pain." After those meetings, Perry said the administration will share its recommendations with lawmakers.
"In many cases, these consequences will be severe," Perry said.

--posted by Sebastian Kitchen

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