'Trickle-down' still works: Budget cuts at the top affect local governments below
by Patrick McCreless
Star Staff Writer
Feb 12, 2011 | 2105 views |  0 comments | 7 7 recommendations | email to a friend | print
Winding through Calhoun County, the Chief Ladiga Trail is a magnet for many bicycle and jogging enthusiasts every year.

But all that use takes its toll and last year Jacksonville had to resurface its section of the popular 33-mile trail.

It did so with a state grant.

“Projects like that we can’t do, not with the economy the way it is,” said Jacksonville Mayor Johnny Smith. “A lot of our funding for street improvement comes through the state.”

And with that state funding possibly drying up, similar future projects may be placed on the back burner.

Deep cuts are expected for the upcoming Alabama general fund and education budgets — cuts that could mean delays in certain municipal projects and higher operations costs for county governments.

During budget hearings Tuesday, Joyce Bigbee, director of the state Legislative Fiscal Office, told lawmakers that significant revenue shortfalls are projected for fiscal year 2012, meaning layoffs and department cuts will likely be considered.

Bigbee said revenue for the general fund, which pays most of Alabama’s non-education expenditures, is expected to drop this year to $1.32 billion from $1.88 billion, or 29.5 percent.

Revenue for the education trust fund could drop to $5.48 billion from $6.17 billion this year, or 11.1 percent.

The revenue shortfalls are expected because unemployment is still high and federal stimulus money, which propped up the state’s budget when the recession hit, will run out next year.

Calhoun County Administrator Ken Joiner said any financial cut the state makes always affects the County Commission’s budget. He said that while the county does not receive any money directly from the state that would be affected by budget cuts, decreased funding to state agencies and public education is eventually felt on the county level.

“Agencies out there that depend on funding from the state … schools in particular … when they get cuts, they come to counties and cities for more money,” Joiner said.

Joiner said any cuts the state might make to its prison system would mean higher costs for the county jail. State prisoners in county jails awaiting transfer to the prison system must be held longer if the state cannot afford to house them — and that means higher costs for county governments, Joiner said.

It typically costs the county $15 per day to house a state inmate. And on average, state inmates are held 30 days before they are transferred to prison.

Between June 2010 and January 2011, the county jail had 451 state inmates, which cost the county an average total of $202,950.

Sheriff Larry Amerson said a backlog of state prisoners in county jails has already been a problem for years.

“Our jail budget is already higher than our law enforcement budget, but we’ve got to have jails,” Amerson said.

Joiner noted that certain county road projects could be delayed by state budget cuts as well.

“Things will be very tight … there will not be a lot to work with,” Joiner said. “We can’t pick up everything (the state) loses.”

The state cuts will be felt on the city level as well, but the sting will not hurt nearly as much as on the county level.

“We have some grants that come from the state or state agencies, but most of our revenue is generated from taxes we levy,” said Jarrod Simmons, assistant finance director for Anniston. “We will not see a huge impact from cuts to the state budget.”

Simmons said the school systems will be hurt more since they get much of their funding from the state.

“The overall state of the economy is what hurts us,” he said.

Like the state itself, Anniston has seen its funds decrease since 2008 due to decreases in local sales tax revenue. The city’s revenue between October 2007 and October 2008 was $18.05 million, the highest it had been in several years. But after October 2008, the recession began to take its toll and by October 2009, Anniston’s revenue had dipped by $720,000 to $17.33 million. Anniston’s revenue dropped further to $17.13 million between October 2009 and October 2010.

A recent bright spot for Anniston was when revenues for December jumped to their highest levels in more than 10 years. Simmons said part of the increase was due to a rise in sales tax, but most of it can be attributed to a jump in use tax.

“There are some businesses that have been investing in certain types of equipment … it may have come from out of state and shipped here … tax comes from that,” Simmons said.

But despite the increase, Simmons said, he expects city revenue to remain relatively flat through 2011.

With Oxford’s annual revenue steadily increasing even after the recession hit, any state money might lose will not be a concern. Taking full advantage of Interstate 20, Oxford has become the retail hub of the county.

Between October 2007 and October 2008, Oxford pulled in $20.78 million in revenue. Its revenue increased to $22.59 million between October 2008 and October 2009 and again to $24.25 million between October 2009 and October 2010.

However, a portion of Oxford’s revenue increase can be attributed not to an increase in sales, but because the city passed a 1-cent sales tax for education in 2009.

Oxford is projecting a $33.8 million budget for the 2011 fiscal year.

Like Anniston, though, Jacksonville is projecting relatively flat revenue in 2011 and does not expect that to change if the state budget is significantly cut.

“We based our budget on the revenue being the same level as last year,” Smith said.

Jacksonville’s revenue stream has fared slightly better than Anniston’s — not taking as much of a dip after the recession struck.

Jacksonville’s revenue between October 2007 and October 2008 was $5.29 million. The city’s revenue decreased by $80,000 to $5.21 million in the October 2008 - October 2009 fiscal year.

In the October 2009–October 2010 fiscal year however, Jacksonville’s revenue increased to $5.24 million.

Smith said the city has also brought in more revenue than expected in the last three months, which he attributes to a holiday shopping season that was better than average.

“It’s encouraging — I’m anxious to see if that continues,” he said.
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