Legislative General Fund budget committee members will start talking fiscal year 2027 next week.
Senate General Fund Committee Chairman Sen. Greg Albritton, R-Range, said the Aug. 26 and 27 budget hearings will include the “usual suspects” of state agencies, such as Medicaid, corrections, mental health, public health and human resources. The leaders of the Alabama Department of Transportation and Alcoholic Beverage Control Board are also on the agenda.
These summertime sessions have in recent years focused on the impacts of inflation on agencies or how they’re spending federal COVID-19 funds. This year, Albritton said, the federal “big, beautiful bill” will be front and center.
“(We want to know) their analysis of where we’re headed with this and how that’s going to affect or reflect on them,” he said.
State leaders know that some agencies will see cuts under the spending plan signed in July. Nationally, Medicaid and the Supplemental Nutrition Assistance Program will be cut by more than $1 trillion over the next 10 years. Exactly what those cuts and other changes in the bill will look like in Alabama is still being determined.
“I challenge you as to whether we actually know what is going to happen with Medicaid and SNAP because we’re listening to the folks that are the influencers on this,” Albritton said. “But this is a big bill and I’m sure there’s gives and takes and other things that are going to rearrange stuff more.
“The biggest question no one has addressed is, do we have any more control locally or not?” Albritton said.
The General Fund is up 3.22%, about $88 million, for the year to $2.8 billion, according to the latest state reports.
A notable decline in July revenues was the interests on state deposits, down 11.6% or about $5 million in July compared to a year prior. Interests on state deposits brought in $10 million to $60 million each year between 2015 and 2022, but an influx of COVID-19 federal relief funds and higher-than-normal interest rates took that revenue to $404 million in 2023 and $557 million in 2024. So far, that revenue is down about 5.5% for the year as state agencies spend that COVID-19 money by a late 2026 deadline.
Because there haven’t been the expected drops in the Federal Reserve-set interest rates, Albritton noted that income, and the General Fund’s total revenue, are still higher than expected.
If and when those interest rates drop, “we’re going to be hurting,” Albritton said.