Economic downturns magnify the inadaquacies of our state budgeting process. The state education budget, is particularly susceptable to economic fluctuations because state sales taxes and state income taxes are the primary source of funding. During strong economic times, the Alabama Education Trust Fund is flush with revenue and is hit the hardest when the economy slows down.
Representative Greg Canfield has proposed an innovative solution to this problem: Basing the budget on a 15-year rolling reserve. Under this plan, the legislature would be allowed to budget no more than and average revenue growth of the previous 15 years. Funds from high-growth years would be set aside to offset shortages from low-growth years.