Proration is the process of across-the-board cutbacks mandated by Alabama law to resolve shortfalls during the state’s budget year. The state’s two big budgets, providing money for education and most other services, have been prorated this year because of large shortfalls in revenue.
Because proration occurs midyear, after operating plans have been made and set into motion, the cutbacks are larger than they appear and especially disruptive. The use of this budget-balancing technique is common — the education budget has been prorated nine times in the past 30 years.
In January, the Public Affairs Research Council of Alabama asked a representative statewide sample of about 500 Alabamians their opinions about budget issues for the current legislative session.
When we asked whether cutting spending across the board is a good way to balance the budget, only 39 percent said it is, 54 percent said something else should be done and the rest didn’t have an opinion. Given some options, 49 percent of our respondents said setting aside money in advance is the best way to manage budget shortfalls, 21 percent preferred having the Legislature make cuts or raise taxes and 8 percent said let the governor make the decisions. Only 16 percent picked proration as the best budget-balancing method, while the remaining 6 percent didn’t have an opinion.
Our survey respondents named education as the most important service provided by the state, and they overwhelmingly approved of earmarking revenue for education. In fact, state law does set aside most of the state’s income and sales tax revenue for education, and it is the sensitivity of these taxes to the economy that leads to frequent proration. The situation calls for creating a method of saving sufficient amounts during the good years to avoid future proration. This would have to be done in the next year or so to be effective for the next economic downturn several years from now.
When we briefly described the size of the likely budget cuts this year and next year, 64 percent of respondents said this would hurt public schools “a lot” and 58 percent said they would be willing to pay more taxes to prevent such cuts in education. Health care was the only other service to get similar results.
EDITOR’S NOTE — Jim Williams is executive director for the nonprofit, nonpartisan Public Affairs Research Council of Alabama.
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