Alabama
From 2002 to 2008, Alabama’s spending increased the most in the parks and recreation (117%), hospitals (62%), corrections (58%), and education (56%) categories. The increase in corrections spending was the fifth-highest in the nation in terms of percentage. The spending categories that saw the least growth were welfare (+11%), highways (+9%), and health (-3%). The state’s overall general spending increase of 37% put it in the middle of the states, ranking 22nd highest.
Alabama’s total revenue growth of 23% ranked 46th for the period. Corporate income taxes were the fastest growing tax revenue category, increasing 63%, although that was less than the growth of the vast majority of states (ranking 41st highest). By contrast, the 52% increase in personal income tax revenue ranked 19th-highest in the nation.
| Spending (Spending and revenue numbers are in thousands of dollars) |
2002 | 2002 Per Capita Rank | 2008 | 2008 Per Capita Rank | Difference in Rank | 2002-2008 Increase/ Decrease |
2002-2008 Increase/ Decrease Rank |
| Corrections | 331,476 | 48 | 525,281 | 43 | +5 | 58% | 5 |
| Education | 6,811,434 | 15 | 10,658,472 | 8 | +7 | 56% | 7 |
| Government Administration | 415,209 | 44 | 576,755 | 38 | +6 | 39% | 23 |
| Health | 718,443 | 24 | 699,309 | 31 | -7 | -3% | 44 |
| Highways | 1,255,800 | 36 | 1,373,098 | 36 | 0 | 9% | 33 |
| Hospitals | 1,118,262 | 4 | 1,808,175 | 3 | +1 | 62% | 17 |
| Interest on Debt | 241,867 | 43 | 328,836 | 45 | -2 | 36% | 27 |
| Natural Resources | 230,519 | 34 | 309,369 | 32 | +2 | 34% | 17 |
| Parks and Recreation | 23,155 | 48 | 50,268 | 43 | +5 | 117% | 7 |
| Police Protection | 128,801 | 37 | 182,955 | 33 | +4 | 42% | 17 |
| Public Welfare | 4,110,058 | 27 | 4,582,199 | 44 | -17 | 11% | 50 |
| Salaries and Wages | 3,115,437 | 21 | 4,194,385 | 19 | +2 | 35% | 21 |
| Direct Expenditures | 12,064,764 | 29 | 15,449,791 | 31 | -2 | 28% | 42 |
| General Expenditures | 16,160,326 | 32 | 22,170,605 | 31 | +1 | 37% | 22 |
| Total Expenditures | 17,996,418 | 33 | 24,892,739 | 33 | 0 | 38% | 22 |
| Taxes (Spending and revenue numbers are in thousands of dollars) |
2002 | 2002 Per Capita Rank | 2008 | 2008 Per Capita Rank | Difference in Rank | 2002-2008 Increase/ Decrease |
2002-2008 Increase/ Decrease Rank |
| Personal Income Tax1 | 2,030,694 | 37 | 3,077,553 | 37 | 0 | 52% | 19 |
| General Sales Tax2 | 1,748,235 | 43 | 2,287,288 | 43 | 0 | 31% | 26 |
| Corporate Income Tax3 | 322,636 | 21 | 524,808 | 37 | -16 | 63% | 41 |
| Total Taxes | 6,509,765 | 47 | 9,070,530 | 42 | +5 | 39% | 35 |
| Total Revenue | 14,942,192 | 39 | 18,353,637 | 48 | -9 | 23% | 46 |
1 Personal income tax per capita rankings are out of 43 since seven states do not collect personal income taxes.
2 General sales tax per capita rankings are out of 45 since five states do not collect general sales taxes.
3 Corporate income tax per capita rankings are out of 46 since four states do not collect corporate income taxes.
Comparison to Baseline Growth
One sound rule of thumb is that government expenditures should not increase more than the combined increase in population and inflation growth. This allows the government to maintain service levels and accommodate increased costs due to an expanding population and rises in the cost of living. For the 2002-2008 period, the Consumer Price Index, used to measure inflation, increased approximately 20% and Alabama’s population increased by 3%. This yields a “baseline” growth of 23% for the period. The figure below compares the difference in Alabama’s expenditures and revenue for the period to this baseline for 15 spending and five revenue categories.
