BRADENTON, Fla. - Alabama is facing a budget shortfall that could top $700 million in the next few years, according to Gov. Robert Bentley.
The state's most pressing problem is expected to be a deficit of $265 million or more in the general fund budget for fiscal 2016, Bentley's press office told The Bond Buyer Dec. 1.
Alabama is also facing other bills coming due in the next few years that must be repaid, such as $160 million borrowed from the state's Rainy Day Fund in 2010, and $187 million taken from the education budget to bolster the general fund.
A shortfall in the Medicaid account of up to $115 million is anticipated, and $40 million will be needed for prison costs. The state also owes $125 million to the federal government from overpayments on several programs due to state errors.
To pay for court services, Alabama raided $63 million from gasoline tax revenues that had been earmarked for highway maintenance.
While Bentley has not released any details on his office about the budget, he spoke in detail about troubling expenses in his annual speech to the Birmingham Business Alliance on Nov. 18, according to the Birmingham News.
"We don't have enough money to cover what we owe," Bentley reportedly said.
State officials have borrowed from one source or another to fund critical needs, some of which must be repaid while others are necessary to catch up on deferred costs, he said.
"There is going to come a time you can't postpone this anymore," said Bentley, who added that he is working on a plan with the Legislature to raise more revenues. He reportedly said raising taxes would be a last resort.
Bentley, a Republican, was elected to his second term on Nov. 4. The state is legally required to have a balanced budget.
Rating agency analysts have noted the depletion of reserves in recent years, though they also recognize that Alabama has "strong" constitutional and statutory requirements to institute budget cuts if revenues fall short.
Analysts have also cited concerns about Alabama's growing gap in pension funding.
The state's general obligation bonds are rated AA-plus by Fitch Ratings, Aa1 by Moody's Investors Service, and AA by Standard & Poor's. All have stable outlooks. Alabama has about $619 million of outstanding GO debt.
