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Riley says stimulus key to budget

The federal stimulus package, which has received little support from Alabama’s congressional delegation, could ease the state’s budget cuts and keep government operating at close to its current level, Gov. Bob Riley said Wednesday.

With the stimulus, the budgets don’t get worse. Without the stimulus, they do and state government could see thousands of layoffs, the Republican governor said as he recommended the state budget for fiscal 2010.

Riley, a former congressman, said he’s not recommending any particular stimulus plan, but is encouraging Congress to pass one because he considers it a crucial foundation for economic recovery.

“What everyone in this room wants is an expanding budget, not a contracting one,” the governor said.

The stimulus plan passed by the U.S. House was opposed 6-1 by Alabama’s delegation, and the state’s two Republican U.S. senators are against it now that it’s pending in that chamber. The House-passed plan could pump about $3 billion into Alabama over 2½ years.

Riley said if the stimulus package fails, the education budget would drop from this year’s $5.8 billion to $5.6 billion next year. With the package, it could jump to $6.2 billion because of federal aid.

Without the package, Riley is recommending spending be cut 2.8 percent for grades kindergarten though 12th, and higher education reduced 3.5 percent. But that doesn’t give a picture of the true cuts because education programs have already been sliced from the state’s all-time record funding of $6.7 billion in fiscal 2008, which ended Sept. 30.

Riley is recommending a $1.6 billion General Fund budget for non-education agencies in the fiscal year that starts Oct. 1.

That’s down from nearly $2 billion this year. But his recommendation is based on the federal government giving Alabama substantially more money for Medicaid than this year. That would allow Alabama to slice its share of Medicaid funding by $353 million.

Most other state programs would get about the same amount as this year, and Medicaid would be able to maintain its health care programs, Riley said.

Riley’s recommendations come in the first week of a legislative session that ends in mid-May. He said the recommendations will be revised based on how Congress handles the stimulus package and the flow of state tax collections this spring.

For the administration, there is a bright spot.

A state Revenue Department report released Wednesday shows state tax collections in January were only 1 percent below the same month a year ago. In December, Alabama experienced a 14 percent drop over the previous December.

For October through January, the first four months of the state’s fiscal year, Alabama’s tax collections were 4.4 percent below the same period a year ago.

A member of the House Government Appropriations Committee, Rep. Greg Canfield, R-Vestavia Hills, said he expects legislators to delay work on the state budgets until late in the session to have the best financial information available.