Montgomery, AL (WSFA) - None of us need a crystal ball to tell us the economy is not looking good. In fact, even the state's most famous investor is having trouble.
Retirement Systems of Alabama chief, Dr. David Bronner confirms state employee retirement investments aren't doing so well either. Not only is the downturn in the economy causing investments in the retirement systems to decline, but there are also financial problems even now with the high cost of insurance for teachers and state employees. Bronner says the state is facing an even more serious problem. He says, "The problem is the revenue coming into the state is based on the consumer. The problem is you have growing expenses, not huge ones. But, the big problem is the pull out of federal funds that we're living off as I speak now, and we will be living off for the next year. And then the big problem comes early six months from now when you start talking about how do we handle 2011."
Bronner says keep your eyes on California. If the economy doesn't get better, Bronner says Alabama might feel a little of what California is going through today. That state is 26-billion dollars in the hole. Bronner says, "California is the critical ingredient because California is one-third of the U.S. economy, and when you're one-third of the U.S. economy if you hurt the other two-thirds you're going to hurt us."
Alabama's economy is pretty flat right now with the help of federal stimulus money, but those funds will run out at the end of 2010. Bronner says, "Nothing can be worse than to be here January, 2010, only 6 months away, talking about the 2011 budget and have not approached the people or the business community or the state and say you're losing all the federal funds. What are you going to do about it?"