State Budget Director: Gas is One Reason Revenues Are Down

A new warning is going out from the man who builds Alabama's state budget.   He says we could see more belt tightening because of a rising cost everyone knows about - gasoline.

Of course, state government is paying more for gas like everyone else, but that's not the reason for tighter budgets.

It's because Alabama consumers aren't spending as much at local stores, the result of those prices.

It's a simple choice every consumer must make. As gas prices zoom higher, they can choose to drive less and many are doing just that when it's not necessary.

"Because gas is so high, we're just doing what we can to take a short trip to Florida," one woman said last weekend.

But many people are making another choice.

"A lot of discretionary income that people would spend in the retail area and we'd receive sales tax for is being spent at the pump," said State Budget Director Jim Main

The problem is some people cant drive less because they commute to work.

"Donna, my assistant, commutes from Notasulga every day," said Main. "I would estimate she's spending a hundred to a hundred fifty dollars a month more on gasoline."

Which means people like Donna have less to spend in stores, and she's not alone.

Both the city and county have reported shrinking sales tax revenues, and so have other cities across the state. Main says Alabama is better equipped to handle a recession.

"We do have all these new better paying jobs now," he said.

But people are still cautiously cutting back.

In response, Main and Governor Riley plugged one hole in the state's new education budget, taking millions from the rainy day account to avoid proration and the 2009 budget is set at 2007's numbers.

"It's painful to roll back from 08 to 07's numbers," said Main.

But with gas and oil skyrocketing, the director says we may have to revisit the budget again, and this time, sharpen the pencil more.

There's somewhat of an irony here.

Alabama collects royalties on both oil and natural gas.   Main says after the price increase and some losses because of interest rate payments, the state will actually make about ten million dollars more on that.

But the increase won't come close to making up the shortfall in state revenue collections.