Alabama schools wipe out $440 million 'rainy day' fund

MONTGOMERY, Ala. (AP) - School tax revenues in Alabama didn't keep pace with budet projections in fiscal 2008, prompting the state to spend all $440 million from a "rainy day" savings fund and leaving a gloomy outlook for the new fiscal year.

The head of the House education budget committee, Rep. Richard Lindsey of Centre, said Wednesday he's concerned the lack of carry-over funds could mean there will not be enough tax revenues in the coming year to pay for the $6.3 billion budget to fund K-12 schools and colleges.

That would cause the governor to declare proration and force schools and colleges to cut spending.

State Revenue Director Jim Main said sales tax revenues for the 2007-2008 fiscal year that ended Tuesday were about 1 percent below the previous year's total, while income tax revenues overall were up more than 3 percent.

Sales and income taxes provide the main sources of money for the education budget.

(Copyright 2008 by The Associated Press. All Rights Reserved.)