‘Points of optimism’ with state finances as COVID-19 impact assessed

State budget director discusses pandemic impact on finances

MONTGOMERY, Ala. (WSFA) - The state of Alabama seems to be weathering the financial storm brought on by the coronavirus fairly well. There is no question state coffers have taken a hit but the extent of that decline may surprise you.

The state is beginning to get a clearer picture of what COVID-19 has wrought on state finances and you might be surprised to learn the hit hasn’t been that severe, all things considered.

“There are some points of optimism,” said State Finance Director Kelly Butler.

Before the pandemic, Alabama was sitting on $10 billion in revenues. Today, some two months later, the virus has caused a 10 percent drop.

“That equates for those two months to about $200 million,” said Butler.

While $200 million is $200 million, a significant drop for any state budget, Butler believes there’s a chance much of that can be made up once people begin paying their income taxes in July.

“Other revenue sources have held up nicely including the Simplified Sellers Use Tax, sometimes called the Amazon tax. That’s the new tax that went into effect several years ago,” Butler said.

Overall, there is a sense of optimism moving forward.

“Alabama has gradually started reopening with businesses in the most recent health orders, and so we’re cautiously optimistic that we will make it through this fiscal year without budget cuts or pro-ration,” said Butler.

Even more encouraging, the state has yet to feel the need to dip into the rainy day fund. Right now that amount stands at $1 billion.

“A healthy reserve in my opinion,” said Butler.

There is no debate: spring of 2020 was ugly for businesses and investments. But a beautiful thing appears to be emerging: a comeback.

For perspective, published reports show New York City lost $6 billion in city revenues from the coronavirus.

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