Finance chief says state can afford more bond debt
By M.J. Ellington
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MONTGOMERY — State Finance Director Jim Main said Monday that new estimates of the state's offshore oil and gas wealth show Alabama can afford another $400 million in bond debt.
Main made his comments to lawmakers before the Legislature began a special session on increasing the bond debt and related issues. Gov. Bob Riley called the session because he wants to increase the state's bond-issuing limit from $350 million to $750 to attract new industry.
Main said a study of the state's offshore oil and gas reserves completed less than three weeks ago shows much higher earning capability from those sources.
From existing wells already drilled in the Gulf of Mexico, Main said, the study showed projected revenue of $3 billion, and as much as $4.7 billion more from areas that studies show contain oil and gas but are not yet active drilling sites.
The state expects to pay back money borrowed with capital improvement bonds through oil and gas revenues, he said.
Legislative Fiscal Office Director Joyce Bigbee said general fund and education budgets are at record levels, but income for general fund programs is much lower than for programs funded through the education budget.
And conditional appropriations will eat up most of the general fund growth, Bigbee said.
Bigbee said revenue for education programs is $6.72 billion, over 8 percent more than the $6.21 billion her office projected.
Bigbee said agencies funded by the general fund budget will grapple for their share of a budget that grew by only 1.5 percent in the past year.
The state prison system is under court order to replace the outdated women's prison and needs higher salaries to keep prison guards. There are other obligations to other general fund agencies, including mental health, public safety, public health, indigent defense fund and human resources that requested conditional appropriations during the 2006 regular session, Bigbee said.
Bigbee said revenue for the state education budget outpaced all projections, coming in 5.6 percent higher that expected.
"The Alabama economy is great right now," Bigbee said. "But remember that it is cyclical."
Finance Director Jim Main said while the economy is robust, the general fund is "flat." Interest rates are the reason, he said.
Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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