The people's voice of reason
The people's voice of reason
Governor Kay Ivey
February 5, 2025 – MONTGOMERY, AL – Alabama Governor Kay Ivey (R) made her largest state general fund (SGF) budget request yet following her State of the State speech on Tuesday. If passed by the Legislature it would be the largest general fund budget in the history of the state totaling $3,702,690,829 including $40 million in conditional appropriations to the Department of Corrections Capital Improvements fund if revenue goals are met.
This amount includes a $341,697,717 increase from the 2025 SGF budget – more than a 10% increase from the record 2025 SGF amount.
The Alabama Medicaid Agency and the Department of Corrections are by far the largest items in the general fund budget.
Medicaid – without any expansion – is the single costliest component of Alabama's state general fund budget.
On Tuesday State Finance Officer Bill Poole told the Legislature's budget committees that Medicaid will cost the state $1.18 billion in the 2026 budget.
"That is a $228 million increase," from 2025 said Poole. "There are no Medicaid expansion components to that. The reasons for this are complex and a lot of those are outside of (Alabama) Medicaid's control."
Medicaid cost the state $955,528,877 in 2025 (this is an estimate of what care will cost once all the providers bills are paid to beneficiaries).
Alabama Medicaid and the State Finance office estimates that the program will cost Alabama taxpayers $1,184,000,000 in the 2026 budget year that begins on October 1. That is a one-year increase of $228,471,123. 66.9% of the total increase in the general fund budget is slated for Medicaid.
The second largest item in the general fund budget is Corrections.
Alabama is currently spending $776,679,170 in 2025 on the Alabama Department of Corrections in 2025. Governor Ivey is requesting $826,704,722 in FY2026 – a $50,025,552 increase (6.44%). This amount does not include the $40 million in conditional appropriations for the Department of Corrections Capital Improvements fund. $14,100,000 of that is budgeted for community corrections which is an alternative to incarceration for less serious offenders.
The state is building two megaprisons that can each house over 4,000 inmates. The one in Elmore County will include extensive medical, mental health, long-term care, and vocational training services. It – the Governor Kay Ivey Correctional Complex – is expected to open sometime in 2026. The other one is being built in Escambia County.
Senator Greg Albritton (R-Atmore) told the members of the Senate Finance and Taxation General Fund Committee that completing the two megaprisons will require borrowing another $500 million.
Combined Gov. Ivey is requesting $2,010,704,722 for Medicaid and Corrections alone account for over 54.3% of the total general fund. The entire general fund budget was $2.08 billion in 2018.
Many state agencies are not expecting an increase outside of the higher amounts for state employee's health insurance increases.
There is no cost-of-living allowance (COLA) for the state's general fund employees in the Governor's budget request. While there is no COLA in the Governor's budget request, it does increase funding for state employee's health insurance. In the Governor's proposed budget, the state funding rate per employee was increased from $1005 in FY25 to $1025 in FY26.
"While the session is only three days in and there is still time to work for COLA's," the Alabama State Employees Association said in an email to state workers. "It is important for active and retired state employees to understand that the rising cost of health insurance coupled with less federal dollars is putting a big dent in the General Fund budget. While funding both a COLA and insurance would be tremendous, it would do state employees no good to get a COLA then turn around and have to pay the increase (or more) back in insurance premiums. In the big picture, the increase funding for SEIB will go a long way to make the lives of active and retired state employees a little easier."
Alabama Legislative Services Agency Fiscal Division head Kirk Fulford warned that the state will likely face "Flat or possibly declining SGF revenues" in the next few years moving forward.
Other highlights of the Governor's general fund budget request include:
Gov. Ivey's budget request slashes $1,240,000 from the Department of Agriculture and Industries. The AG Department budget in 2025 is $21,031,438. The Governor's budget cuts it to $19,791,438.
The Governor's budget cuts the Alabama Department of Commerce from $21,497,688 to just $9,984,332 - an $11,513,356 decrease. The cuts include line items of $5,000,000 for the Mobile Airport Authority, $4,000,000 to upgrade the Mobile Port Pier, $400,000 for the Decatur Morgan Country Entrepreneurial Center and $400,000 for Advanced Air Mobility Responsibilities.
The Department of Conservation and Natural Resources was cut $3,375,000 from $9,375,000 to just $6,000,000. Most of ADCNR funds come from the sell of hunting/fishing licenses and parks fees – none of which is accounted for in the budget.
The Governor increases funding for the District Attorneys $2 million to $50,930,744.
The Governor cut $10,490,000 from the Alabama Department of Economic Affairs (ADECA) to $43,731,072.
The Department of Public Health is receiving a $27,120,901 increase from $131,180,729 to $158,301,630.
The Alabama Historical Commission is taking a $450,000 cut from $5,450,176 to $5,000,176.
The Department of Labor has been replaced by the Department of Workforce.
The Alabama Department of Human Resources (DHR) is receiving a $4,121,000 increase from $146,057,977 to $150,178,977.
The Alabama Law Enforcement Agency (ALEA) is getting a $6,833,000 increase from $134,984,756 to $141,817,756. The governor's budget does eliminate a $4,742,932 line item for State Trooper overtime.
The Department of Mental Health is receiving a $8.4 million increase from $239,762,669 to $248,162,669.
The Forestry Commission is getting hit with a $2 million cut from $18,214,485 to $16,214,485. The savings will come from the elimination of the Forestry Efficiency Grant Program.
The Military Department is getting hit with a $one million cut from $5 million in 2025 to just $4 million in 2026. Most of this comes from cuts to armory maintenance.
The Senior Services Department is receiving a $940,000 increase from $49,338,454 to $50,278,454.
The Tourism Department is getting hit with a $6.8 million cut from $14,541,889 in FY25 to just $7,741,889 in FY26.
The Youth Services Department is level funded at $8,375,805.
The Board of Pardons and Paroles is level funded at $94,451,750.
The Alabama Medical Cannabis Commission (AMCC) received a $1,174,714 cut from $2,674,714 to just $1,500,000.
The Governor cut $50,000 from the Department of Veterans Affairs from $3,887,477 to $3,837,477 -50,000. The savings comes from eliminating a $50,000 line item for veterans' recovery services in Mobile.
The Governor completely eliminated the feral hog program at the Soil and Water Conservation Committee saving $200,000.
Alabama has an arcane budgeting system where most of the moneys are earmarked and there are two budgets: the state general fund (SGF). The SGF funds Medicaid, prisons, public health, and most other non-education related state agencies other than roads and bridges which are funded by fuel tax revenues. Schools, universities, colleges, and other education related agencies are funded in the education trust fund (ETF).
https://alison.legislature.state.al.us/files/pdf/lsa/Fiscal/FY2026/SGF/SGF_FY_2026_GOV_REC.pdf
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