Alabama’s $18,000 Spending Problem - The Sustainable Budget Project
Government grew faster than population growth and inflation. Taxpayers paid the difference.
Hello friends,
Imagine you’re sitting around the kitchen table trying to balance your family’s budget.
You got a raise this year. Prices increased a bit. Your family grew, and some expenses naturally went up.
But what if your spending increased twice as fast as your income and cost of living year after year?
Eventually, something would have to give.
You’d cut back. Reprioritize. Delay purchases. Look for efficiencies. In short, you’d exercise discipline because that’s what responsible budgeting requires.
Yet government often operates differently.
Most budget debates focus on how much revenue was collected, whether spending increased from the previous year, or which programs received more funding. Far fewer policymakers ask a more important question:
How fast should government grow?
That’s the question at the heart of my Sustainable Budget Project at Americans for Tax Reform.
The project uses a simple benchmark: government spending should change by less than population growth plus inflation. When spending consistently exceeds that rate, government claims a larger share of economic resources and leaves less with families, workers, entrepreneurs, and taxpayers.
Over the coming months, I’ll use this framework to examine states across the country.
Let’s start with Alabama.
Alabama’s Growing Spending Problem
Alabama is often viewed as a fiscally conservative state. Yet the data from the Alabama Sustainable Budget Project page tells a different story.
According to the project, Alabama’s state-funds budget grew from roughly $16 billion in 2016 to nearly $27 billion in 2025. Had spending simply followed population growth plus inflation, the budget would have been closer to $21.5 billion.
That’s a difference of roughly $5.2 billion in a single year.
Chart 1: Alabama Budget Comparison
The chart above shows what happened. For several years, spending and the Responsible Budget benchmark moved relatively close together. Then spending accelerated. By 2025, actual spending had pulled dramatically away from what population growth and inflation would have justified.
This isn’t merely a budget issue.
It’s a taxpayer issue.
The $18,000 Cost to Families
Over the last decade, Alabama accumulated nearly $24 billion in excess state-funds spending compared with a Responsible Budget.
For a family of four, that’s more than $18,000.
That’s not a line item on a spreadsheet.
That’s money that could have strengthened retirement savings, paid off debt, or helped build an emergency fund.
Of course, not every dollar above the benchmark was necessarily wasted. Alabama benefited from strong revenue collections, federal pandemic assistance, and economic growth during much of this period.
The more important question is whether temporary revenue gains justified permanently expanding government spending.
That’s where discipline matters.
How the Gap Developed
The next chart helps explain why Alabama drifted so far from a sustainable spending path.
Chart 2: Average Annual Budget Growth
Takeaway: State-funds spending grew 5.5 percent annually while population growth plus inflation averaged only 3.0 percent.
At first glance, a difference of 2.5 percentage points may not seem significant.
But compounding changes everything.
Just as small differences in investment returns can create large differences in wealth over time, small differences in spending growth create dramatically larger government budgets over time.
That’s exactly what happened in Alabama.
Why Budget Structure Matters
These spending trends are occurring within a budgeting system that the Alabama Policy Institute has long argued needs reform.
API notes that more than 90 percent of Alabama revenues are earmarked for specific purposes, limiting lawmakers’ flexibility and making it harder to prioritize spending effectively.
Those structural challenges make spending restraint even more important.
The solution isn’t austerity.
The solution is discipline.
A Better Path Forward
A Responsible Budget does not freeze spending or require immediate cuts.
It allows government to grow while ensuring that growth remains aligned with taxpayers’ ability to support it.
Chart 3: FY2027 Responsible Budget Limits
Even under a Responsible Budget framework, Alabama could continue increasing spending next year.
Government would still grow.
It simply would not grow faster than the people funding it.
Three Key Takeaways for Policymakers
Spending limits matter. Population growth plus inflation provides a practical benchmark for sustainable government growth.
Alabama exceeded that benchmark. The result was billions of dollars in excess spending and a growing burden on taxpayers.
Fiscal discipline creates opportunity. Spending restraint is the foundation for lasting tax relief, stronger economic growth, and greater prosperity.
Closing Thoughts
When spending consistently exceeds population growth plus inflation, government expands faster than the taxpayers funding it. Over time, that means higher tax burdens, fewer opportunities for tax relief, and less room for the private sector to create jobs and prosperity.
Alabama is the first stop in this series. Some states will provide examples of fiscal discipline. Others will reveal even larger spending problems. But each state can be evaluated using the same standard.
If we’re serious about lower taxes, greater affordability, and stronger economic growth, the conversation must start with spending restraint.
That’s exactly why the Sustainable Budget Project matters.
What Do You Think?
Should states limit spending growth to population growth plus inflation?
Leave a comment below and join the conversation.
If you found this analysis valuable, please share it, restack it, and subscribe for future installments in this 50-state series.
And if you’d like to support my work researching, writing, speaking, podcasting, and advancing policies that let people prosper, please consider becoming a paid subscriber.
Together, we can help build a future where government lives within its means and families keep more of theirs.
Let People Prosper,
Vance Ginn, PhD
President, Ginn Economic Consulting
Host, Let People Prosper