Hammett: State’s economy stronger than most
Published 12:59 am Wednesday, November 26, 2008
In many ways, Alabamians are among the fortunate ones in the nation’s current economic slump, Speaker of the House Seth Hammett (D-Andalusia) told local Rotarians yesterday.
“We’ve never been in a situation like this one,” Hammett said. “We’ve always had business cycles, but we’ve never had a situation like we have today.”
He said Alabama is better off than many parts of the country because unemployment isn’t as high, the Constitution doesn’t allow deficit spending, and even in the midst of the current slump, new jobs are being created.
“Our unemployment is up but not as much as other parts of the nation,” Hammett said. “It’s 6.5 percent in the nation, but it’s 5.6 percent here. That’s good news for our economy.”
And while many states find themselves facing tough economic times while laden with debt, state law has prevented Alabama from being in the same shape.
“Our constitution prescribes that we can’t have deficit spending,” Hammett said. “California does not have that and has engaged for many years in deficit spending.
The nation has a similar problem, he said.
“Our national debt was $5.7 trillion in 2000, and it’s doubled in the last eight years,” Hammett said. “It will be north of $11 trillion in January, we continue to borrow money, and Obama is calling for another stimulus package. “
“Alabama is fortunate in another area and that’s the housing market,” he said. “Property is not overvalued here like in other areas of the country.”
While there is some indication of overvalued property on Alabama’s Gulf Coast, he said, the problem isn’t as widespread as in California and Nevada where it is “way overvalued.”
And there is more good news, too, he said, pointing to more than 4,700 jobs headed to the Huntsville area as a result of BRAC (Base Realignment and Closure) as an example.
“In the Florence area, National Rail Cars plans to pay welders $50,000 to $60,000 per year at their new facility, and in the southern part of the state, ThyssenKrupp, the German steel plant, is building a $3.5 billion facility that will employ 2,700,” he said.
In nearby Axis, another steel mill, SSAB, is in the midst of a $450 million expansion that will create 130 new jobs.
“We have reasons for optimism at a time more of the economic news is not good.”
As a result of economic troubles in the nation and world, he said, the state’s General Fund and Education Trust Fund revenues are growing at rates less than expected.
“We’re going to have that word called proration,” he said.
But thanks to an amendment approved earlier this month by Alabama voters, the state can borrow money from its trust fund and avoid making cuts as a result of proration this year.
“There is enough to make it this year, but only by tapping in to funds,” Hammett said, “and only when the governor declares proration.
“Next year, we will not have that money available,” Hammett said. “We’ve got to be very frugal with our money.”
Over the past three years, he said, the education budget has grown about 33 percent.
“We’ve had some good times, but we’re not in them right now,” he said.
Even though times are tough, he said, it is the job of the Alabama Legislature to prepare for better times.
“We’ve been through tough times before,” he said. “We want to be in position to get going again when we come out on the other side.”
In the House of Representatives, he said, one priority will be transportation infrastructure and organizing all parts of that infrastructure so that it will be considered as a system. For instance, if cargo can be loaded on a barge and shipped to the Port of Mobile, it can lessen the pressure on the state’s highway system.
The state also needs to authorize private/public partnerships, he said, so that more projects can be completed.
But getting anything approved this year will be difficult, no matter how efficiently the House runs, he said.
“The Alabama Senate is in a 10-year experiment that’s not working,” he said.
Ten years ago, the senate stripped the lt. governor of his power and gave it to the senate body.
“The senate is supposed to be operated by committee,” Hammett said. “There is a lack of concentration of power in one person.”
Republicans and conservative Democrats have voted together and essentially shut down the Senate last year. Hammett predicted more problems this year.
“Two years ago, Sen. Hinton MItchem (D-Union Grove) was elected president pro tempore of the Sentate with the agreement he was step down in two years and Rodger Smitherman (D-Birmingham) would become president,” Hammett said. “Now Mitchem has sent a memo stating that he will step down when Smitherman provides a list of 18 members who will vote for him for president pro tempore. Smitherman is crying foul.”