The Alabama Dynamic Expenditure Limit

The Alabama Dynamic Expenditure Limit

Tax and expenditures limits (TELs) have been used since 1875 when Missouri enacted the first property tax limitation. Research shows TELs to be effective only if carefully constructed to accommodate a wide range of economic conditions.

The State of Alabama has recently faced a number of difficult financial and budgetary situations. As a result of budgetary miscalculations State budgets required cuts in 7 times since 2001.

In order to prevent similar budgetary scenarios in the future, the State of Alabama should install a carefully constructed expenditure limitation. The proposed Alabama Dynamic Expenditure Limit (ADEL) utilizes changes in Alabama’s inflation, output, and population to create an expenditure limit which moves with the economy to accommodate the needs of Alabama’s citizens.