Alabama State Budget FY2026 Analysis

Alabama spent $13.6 billion across all funds in FY2026, or $2,619 per resident. All-funds spending counts the general fund, federal grants, and dedicated state funds together — the fairest basis for comparing states, since they differ widely in how much they route outside the general fund.

The general fund — the discretionary portion the legislature actually debates — was $3.7 billion, or 27.2% of total spending. The remainder is largely federal grants (Medicaid above all) and dedicated revenues such as fuel taxes earmarked for highways.

Alabama's currently operative budgets — FY2026, running Oct. 1, 2025 through Sept. 30, 2026 — reflect the state's two-budget structure: a $9.9 billion Education Trust Fund (SB112), up 6% and the largest education budget in state history at enactment, and a $3.7 billion General Fund, up 10% ($347 million), for roughly $13.6 billion in combined state-fund appropriations; federal funds are budgeted separately. ETF growth went to programs rather than paychecks: the CHOOSE Act's education savings accounts were funded at $180 million — up from the $100 million initially allocated in the school-choice program's first year — the AMSTI math-and-science initiative rose 31% ($32.2 million), and the PEEHIP educators' health plan absorbed a $99.2 million increase, but there was no across-the-board educator raise and per-employee PEEHIP contributions rose from $800 to $904. General Fund growth is dominated by Medicaid, whose state appropriation jumped 19% ($223.8 million) to $1.18 billion, and Corrections, up 11% ($90.1 million) to $826.7 million; transportation gained about $40 million (9.1%), while the Board of Pardons and Paroles was trimmed 4.1% to $90.6 million. New commitments include $9.6 million for a state-employee parental leave policy and $15.6 million for employee injury compensation. Gov. Kay Ivey signed both budgets in early May 2025. Their FY2027 successors were signed April 10, 2026 and take effect Oct. 1, 2026 — the education budget passed the House at a record $10.9 billion — so the FY2026 figures above govern spending only through Sept. 30, 2026.