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Riley proposes returning surplus

By Phillip Rawls
Associated Press Writer

MONTGOMERY — Gov. Bob Riley said that if Alabama ends up with another budget surplus in the next fiscal year, he'd like to return the money to Alabama citizens.

Riley is working on the fiscal 2007 state budgets he will present to the Legislature in January.

"If there is any money left after we build this budget, we are going to give it back to the hardworking families of Alabama," Riley told the Montgomery County Republican Club on Monday night.

Riley said Alabama's economy is growing, and the increased tax collections that growth has produced will be reflected in the education budget he will propose next month. He said his recommended education budget will include increases for K-12 schools and colleges and universities.

He did not give details, but he told the Republican crowd, "We are going to do things we've never done before."

Before his speech, Riley said the picture for the state's General Fund budget, which finances non-education agencies, is not as bright.

But he said "there is a possibility" of the state returning an overall state surplus to his citizens. When asked if it would be tax refund or tax reduction, Riley said he's looking at ideas about how to do that and hasn't decided on anything.

The state ended fiscal 2005 on Sept. 30 with $299 million in budget surpluses due to a larger-than-expected upturn in the state's economy. Net state tax collections after refunds rose 11 percent over the previous fiscal year to $7.1 billion.

The personal income tax, which is the state's largest source of tax revenue, was up 11 percent from the prior year, and the sales tax, which holds second place, was up 6 percent. The fifth largest tax source, the corporate income tax, increased 43 percent over the previous year due to the economic recovery, the Revenue Department reported in October.

Fiscal 2005 was a turnaround from Riley's first year in office in 2003, when the state was looking at its biggest budget deficit since the Depression.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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