Alabama ends fiscal year with budget surpluses

Here's more evidence that a vibrant economy, when it is accompanied by reasonable restraints on government spending, is by far the most effective way to raise revenues.

Tax collections that rose 11 percent over the past 12 months helped state government end the fiscal year with $299 million in budget surpluses...

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 a whopping 43 percent over the previous year due to the economic recovery, the Revenue Department reported.

Helping fuel the increase in income taxes was an active work force; the unemployment rate was 3.8 percent in August, compared with 4.9 percent nationally.

"We are sitting absolutely gorgeous, not even pretty in terms of job creation," said Keivan Deravi, an economist at Auburn University Montgomery.

The state education budget ended the fiscal year with an unexpected surplus of $265 million. The General Fund budget, which finances non-education programs like state troopers, Medicaid and prisons, ended with a $34 million surplus.