Skip to content

General Fund Budget Passes House

The House passed the State General Fund budget this week, along with its companion bills, sending the largest General Fund budget in state history to the Senate for consideration.

The $3.024 billion budget marks a substantial about face for a budget that was often pinching pennies since the Great Recession. High tax receipts coupled with unprecedented federal funding has allowed the legislature to invest significantly in chronically strapped agencies such as the Alabama Medicaid Agency ($70 million increase) and the Department of Corrections ($60 million increase).

The budget also provides a 2 percent cost of living wage increase for state employees.

Alabama’s Department of Environmental Management’s (“ADEM”) budget nearly doubled, from $12.3 million to $24.4 million in part due to the State having to provide matching funds for clean water and infrastructure grant programs provided by federal law.

Grocery Tax Cut and Education Budget Next Up

Generally, both chambers will be working on supplemental and regular budgets in the coming weeks. The Senate has not yet acted on the Education Trust Fund budget as leadership has continued to discuss the possibility of tax rebates, tax cuts, and other proposals to spend the unprecedented budget surplus.

One proposal that seems to be gaining traction is SB257 by Senator Andrew Jones. The bill proposes to cut the State’s 4 percent tax on groceries by 0.5 percent a year beginning this fall and then every fall thereafter until the new sales tax rate reaches 2 percent.

The bill provides that the annual tax reduction will only be implemented if sales tax receipts grow by 2 percent or more a year.

The bill, when fully implemented, would save grocery shoppers approximately $304 million per year and use the SNAP definition of food, which includes most products in a grocery store except for hot foods, alcohol, tobacco, pet food, and cleaning supplies. As written, the bill does not propose to replace the lost revenue with a new source.

School Choice Bills

The PRICE Act, filed by Senator Larry Stutts, had a public hearing conducted this week in the Senate Education Policy Committee where supporters and critics debated the bill. The legislation establishes education savings accounts that would provide just under $7,000 for parents to spend on behalf of their child for educational related expenses, including home school, private school, virtual school, and tutoring.

No vote was taken as Education Policy Committee Chair, Senator Donnie Chesteen, moved for the bill to be re-referred to the Senate Finance and Taxation Budget Committee.

Rep. Terri Collins’ bill to update Alabama’s charter school law also failed to make it out of the House Education Policy Committee this week due to absent members. She vowed to make corrections to the bill prior to bringing it back for consideration next week.

The bill would clarify funding language for conversion charter schools, which are public schools currently in operation that convert to a charter, remove the State School Board’s ability to appoint members to the Alabama Public Charter School Commission, and make other technical changes.

Governor Ivey indicated her support for the charter school bill along with strengthening the Alabama Accountability Act in previous months, including in her State of the State address.

Legislation to improve and expand the Alabama Accountability Act was filed yesterday by Senator Chesteen. His bill proposes to increase the tax credit cap available to taxpayers who receive a dollar-for-dollar credit against their income tax (up to 100 percent) from $30 million to $40 million. The bill would also raise the cap up to $60 million over time if the cap is met, among other things.

ESG Bill Filed

Senator Dan Roberts filed a bill (SB261) related to ESG (environmental, social, and governance) Thursday. ESG is a framework that is used to assess the business practices and performance of an organization on sustainability and social issues.

SB261 would prohibit governmental entities from entering into any public contract for goods or services with companies that engage in economic boycotts of certain businesses and industries, including natural resources and firearms. Critics allege that ESG scoring is being used to harm fossil fuel and energy companies, gun makers, mining and timber ventures, and other similar companies.

The bill requires companies to provide written verification prior to executing a contract with the state that it does not engage in economic boycotts or do business with those engaged in economic boycotts. As written, the legislation is very broad, which has many concerned about the unintended consequences of the proposal. The bill is scheduled to be in committee next week.

The Legislature reconvened on Tuesday.

This update provided by the Economic Development Authority of Alabama.

Leave a Comment