Budgets
The legislature passed record-setting budgets after working into the early hours of Friday morning. The House and the Senate met in a conference committee to reconcile their differences before the final passage of the budgets and supplemental appropriations. It is important to note that while the budgets did pass with near unanimous support, there was debate amongst legislators regarding how the money should be appropriated and how conservative the state should be with the appropriations, given the possibility of an economic downturn.
Education Trust Fund
The legislature approved a $8.8 billion education budget which allocated $6 billion for K-12 education and $2.3 billion to Higher Education. The budget also includes a 2% pay increase for K-12 teachers, a $1,000 bonus for special education teachers, and guidelines for the minimum pay scale for education support staff.
The supplemental appropriations from the Education Trust fund totaled roughly $2.8 billion. These supplemental appropriations were distributed for numerous one-time education-related expenses.
A major part of the supplemental education budget is Governor Ivey’s tax rebate for Alabamians. The rebate will provide $150 for individual tax filers and $300 for married couples filing jointly. The legislature also created a new education savings account, the Educational Opportunities Reserve Fund, designed to serve as a reserve for the education budget in years to come.
Lastly, the legislature appropriated $75 million for the capital grant program, which the Lt. Governor’s office will administer. This program will provide eligible K-12 institutions grants that could be utilized for various purposes, including capital projects, debt service payments, addressing deferred maintenance in existing facilities, enhancing school security and safety measures, and providing schools with technology and equipment to broaden educational opportunities.
Chairman Danny Garrett and Chairman Arthur Orr were tasked with crafting the Education Trust Fund appropriations in their given chambers.
General Fund
The legislature approved a $3 billion General Fund Budget. This budget will increase funding for prisons, Medicaid, public health, mental health, law enforcement, and other non-education state agencies. The budget also includes a 2% pay increase for state employees.
Additionally, the legislature approved supplemental appropriations from the General Fund totaling roughly $207 million for state and local projects. These appropriations from the General Fund demonstrate the legislature’s continued discourse regarding public safety, healthcare, and addressing critical community needs.
Chairman Greg Albritton and Chairman Rex Reynolds were tasked with crafting the General Fund appropriations in their given chambers.
Grocery Tax
A bill gradually reducing the state’s grocery tax, sponsored by Senator Andrew Jones and Representative Danny Garrett, has passed the Alabama House 103-0. This tax reduction would occur annually, reducing the current 4% sales tax on certain groceries to 2% over a period of time. However, for this tax cut to take effect, there needs to be an adequate increase in the state's Education Trust Fund budget to offset the loss incurred due to the tax reduction.
There has been bipartisan support regarding reducing the grocery tax since the beginning of the session.
Foreign Land Ownership
The foreign land ownership bill sponsored by House Majority Leader Scott Stadthagen passed in the House this week after the Senate’s revisions. This bill previously applied to only Chinese land ownership, but significant changes were made.
As mentioned in last week’s update, under the modified version of the bill, foreign governments, such as China, Iran, North Korea, Russia, and those mentioned on the United States Department of the Treasury's Office of Foreign Assets Control's sanctions list, are not permitted to purchase agricultural or forestry land in Alabama, as well as land located within 10 miles of military bases and vital infrastructure such as power plants, refineries, seaports, and airports. This bill will now be presented to the Governor for her approval.
Coal Production Tax Credit
A bill relating to coal production tax credits, sponsored by Senator Arthur Orr, received a favorable report from the House Ways and Means Education Committee after some changes presented by Minority Leader Anthony Daniels.
As mentioned in last week’s legislative update, this credit could now be utilized for income and utility services taxes. Moreover, individuals or entities that increase their coal production in Alabama compared to the previous year would qualify for the credit. Any unused credits can be carried forward for a maximum of five years. Additionally, the bill incorporates sunset provisions and reporting guidelines to ensure effective regulation of economic tax incentives. This bill can now go to the House for a vote of the entirety of the chamber.
School Choice
A bill sponsored by Senator Donnie Chesteen has passed in the Senate and received a favorable report from the House Ways and Means Education Committee. This bill amends the Alabama Accountability Act by changing the terminology used to describe the lowest-performing schools in the state from “failing” to “priority.” This bill also expands a student's eligibility for the program by raising the household income threshold for a family of four from $55K annually to $74K annually. Lastly, this legislation expands the eligibility and scope of services available to students with special needs.
It is important to note that the legislature is working on several other education-related pieces of legislation. Still, Senator Chesteen’s bill has sparked the most discussion on Goat Hill this week.
Status of the Legislature
The Legislature used four legislative working days this week and has used twenty-seven of its allotted thirty legislative working days. While using four working days was not widely expected to occur this week, it was necessary to pass the budgets. As of May 26th, there have been 523 bills filed in the House and 352 bills filed in the Senate. Given that three legislative days remain, newly filed bills cannot be considered by the legislature. The House will reconvene on Wednesday, May 31st, at 1:00 p.m., and the Senate will reconvene on the same day at 3:00 p.m. Next week the legislature is expected to use two legislative working days.
