Tax cut bills brought forth by Rep. Danny Garrett, R-Trussville, were approved Wednesday by the Alabama Senate Committee on Finance and Taxation (Education).

Committee chairman Sen. Arthur Orr, R-Decatur, called the tax package, which lawmakers say would save taxpayers more than $200 million, a “work in progress.”

“We don’t know where the edge of the cliff is,” he said.

“We don’t know what the economy is going to be like in a year or two years.”

“So, when we make these decisions, such as today, I don’t think any of us want a large, overfunded government just looking for ways to spend money,” he continued.

“And that money comes from the people. We don’t want that kind of beast… that’s inefficient and not making things happen. But on the other side of the coin, we have got to properly fund government.”

The bills

HB388, which would increase a state income tax exemption for people 65 and older on money withdrawn from IRAs and 401(k) accounts, was approved with an amendment to phase the exemption in over three years.

It is expected to save taxpayers an estimated $45 million a year, according to Garrett.

HB389, which would make changes to the income tax affecting dependent exemptions and deductions and would save taxpayers an estimated $25 million a year, received unanimous approval.

HB379, which would exempt remote workers from income tax if they worked in the state for less than 30 days in the year, received unanimous approval.

HB386, which would reduce the state sales tax on food from 3% to 2%, was approved with an amendment to remove the second penny on the grocery tax.

It was also amended to combine with HB387, which would authorize, but not require, cities and counties to lower their sales taxes on food.

Current law allows cities and counties to reduce the sales tax on food only if their general fund grows by at least 2%.

HB387 was approved with an amendment to change the nature of the bill, reducing tax sales on machinery.

Sen. David Sessions, R-Grand Bay, said this was expected to be helpful to farmers.

“There was a desire to assist businesses as well,” Orr said on Garrett’s behalf.

HB386 and the new HB387 are anticipated to save consumers over $130 million combined a year.

‘We need a lottery,’ Democrat says

Sen. Rodger Smitherman, D-Birmingham, expressed concerns over where the state was going to make up the money.

“Businesses don’t have to get the same cuts families get; we don’t have to do this tit for tat,” he said, referencing HB387.

“That’s $11 million that we could save.”

He added that a lottery would be helpful in making up the revenue loss, and said he hoped next year that the legislature would be “open minded” enough to consider it.

“We need a lottery, we need that money,” he said.

Alabama voters have not had a say on whether to establish a lottery since 1999, when they voted down Gov. Don Siegelman’s education lottery proposal.

The four states bordering Alabama all help fund education and state services with lotteries.

Attempts to introduce a lottery to the state this year have continued a long streak of failing in the legislature.