Tax rebate, tax cuts pending in 2nd half of legislative session

Gov. Kay Ivey’s proposal of an $800 tax rebate for Alabama households did not advance during the first half of Alabama’s legislative session, but the senator sponsoring the bill said he expects action on it this week.

The Legislature returns Tuesday with 15 meeting days left out of the 30 allowed by the state constitution. Besides the one-time tax rebate, legislators are considering tax cuts, including the sales tax on food. Other unfinished business includes bills on education policy, crime, and guns, as well as the annual budgets for education and the General Fund.

Lawmakers have passed a handful of bills they labeled as priorities before the start of the session, including the renewal and expansion of the incentives for recruiting industry, a bill to crack down on fentanyl, the leading cause of overdose deaths, and a bill to cut back on “good time” that allows prisoners to shorten their sentences.

Bills that are pending: Tax cuts and rebates

Ivey proposed an $800 tax rebate for married couples filing jointly and a $400 rebate for individual taxpayers during her State of the State address to open the session on March 7. Lawmakers introduced bills for the rebate in the House and Senate, but neither have come up in a committee. Sen. Arthur Orr, the Senate sponsor, said he expects movement on the rebate bill this week, possibly at a reduced amount. Ivey’s proposal would cost $967 million.

The Legislature is considering tax cuts and a rebate partly because the state has a $2.8 billion surplus in the Education Trust Fund, the result of historically large tax revenues that exceeded spending. Senate President Pro Tem Greg Reed, R-Jasper, has said the four main options for using the surplus are a rebate, tax cuts, investments in certain programs, and putting money into a reserve account. Decisions on all four options remain as lawmakers move into the final half of the session.

Last week, all 35 senators signed onto a bill to gradually reduce the 4 percent sales tax on groceries to 2 percent. Advocates have called for a repeal of the grocery tax for decades, saying the tax on necessities is an unfair burden on low-income families. The pinch of inflation and the unusual budget surplus have helped build support for cutting the food tax this year. Lawmakers have introduced multiple ways to do that but the bill with all 35 senators as sponsors might have the best chance.

The House has passed bills making modest cuts to the state income tax and increasing a tax exemption for people 65 and older on withdrawals from 401-K type accounts and IRAs. A bill to exempt overtime pay from the state income tax is also still in the mix and has support in both parties.

Bills that are pending: Education policy

A bill that would allow parents to receive $6,900 a year through education savings accounts to use for private school or home school was one of the most anticipated of the session. The Parental Rights in Children’s Education, or PRICE Act, is pending in the House and Senate and has not been approved by a committee in either chamber.

Lawmakers have also filed a bill to expand school choice eligibility and offerings under the Alabama Accountability Act, a program that offers tuition scholarships for some students who want to attend a school other than the child’s assigned public school.

A bill to prohibit the teaching of “divisive concepts” in race, sex, and religion by schools, colleges, and state agencies is back after being first introduced last year as part of opposition to critical race theory by Republicans across the country. House Republicans passed the divisive concepts bill last year over staunch opposition from Democrats, but it died in the Senate. House Speaker Nathaniel Ledbetter has said he wants assurances the bill can pass the Senate before putting it on the House calendar again.

A bill to prohibit colleges from allowing transgender athletes to compete on sports teams that match their gender identity has won approval in the House and awaits consideration in the Senate.

Another bill that is pending would expand a prohibition on discussion of gender identity and sexual orientation that now applies from kindergarten through fifth grade, extending it through eighth grade.

Bills pending: Crime and guns

A bill to mandate longer prison sentences for crimes committed by gang members has won approval in both House and Senate committees. It sparked a sharp disagreement between Republican lawmakers and Democrats, who said they are concerned that it could be misused for purposes of racial profiling. The bill is a priority for Attorney General Steve Marshall and figures to be heavily debated when it reaches the House or Senate floor.

Bills to impose tougher penalties on street racing have passed both the House and Senate but have not won final passage. The mayors of Alabama’s 10 largest cities have called the bill a priority. The legislation follows incidents resulting in deaths and injuries at street racing events.

Another bill would make parents criminally liable if their child gains access to a gun and is caught with it at school, if the parent failed to “reasonably secure” the gun at home. The crime would be a misdemeanor. The House Judiciary Committee approved the bill after a long debate and it is pending in the House.

Other bills pending:

Ivey proposed an education budget that calls for spending a record $8.8 billion from the Education Trust Fund budget for fiscal year 2024, which starts Oct. 1, a 6.5% increase over the current year. That includes a 2% pay raise for education employees. It increases spending on reading and math instruction in the earliest grades, programs set up under laws called the Literacy Act and the Numeracy Act. Lawmakers have not taken action yet on the education budget, which will start in the Senate.

Another pending bill is Ivey’s proposed plan to allocate the $2.8 billion surplus in the education budget. That includes the $967 million for the proposed tax rebates, $360 million for capital projects in public schools to help offset inflation affecting projects funded with a bond issue a few years ago, and $150 million for capital projects in rural school systems with the most need. Lawmakers can revise Ivey’s proposal before voting on it.

The House has passed a record $3 billion General Fund budget for non-education state programs, including Medicaid, prisons, mental health, the court system, the Alabama Law Enforcement Agency, and others. It would be a 6% increase over this year. It has moved to the Senate.

A potentially controversial bill to remove the members of the Birmingham Water Works Board, and change the appointing authorities for the board drew strong opposition at a public hearing but won approval by a 6-5 vote in a House committee. The BWWB provides water to about 770,000 people in Jefferson, Blount, Shelby, St. Clair, and Walker counties. The board has come under criticism for billing problems and other problems. The Birmingham City Council opposes the legislation, which could spark filibusters from Birmingham lawmakers if it reaches the House or Senate floor. Eight years ago, after much discussion, the Legislature passed a bill to expand the board and make other changes.

Signed, sealed, and delivered

Lawmakers said passing a bill to respond to the surge in overdose deaths caused by fentanyl, a drug much stronger than heroin, was a top priority. They passed a bill to impose a mandatory sentence of three years in prison for knowingly possessing one to two grams of pure fentanyl, classifying that as trafficking. Two milligrams is considered a potentially lethal dose, meaning that one gram is enough to potentially cause 500 deaths. Possession of larger amounts will result in longer mandatory sentences. Ivey signed the bill into law. There were 1,069 fentanyl deaths in Alabama in 2021, up from 463 the year before, according to the Alabama 2023 Drug Assessment.

Ivey has also signed into law a bill to revise Alabama’s law on correctional incentive time, known as “good time.” The bill cut back on how quickly eligible inmates can reduce their sentences and made other changes. Good time has been in state law since 1980 but has come under criticism the last couple of years for being too generous and for not being consistently applied. The men charged in the slayings of law enforcement officers in 2021 and 2022 had earned substantial amounts of good time while in prison. Only about 14 percent of Alabama inmates were eligible for good time as of January, according to the Alabama Department of Corrections. Those with a sentence longer than 15 years and those charged with Class A felonies, manslaughter, or sex offenses involving a child are ineligible.

A bill to require hospitals and nursing homes to allow patients or patients’ families to designate “essential caregivers” who will be assured visitation access was approved and signed by the governor. The bill came in response to restrictions on visitation during the COVID-19 pandemic. Under the new law, hospitals and nursing homes must allow visitation access during certain situations, such as end-of-life, when the patient is facing a major medical decision, when the patient needs encouragement to eat, and other situations. The bill was named after Harold Sachs, longtime chief of staff with the Alabama Republican Party, who died in November 2020, and Anne Roberts, who died in March 2022 and was the wife of Sen. Dan Roberts of Mountain Brook.

The Legislature passed four bills to renew and expand Alabama’s industry recruiting laws, a package Ivey called the Game Plan. Two of those laws, the Jobs Act and the Growing Alabama Act, were first passed in 2015 and were set to expire in July. Lawmakers said the Jobs Act has helped the state recruit companies that have invested $22 billion and created 40,000 jobs. They extended the Jobs Act and the Growing Alabama Act for five more years and increased the spending caps.

Other bills in the Game Plan are intended to promote the development of more industry-ready sites, promote the development of technology companies and small business, and require the Alabama Department of Commerce to post on its website more information about incentives paid to companies.

The bills passed with strong support from both parties and Ivey signed them into law at a ceremony at the Capitol.