2023 Legislative Update: Regular Session Week Seven

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Budgets

On Tuesday, the House unanimously passed the $3 billion General Fund Budget after much deliberation in the House Ways and Means General Fund Committee, chaired by Representative Rex Reynolds. This budget is the funding mechanism for Alabama’s non-education-related expenditures.

This budget includes sweeping budget increases for most state agencies and a 2% pay raise for all state employees. This proposed budget is roughly $230 million greater than last year’s budget, which can be attributed to the state’s increased tax revenues. This bill has been sent to the Senate for their review, where some changes are expected to be made.

On the other hand, the state’s Education Trust Fund budget has not been presented to the Senate Ways and Means Education Committee chaired by Senator Arthur Orr. This budget will likely be presented to the committee next week.

School Choice

This Wednesday, the Senate version of The Parental Rights in Children’s Education (PRICE) Act, sponsored by Senator Stutts in the Senate, was presented to the Senate’s Education Policy Committee. The bill was, however, referred to another committee for their review due to the large implications this bill would have on the state’s Education Trust Fund budget.

As mentioned in previous newsletters, this bill aims to establish a universal education savings account program that would allow parents more control over their children's educational options. It would not be optional for schools or families to participate in the program.

Overtime Tax Implications

A bill has been introduced in the House by Minority Leader Anthony Daniels that states any extra hours worked beyond 40 hours will not be taxed by the state's 5% income tax. This bill has been applauded by members on both sides of the aisle and received a unanimous favorable report from the House Ways and Means Education Committee on Wednesday.

This is a unique proposition as no other states have implemented such a similar measure. Leader Daniels stated, “this is an opportunity to provide a tax incentive for work,” and he believes this will increase the state’s workforce participation rate and allow workers to have more money to take home. The bill will now be presented to the full House for a vote.

Grocery Tax Reduction

A bill gradually reducing the state’s grocery tax, sponsored by Senator Andrew Jones, has received the unanimous support of the Alabama Senate. 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 chatter regarding reducing the grocery tax since the beginning of the session. This bill, or some version of it, will likely make its way through the Senate Finance and Taxation Committee next week. Alabama is one of thirteen states implementing a grocery tax but remains one of the country's lowest-taxing states due to the tax code's collective makeup.

Mandatory Cellphone Filters for Minors

A bill sponsored by Representative Chris Sells, requiring cell phones to have content blockers to be activated as a default setting by cell phone manufacturers, has received a favorable report from the House Commerce and Small Business Committee. This bill would require a manufacturer to implement an automatic filter that blocks content deemed "harmful to minors." Failure to comply with this requirement would result in the manufacturer being held civilly liable.

There was a public hearing called on this bill, and several individuals representing the telecommunications industry spoke out against the bill, and several parents of children who had been exposed to explicit materials on cellphones spoke as proponents of the bill. The bill has over 50 cosponsors in the House and will be presented to the entirety of the Alabama House for a vote in the coming weeks.

Environment, Social and Governance (ESG)

On Thursday, Senator Dan Roberts introduced SB261, the comprehensive ESG bill many have speculated to be considered this legislative session. One of the primary provisions of the bill prohibits governmental entities from entering into certain contracts with companies that boycott businesses because the business engages in certain sectors or doesn’t meet certain environmental or corporate governance standards. The bill also requires the Attorney General to investigate and enforce the prohibited activities if this legislation becomes law. This bill has the attention of the business and economic development communities and will be in committee next week.

State of the Legislature

The Legislature used two legislative working days this week and has now used fifteen of its allotted thirty legislative working days. As of April 21st, there have been 406 bills filed in the House and 262 bills filed in the Senate during the regular session. The House will reconvene on Tuesday, May 2nd, at 1:00 p.m., and the Senate will reconvene on the same day at 2:30 p.m. Next week the legislature is expected to use three legislative working days.