2023 Legislative Update: Regular Session - Week Twelve

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Budgets   

This Thursday, Governor Ivey signed the record-breaking General Fund and Education Trust Fund budgets into law. In sum, there was over $15 billion appropriated. The legislature did make significant changes to Governor Ivey’s proposed budgets, including adjusting the taxpayer rebate to $150 per individual and $300 per married couple from the proposed $400 per individual and $800 per married couple.   

In reaction to signing the budgets into law, Governor Ivey stated, “We can be proud of the fact that during my time as governor, we have not once used the word proration, nor have we spent beyond our means.”  

It is important to note that Governor Ivey also signed legislation making supplemental appropriations due to the state’s record receipts.   

Grocery Tax Cut   

The legislature has unanimously voted to cut the state’s grocery tax after inquiring into how such a cut would affect the state’s receipts to the Education Trust Fund. This legislation, sponsored by Senator Andrew Jones and Representative Danny Garrett, has generated broad interest from the public as Alabama is one of the few states that taxes groceries at the same rate as other goods.   

The bill entails a reduction in the tax on food from 4% to 3%. Moreover, the legislation includes a potential decrease to 2% on September 1st, 2024, contingent upon a projected minimum growth of 3.5% in tax collections for the Education Trust Fund. If the growth requirement is not met by 2024, the reduction to 2% will be deferred until the subsequent year when the growth condition is satisfied. This has been sent to the Governor for her signature.   

Overtime Tax Exemption   

A bill, sponsored by House Minority Leader Anthony Daniels, has passed in both chambers after changes by the Senate. This legislation will exclude overtime pay from being subjected to the 5% state income tax. The Senate introduced a provision that sets a cap of $25 million as the total amount of tax reduction each year. This $25 million cap was welcomed by Leader Daniels as the other proposed revision to the bill would have set a cap on individual taxpayers.   

This legislation is the first of its kind in the nation, and Leader Daniels received a bipartisan standing ovation on the House floor for his work on this legislation. Leader Daniels believes that this legislation will allow businesses to “recruit and retain . . . talent and also increase the participation time” of workers. This legislation has been sent to the Governor for her signature. 

Accountability Act Expansion   

The bill sponsored by Senator Donnie Chesteen that has been coined “school choice lite” has passed both chambers and been sent to the Governor for her signature. 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.   

Port Incentives   

The bill sponsored by Representative Chip Brown that modifies the current tax benefits given to companies transporting goods through Alabama's ports passed the Alabama Senate this week. Under this bill, the tax credits for companies utilizing the state’s ports would be tied to their cargo volume. In other words, the credits increase as cargo volume increases. This bill has now passed in both chambers and has been sent to the Governor for her signature.   

ESG   

This week the Alabama House passed a bill sponsored by Senator Roberts that, in his words, “protects Alabama businesses.” Representative Chip Brown carried this bill in the House, and there was no debate on the House floor despite a lengthy debate on the Senate floor regarding this legislation.   

This legislation will require companies doing business with the state to verify they are not boycotting the timber, mining, fossil fuel, and firearm industries. It also requires verification regarding stances on environmental standards, board composition, sex-change surgery, and/or abortion care. This bill has now passed both chambers and has been sent to the Governor for her signature.   

Foreign Land Ownership   

The bill sponsored by House Majority Leader Scott Stadthagen regarding land ownership by foreign governments has been signed by Governor Ivey. Under this law, foreign governments, such as China, Iran, North Korea, Russia, and those listed 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.   

The Women’s Sports Protection Bill   

The Women’s Sports Protection Bill, sponsored by Representative Susan Dubose and Senator April Weaver, has been signed into law by Governor Ivey. As mentioned in previous legislative updates, this bill broadens a 2021 law that already applied to K-12 sports teams to also apply to higher education sports teams.   

The bill would prevent transgender athletes from participating in intercollegiate sports teams that correspond with their gender identity. Governor Ivey applauded the legislation and stated that this law is about “protecting female athletes at all levels and upholding the integrity of athletics.”   

Status of the Legislature   

The Legislature has used twenty-nine of its allotted thirty legislative working days. As of June 2nd, 524 bills were filed in the House, and 352 bills were filed in the Senate. The House and Senate will reconvene on Tuesday, June 5th, at 1:30 p.m. to use their last legislative day.