State Sen. Arthur Orr is sticking to his guns on the issue of what he views as an unacceptable impact on the state’s education trust fund budget from the elimination of Alabama’s income tax obligation for full-time, hourly wage employees who work over 40 hours a week — also known as the overtime tax cut.

Orr expressed concern about the financial cost of the exemption and the possibility of the state legislature renewing it Friday morning on WVNN’s “The Dale Jackson Show.”

According to Orr, lawmakers originally thought such a bill would cost the state around $40 million in revenue annually. That figure has shifted drastically.

“It’s now $230 million annualized,” Orr (R-Decatur) said. “The estimated cost by the time we get to June will be around $345 million for the 18 months the bill’s been in play or the law has been in play. So the question is legislators, do you want to continue this program, you know, a reduction in revenue of $230 million annualized or do you want to cut somewhere else? In other words, do you want to cut the income tax rate for everybody? Are we going to continue with this specific overtime pay reduction or do you want to cut it everywhere?”

RELATED: Daniels wants overtime tax exemption extended despite ETF revenue shortfall

As chair of the education trust fund budget committee in the Alabama Senate, he urged lawmakers to practice caution. “But be mindful, whatever we do does come from the public education budget across the state,” he said.

Additionally, Orr questioned why the exemption applies to hourly employees and not those with a salary.

“So what’s the best tax policy? What’s the best means? If we do want to cut taxes, how do you want to implement this? Do you want to hit a broader group? There may be some people I’m thinking of clerks at the bank or wherever that maybe don’t have a chance at overtime ever. You may have people on a, quote, salary making 40, 50, $60,000. They would like some tax relief, too, but we’ve defined it just to people who are hourly employees who have the opportunity to get overtime.”

“So those are questions I think we need to answer in the legislature before we just rubber stamp and renew this? So that’s the reason I’m interested to see what the disposition of the legislature is in 2025. We also need to see what the numbers say.”

The tax break will expire on June 30, 2025, if Alabama lawmakers don’t extend it.

Austen Shipley is a staff writer for Yellowhammer News. You can follow him on X @ShipleyAusten