The Alabama Legislature returned to regular session Tuesday, greeted by a budget proposal from Gov. Kay Ivey.
Consistent with priorities outlined in her State of the State Address, the proposal includes increased funding toward education, repayment of debt obligations ahead of schedule, a 2% pay increase for all state employees, and a confirmed push for $400 tax rebates to qualified individuals.
The proposal includes both supplemental spending requests for the remainder of this year, as well as a FY2024 budget, which will likely be taken up by lawmakers in the latter part of the session.
“Alabama, especially considering the state of the nation’s economy, is on sound footing,” Ivey said today. “Just as every Alabama family budgets to invest, pay their debts and increase their savings, my budget proposals do just that for our state.”
Both the General Fund and Education Trust Fund budgets are in surplus. The privileges afforded by a positive financial standpoint for the state came with the responsibility of increase requests from almost all state agencies. Given the current reality of inflation, many agencies requested dramatic increases.
The governor, as well as legislative leaders, have credited the resilience of the Alabama economy and state budget position to a reigned-in approach – particularly compared to other states.
As Ivey put it, “Our budgets are strong, and that is, no doubt, because of the fiscally conservative approach we have taken and continue to take.”
A major indicator of the positive position comes from the final $16 million repayment to the Alabama Trust Fund, which was finalized last week by SB1. Meaning, the state will no longer have to make annual multimillion-dollar contributions. In addition to measures proposed to pay down $40 million in various debts, it also calls for a $50 million contribution to the General Fund budget reserve, known as the rainy day fund.
The full proposal, which will likely undergo changes from the legislature later in the session, requests a 8.4% increase to the state’s General Fund and a 6.5% increase to the ETF.
State Finance Director Bill Poole offered new specifics about the $400 tax rebate for qualified individuals – as detailed in the governor’s ETF supplemental proposal.
He said those who filed a 2021 tax return are qualified to receive the one-time payment. State lawmakers will have to structure the exact funding package but, once approved, it will take 60 to 90 days for the state to send checks.
The possibility of money going directly back into taxpayers’ pockets can be credited to a $2.8 billion surplus in the ETF.
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