This week, the Alabama legislature reached the halfway point of the 2023 legislative session, completing 15 days out of the maximum 30 legislative days. The session is expected to conclude by mid-June. Details of this week’s notable action are provided below.
General Fund Budget Passes the House
The Alabama House on Tuesday unanimously approved a General Fund budget of just over $3 billion in spending for FY2024, approximately $15 million more than what Gov. Kay Ivey had requested. The House also approved a $201.7 million supplemental appropriations bill for the current fiscal year, $13.27 million higher than Ivey requested. The budget bill sponsor is House Ways & Means General Fund Chairman Rex Reynolds (R-Huntsville), and includes a 2% cost-of-living pay increase for state employees and represents a nearly 6% increase over the current fiscal year’s budget of $2.86 billion. Some of the largest expenditures are for prisons and health services. Major expenditures included in the proposed appropriations bill include $39 million to the Department of Mental Health, $23 million of which would be used toward construction at the Taylor Hardin medical facility, $5.7 million for the Huntsville Armory construction, $8 million for a new criminal history computerized system for the State Law Enforcement Agency and $12 million for the Alabama Forestry Commission. The supplemental appropriations bill, which permits additional expenditures to the current fiscal year’s budget, also passed unanimously in the House, and would increase expenditures to $201.7 million. Both the FY2024 budget bill and the FY2023 supplemental bills now move to the Alabama Senate for consideration.
Anti-ESG Bill Introduced
This week, legislation was filed aimed at curbing ESG demands on corporate America. ESG investing – also known as “socially responsible investing,” “impact investing,” and “sustainable investing” – refers to investing which is focused on optimizing environmental, social, and governance (ESG) factors or outcomes. As more and more public and private investment funds have placed – or been forced to place – ESG requirements on their portfolio holdings, 13 states have passed anti-ESG legislation prohibiting state funds from adopting such standards. SB261 by Sen. Dan Roberts (R-Mountain Brook) would prohibit a governmental entity in Alabama from entering into a public contract for goods or services with those companies that boycott other companies without ESG standards, and it would prohibit any company in the state from being required to engage in economic boycotts or other actions that further ESG interests, including economic boycott criteria. The bill would also prohibit any company in the state from being penalized for declining to engage in economic boycotts or other actions that further ESG interests. SB261 is sure to draw concerns from companies that operate in multiple states with differing attitudes and requirements regarding ESG investing.
Grocery Tax Bill Removed with Full Senate Sponsoring
On Thursday, Senator Andrew Jones (R-Centre) filed SB257 – the latest proposal concerning the state’s long-debated grocery tax. However, SB257 differs from other grocery tax bills filed within the current regular session for several reasons. Sen. Jones was able to secure co-sponsorship of his bill from all 34 of his colleagues in the upper chamber on the bill before filing it. This strong and bipartisan show of support from the entire Senate immediately moves Jones’ bill to the top of the heap for consideration in the legislative weeks ahead. Momentum for action on a grocery tax cut has been further spurred by Lt. Governor Will Ainsworth and his public call to action for permanent tax relief for Alabama citizens amidst a historic state tax surplus. The bill, if enacted, would remove half of the state’s 4% sales tax of groceries over a 4-year period – a move intended to minimize disruption to the state’s Education Trust Fund (ETF) budget. Sustainability has been important point of discussion for advocates, and the overall impact of SB257 is a cut to the education budget by more than $300 million. House leadership has not immediately reacted to the filing of the legislation, but bipartisan support for action on the grocery tax exists in that chamber as well. SB257 will be a key item to watch in the second half of the regular session.
House Committee Approves Tax Exemption for Overtime Pay
Overtime pay would be exempt from Alabama’s state income tax under a bill that won unanimous approval Wednesday morning in the Alabama House Ways and Means Education Committee. HB217 by House Minority Leader Anthony Daniels (D-Huntsville) would establish that earnings received by a full-time hourly employee for work performed in excess of 40 hours in a week would not count as gross income for purposes of the state income tax, which carries a 5% rate. Daniels said the chance for employees to keep more of what they earn would be a work incentive. The House Committee added a sunset amendment offered by Committee Chairman Danny Garrett (R-Trussville), that would end the tax exemption after three years unless the Legislature extended it.
Rep. Kyle South (R-Fayette) to Step Down
Representative Kyle South (R-Fayette) will step down from his seat in the Alabama House of Representatives to become the next leader of the Chamber of Commerce of West Alabama in Tuscaloosa. The Chamber’s Board of Directors voted to hire South during a Thursday morning meeting. In addition to his legislative duties, Rep. South previously served as President and General Manager of his family’s West Alabama TV Cable Company, which they sold in 2019. South first ran for office in 2014 and is serving his third term as the State Representative for District 16, which includes parts of Fayette, Jefferson, Lamar and Tuscaloosa counties. South will step down from his seat before he takes the helm at the Chamber later this year, but with a tentative July start date, he’ll serve out the rest of the 2023 legislative session before vacating the office. Governor Ivey will call a special election for the race to succeed South.
The legislature will reconvene on Tuesday, May 2, 2023.