Goat Hill Report-Week Ending in May 26, 2023

This week, the Alabama legislature completed Days 24, 25, 26 and 27 of the 2023 legislative session. Four meeting days is unusual for a regular legislative session, but Day 27 occurred when legislative leaders decided to extend the late Thursday session into the wee hours of Friday morning. Based on these calendar developments, there are now just 3 meeting days left in the session. The legislature will meet next Wednesday and Thursday, and could adjourn Sine Die as early as next Thursday – which would be a day short of a full 30-day session. A final decision on Sine Die is expected in the next few days. Details of this week’s notable action are provided below.

Budget Bills Head to Governor’s Desk

The legislative headliners of the week were the Education Trust Fund (ETF) and General Fund (GF) budgets. The $3 billion General Fund budget, and the rare General Fund supplemental budget of $207 million in excess funds in the current budget year, reflect record revenue for the state – although legislators have noted the spending spree may be coming to an end as revenue levels off and inflation remains an issue. This balancing of record revenues and cautious economic outlook culminated late Thursday into early Friday morning with a marathon session that saw expenditures move from the Education Trust Fund to the General Fund as part of budget re-writes and political maneuvering. All of the budgets – the ETF, GF, and both supplemental budgets – ended up in joint conference committee on Thursday to reconcile differences between the House and Senate in spending priorities and other bill provisions. The final General Fund supplemental budget includes: $50 million to a savings account; almost $40 million to pay off four state bonds; $18 million in capital project funds for the Department of Mental Health (an additional $5 million for this purpose was shifted to the education budget); and an increase to equip the new Alabama Department of Forensics lab in Huntsville. Three additions to the General Fund supplemental were projects previously struck from the Governor’s proposed ETF supplemental: $5 million for a new downtown airport in Mobile; $20 million to the State Port Authority for upgrades to coal moving equipment; and $5 million for a Montgomery whitewater and outdoor adventure park currently under construction. The $3 billion FY2024 General Fund budget had fewer changes, with the most notable being the reversal of an earlier Senate decision to transfer $23.5 million from ALDOT to the Alabama Law Enforcement Agency (ALEA). ALEA received the funds from other edits, and the restoration of the funds to ALDOT allows the agency to draw down $94 million in federal funds.

On the education side of the budget process, the Alabama Legislature passed more than $11.5 billion in education spending: $8.8 billion for the FY2024 education budget, and an unprecedented $2.8 billion in surplus education spending for the current year. The battle over priorities in the ETF supplemental budget were the most contentious, and much of the focus centered on the Governor’s proposed taxpayer rebates. The Governor had initially proposed $400 rebates for individuals and $800 for couples, but the Senate version substantially reduced the rebates to $105 for individuals and $210 for couples. The final result from the joint conference committee changed them a fourth time, settling on $150 per person, or $300 for couples. The change amounts to a $393 million price tag for the ETF, substantially less than Governor’s original $950+ million proposal. The savings from reducing the rebates allowed the joint conference committee to provide an additional $75 million to the Educational Opportunities Reserve Fund – a special education savings account – increasing the total spending to $354 million. Other increased expenditures in the ETF supplemental were an additional $79 million to the K-12 Capital Grant Fund – a program to be administered by the Lt. Governor that will award grants to schools for infrastructure, technology, and construction projects – for a total amount of $179 million. The FY2024 ETF budget was the least contentious of the budget negotiations, seeing only modest changes related to technical language rephrasing.

With both the House and Senate approving and concurring on the two ETF budgets and the two General Fund budgets, all four bills have gone to the Governor’s desk for final approval.

What’s Left for the Session

Looking ahead to the final few days of the session, a few high profile items await final action…

Grocery Tax Phase Out – On Thursday, the House voted 103-0 to remove half of the state’s 4% sale tax on groceries – a perennial proposal that has gained unprecedented and broad bipartisan support this session. HB175 by House Ways & Means Education Committee Chairman Danny Garrett (R-Trussville) would gradually remove the tax by one percentage point a year, provided there is enough growth in tax collections to offset the revenue loss, until the tax drops to 2%. The bill now moves to the Senate, where all 35 senators have signed on as co-sponsors of the Senate version of the legislation. Alabama is one of just three states that tax groceries at the same rate as other purchases. In past years, primarily Democratic legislators have unsuccessfully pushed for the grocery tax removal. However, this year’s legislative effort gained bipartisan traction in the midst of rare budget surplus and inflationary increases in food prices.

School Choice –  Two bills that have faced contentious votes thus far in the session are poised for consideration in the final days of the session. On Tuesday, the Senate approved SB263 by Sen. Donnie Chesteen (R-Geneva) which expands the Alabama Accountability Act program that provides scholarships funded by state tax credits enabling students to attend private K-12 schools. By a vote of 26-7, Senators approved the measure that would raise the eligibility income cap for the scholarships from $55,500 for a family of four to $75,000 and also raise the cap on the tax credits that fuel the scholarships from $30 million to $40 million, and eventually up to $60 million – all in an effort to bring more students into the program. The bill sponsor estimated that the changes could quickly expand the number of students using the program from about 3,000 students to about 4,400. The bill also passed House committee this week and is now pending action on the House floor. In addition, the state’s charter school law would be updated under the provisions of HB363 by Rep. Terri Collins (R-Decatur), which passed Senate committee this week and is due to be considered on the Senate floor. HB363 would: change the appeals and nomination process for charter schools; allow charter schools to designate priority geographic areas for enrollment and require school districts given the power to authorize charter schools, known as local authorizers, to submit to a state review every five years; and extend the terms of members of the Alabama Public Charter School Commission from two to four years and provide them staff and professional development. The bill also removes a requirement that the commission find evidence a local school board made a mistake in its application review, which gives the commission more leeway in overriding a local school board’s decision.

Legislator Resigns Amid Federal Indictment

The biggest shock of the week occurred on Tuesday when freshman State Representative Fred Plump (D-Birmingham) abruptly resigned the seat he won just last fall. Plump’s resignation came as part of a guilty plea to federal charges alleging that, prior to Plump’s election to the legislature last year, his youth baseball league nonprofit took public money distributed by another state lawmaker and used some of it to pay that lawmaker’s assistant. The public money came from the Jefferson County Community Service Fund, which was created by the state legislature in 2015 to allow the Jefferson County Commission to collect a one percent sales tax and a one percent use tax, and distribute about $3.6 million annually to public groups like schools, libraries, police departments, and youth sports. The Plump indictment is reportedly part of larger investigation that includes the other state lawmaker, identified as longtime State Rep. John Rogers (D-Birmingham) by news reports and Rogers himself. In its Tuesday bombshell, the U.S. Attorney’s Office in Birmingham announced that Rep. Plump is charged with one count of conspiracy to commit wire fraud and one count of obstruction of justice. Plump’s resignation from the Alabama Legislature is effective immediately.

The Alabama legislature will reconvene on May 31, 2023.

Comments are closed