Gov. Kay Ivey, in her State of the State address in March, proposed sending a $400 one-time tax rebate from Alabama to taxpayers. Alabama lawmakers, however, have slashed the proposed $400 tax rebate to $100 per tax filer, reducing the overall spending on the tax rebate from more than a billion dollars to $275 million.
Why Was The One-time Tax Rebate From Alabama Slashed?
On Wednesday, a Senate committee approved the cut in the one-time tax rebate from Alabama with little discussion. The committee also approved the provision to make the rebate part of the $2.8 billion supplemental appropriation.
Talks to reduce the rebate amount from $400 to $100 first surfaced earlier last month. At the time, Senate Education Budget Chair Arthur Orr told AL.com that the support for Gov. Ivey’s proposed tax rebate has softened since it was first announced in early March.
“The rebate that’s been suggested will probably be moderated to some level,” Senate Education Budget Chair Arthur Orr said last month.
The $400 tax rebate was a key part of Gov. Ivey’s budget proposal. Gov. Ivy noted that the rebate is important to help families struggling to pay for essentials because of inflation.
“A paycheck does not go as far as it did two years ago,” Gov. Ivy said while proposing the tax rebate from Alabama. “That’s why I am calling on you to put nearly a billion dollars back into the hands of hardworking, taxpaying Alabamians through one-time rebates of $400.”
Under Gov. Ivey’s proposal, a rebate of $400 would go to people who filed state income taxes in 2022, while families (a household with two incomes) would get $800. Overall, the governor proposed sending $967 million in one-time tax rebates.
Senate Committee Proposal: What Else Is In It?
Apart from reducing the one-time tax rebate from Alabama from $400 to $100, the Senate committee also stripped a few more of Gov. Ivey’s projects from the $2.8 billion supplemental education package.
Gov. Ivey initially proposed using most of the $2.8 billion of supplemental education funding for projects having little connection to schools and colleges, including funding for a Montgomery water park and a Mobile airport.
The Senate committee discarded such projects, as well as redirected the funding to school safety, classroom instructional support and colleges. Specifically, the committee proposed using the fund to establish a grant program to assist schools with capital projects and develop a system to manage excess revenue.
Additionally, the Senate committee proposal also includes $40 million for school safety grants (compared to $10 million in Gov. Ivey’s proposal). The Senate committee proposal also sets aside $20 million to fund some classroom instructional support materials for teachers to ensure they don’t need to wait until the start of the fiscal year to access the funds.
The proposal also includes $15 million for four-year public universities and about $200 million for higher education projects at two- and four-year colleges.
The $2.8 billion supplemental appropriation now heads to the Senate chamber.
