Alabama House committee advances bill to cut half of state’s 4% sales tax on groceries
Alabama lawmakers on Wednesday advanced legislation to remove half of the state’s 4% sale tax on food, a proposal that has garnered wide bipartisan support among lawmakers this year. The House Ways and Means Education Committee approved the tax cut as part of an appropriations package that also included a nearly $9 billion education trust fund budget, the creation of a new state savings account, and a one-time tax rebate of $210 per tax person. The bills now move to the full House of Representatives. Alabama is one of only three states that tax groceries at the same rate as other purchases. Removing the tax has been unsuccessfully proposed for decades in Montgomery, but has finally gained traction this year in the face of the budget surplus and soaring food prices. The proposed legislation would gradually remove the tax, provided there is enough growth in tax collections to offset the revenue loss, until the tax drops to 2%. Proponents said reducing the tax would help Alabamians every time they walk in the grocery store. “Untaxing groceries has long been at the top of the list to help regular, everyday working-class folks who spend a disproportionate amount of our income on sales taxes like groceries,” Robyn Hyden of Alabama Arise, an organization that lobbies for policies benefiting low-income families, told the committee. Almost every member of the Alabama Legislature is in support of the proposal. All 35 state senators and 100 of the 105 representatives have signed on as sponsors of the initial legislation. But some groups, including the organization that lobbies for teachers and public school employees, expressed concern about a loss of revenue for the state education budget. The 4% tax provides $608 million annually to the state, according to estimates from the Legislative Services Agency. Allison King of the Alabama Education Association told the committee the state’s budget surplus is temporary. “AEA is not against cutting grocery taxes, but we are against cutting grocery taxes without an equally reliable funding source to replenish the lost revenue,” King said. King said while Alabama is one of the few states to fully tax groceries, most other states have higher property taxes or other revenue sources to fund education. In the wake of a record education budget surplus, legislative leaders said, they are trying to strike a balance between spending, tax breaks and and saving. The committee also approved an $8.8 billion education trust fund budget that includes a 2% pay raises for public K-12 education employees. The House committee on Wednesday also increased the amount of proposed one-time tax rebates. The committee approved rebates of $210 per taxpayer and $420 for married couples. That is double the size of the rebates approved by the Senate. Lawmakers are also proposing to steer nearly $300 million to a new savings account called the Educational Opportunities Reserve Fund, which could be tapped during a revenue shortfall or to address education needs as they arise. “All of this extraordinary revenue is going to run out eventually … so having a little reserve, and extra places where we have put money away that we could slide into those low points, is very, very wise,” said Rep. Terri Collins, R-Decatur. Republished with the permission of The Associated Press.
Donnie Chesteen uses stalling tactics to effectively kill education choice bill
On Wednesday, the Alabama Senate Education Policy Committee failed to vote on a school choice bill that was debated before the Committee. Instead, the bill has been referred to another committee for their consideration. Senate Bill 202 (SB202) is sponsored by Sen. Larry Stutts. Over 200 people crowded into an overflowing public hearing in the Alabama Senate Education Policy Committee. Opponents and proponents of school choice both presented their arguments for and against in a time restricted format. Based on the applause and cheers it appeared that proponents far outnumbered the people there in opposition to the bill. Following the debate, the Republican Chairman of the Committee, Donnie Chesteen, said that his committee would not vote today on the bill. “We will not take a vote today,” Chesteen said. “My recommendation is that we refer this to the education budget committee.” “We are talking about hundreds of millions of dollars out of the education budget,” Chesteen said. “We need to know what we are cutting.” “I asked that it be referred to the budget committee when I introduced it,” Stutts said. “I understand the stalling tactics that are playing out,” Stutts said. Thursday will be the 15th legislative day. The Alabama Constitution limits the regular session to a maximum of thirty legislative days. Under the rules of the Alabama legislature, it takes a minimum of five legislative days for a bill to pass. If the bill bounces from committee to committee for the next three or four weeks, there won’t be time for the bill to get to the floor of the second house for an up or down vote before the session ends. “I have never seen that,” Sen. Stutts told Alabama Today referring to the Chairman re-referring the bill to a second committee and expecting it to come back to the first committee for consideration. The House of Representatives has passed rules abolishing the practice of re-referring a bill from one committee to another before it can be considered by the full body. The Senate has not adopted that rule. “I am going to have a talk with the Chairman,” Stutts told Alabama Today. Dr. Arthur Watts is the Finance Director of the Montgomery City School System. “This bill could cost $600 million,” Watts told the Committee. The typical teacher costs about $70,000. That includes $10,000 in benefits. Just one fourth of that, $150 million divided by $70,000 would be a loss of over 2080 teachers. Half that would be $300 million. That would be a loss of 4160 teachers. If it cost all of that, $600 million, that would be a loss of 8320 teachers. Eagle Forum Director Becky Gerritson said, “Education dollars should go to educate the children.” “We already do this in higher education,” Gerritson said. “We take money in the form of Pell Grants and allow them to use the money the way they want. They can go to state schools, private schools, or technical schools. We do this all the time with higher ed.” Gerritson said there would not be a mass exodus from public to private schools if SB202 passed. “They will still get 98% of the students, but that little bit of competition makes the difference,” Gerritson said. “When private schools fail they close, when public schools fail we give them more money.” Gerritson explained that the bill sets up an educational savings account for every child that elects to opt out of the existing public school system. “The money goes directly from the account to a vender,” Gerritson said. “We can track every dollar.” Gerritson said that Eagle Forum backs this approach to school choice rather than existing programs like the Accountability Act and charter schools, because, “This one provides the biggest impact and the fastest.” Allison King with the Alabama Education Association (AEA) spoke against the bill. “Before I came to work for AEA, I worked ten years as a classroom teacher and an administrator,” King said. “We do currently have school choice in our state, and it is not being fully utilized.” King said that this bill has a “lack of accountability and oversight.” King said that the bill creates the opportunity for fraud by both the parents and the education vender the parents select. “The fraud would have to be substantial for it be actionable,” King said. King said that the legislation would allow parents to use the money on purchasing an ipad, sending their kid to Space Camp, or to play travel ball. “All of these things are allowable,” King said. “They can even get accountability act funding and still receive funding through the PRICE Act” The program would be phased in over three years with kindergartern through third grade in phase one. Proponents estimate that most of the children who would get the education savings accounts are already in private schools and of the 80,000 Alabama children who go to private school now about 75% would opt in to the program. “The saddest thing I have had to deal with as a realtor is families having to move because they are chasing schools,” said Sen. Shay Shelnutt. “Thank you Dr. Stutts for bringing this bill forward and I full support this bill.” “I appreciate all that accountability bills we have passed, but by all those measures we are still in last place or very near last place in education,” Stutts said. “That hurts our state on a whole lot of levels and not just on the real estate movement.” Stutts listed the Literacy Act, the Numeracy Act, the Accountability Act, and other efforts by legislators to improve education in the state. “This has the opportunity to change education faster than all of those other things combined,” Stutts said. “Where we rank in education is important.” Stutts explained that the money left over in the education savings account is available for the students. “You are able to use that money until you are 21,” Stutts said. The money left over from K-12 in a child’s account could be used for college or
