Alabama Gov. Kay Ivey is expected to call a special legislative session Tuesday night to determine how Alabama’s remaining $1 billion in American Rescue Plan Act (ARPA) funds will be spent. A draft version of the bill released last week indicates that lawmakers will focus on broadband, water and sewer infrastructure projects, and reimbursing healthcare and nursing home providers for pandemic-related expenses.
What’s missing from the draft bill is any effort to use stimulus dollars to provide tax relief to Alabamians. Citizens should be wondering why not.
Under the original provisions of ARPA, states were prohibited from using stimulus funds to directly or indirectly offset any reduction in state revenues, i.e., to provide tax cuts. However, Alabama and 12 other states filed a federal lawsuit challenging this provision, asserting that it violated the Spending Clause of Article I of the U.S. Constitution. Ultimately the 11th U.S. Circuit Court of Appeals ruled that the tax mandate provision was unconstitutional because it placed ambiguous conditions on Alabama’s receipt of federal stimulus funds.
As lawmakers turn towards a special session allocating Alabama’s remaining ARPA funds, they are claiming that there are no so-called “revenue replacement” funds available for tax cuts. This may be true, but what were almost all the state’s available revenue replacement funds spent on? Prisons.
During a special session in September 2021, Ivey and the Legislature decided to use $400 million in revenue replacement funds to jumpstart construction of two new state-owned prisons, housing around 8,000 prisoners when completed. In other words, lawmakers chose to spend almost all of the revenue replacement funds available to build new prisons, even while Attorney General Steve Marshall was actively challenging the no-tax-cuts provision of ARPA.
This is not to say that the state does not need new prisons, nor that it was an inappropriate use of funding. Alabama has long been under scrutiny from the U.S. Department of Justice over prison conditions, violence, lack of mental health care, and other issues. U.S. District Judge Myron Thompson gave the state a July 2025 deadline to meet certain conditions. If that does not happen, the federal government could take control of the state’s corrections system, which is not a good outcome for Alabama.
But we must remember that Alabama had years to address the long-neglected prison system and ultimately waited until the last minute, when it had little choice, to act. Federal lawsuits involving Alabama prisons have been underway since at least 2014. At the time, then-Gov. Robert Bentley created a Prison Reform Task Force, which successfully implemented departmental and sentencing reforms. It failed in reaching consensus on building three new men’s facilities and replacing Tutwiler women’s prison.
Ivey revived prison reform efforts in 2019, but a plan to construct two privately-owned prisons unraveled due to investor backlash. It took another two years before lawmakers finally agreed that the state would construct and own two new men’s facilities. Project costs are expected to reach $1.3 billion, including the $400 million in ARPA funds.
If lawmakers had not waited seven years to take action to correct Alabama’s prison issues, that $400 million could have been used towards tax cuts for citizens. Federal courts have made that clear. One of the main goals of stimulus funding is to spur economic recovery for citizens and businesses impacted by the pandemic. Hundreds of millions of dollars in tax relief would have gone a long way toward meeting that goal.
No one could have predicted the COVID-19 pandemic would happen, wreaking havoc on Alabama’s and the U.S. economy. But the prison situation was a disaster a long time in the making. It could and should have been dealt with years earlier. If it had been, then maybe we’d be talking right now about using ARPA funds for tax relief, instead of more projects allowing state government to choose winners and losers.
Justin Bogie serves as Fiscal and Budget Reporter for 1819 News. The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News. To comment, please send an email with your name and contact information to: Commentary@1819News.com.