Will Alabama finally enact legislation to repeal a portion of the state grocery tax in 2023? All indications show the legislature intends to do so, but the clock is ticking. Thursday marked the 23rd of the maximum 30 days available for the 2023 regular session. If the grocery tax repeal is to move from proposal to reality, it’s time for action.
Last month State Sen. Andrew Jones (R-Centre) introduced a bill to cut the state portion of the grocery tax in half by as soon as 2026 if certain economic growth indicators are met. Jones’ bill came with rare unanimous support in the Senate, with every state senator signing on as a cosponsor and Lt. Gov. Will Ainsworth offering his stamp of approval. According to Jones, the tax cut could save Alabamians more than $300 million annually.
Since then, there has been little movement. Senate Bill 257 has yet to receive a committee hearing.
What’s the holdup? One issue may be constitutional.
The Alabama Constitution requires that bills raising revenue originate in the House of Representatives. It also specifies that no revenue bills can be enacted during the last five days of a regular session. If the statute is strictly interpreted, that means that any revenue bill needs to be passed by the end of the 25th legislative day, which happens next week.
Whether the proposed grocery tax repeal fits into that category is murkier. It is a revenue bill, but it would decrease state revenues rather than raising them, so the restrictions may not apply. Regardless, Jones believes the bill will be more “constitutionally sound” if it starts in the House.
Despite the uncertainty, top lawmakers still believe the grocery tax repeal will be addressed before the end of the session. That process started Tuesday when State Rep. Danny Garrett (R-Trussville) introduced an identical House version of Jones’ repeal bill. While it does not have the unanimous support of the Senate bill, it is close, with 98 bipartisan cosponsors joining the repeal effort.
The delay could make for better legislation. As introduced, the bill would begin reducing the grocery sales tax rate by 0.5% each year starting on Sept. 1, 2023. If state Education Trust Fund (ETF) revenues grow by at least 2% in subsequent years, the tax would fall by an additional half percent each year through 2026, the major caveat being that if growth targets aren’t met, the reduction would be paused, meaning that full implementation could take longer than three years.
State House Speaker Nathaniel Ledbetter (R-Rainsville) would like changes made to the bill so that Alabamians see the full impact of the tax cut sooner. “Instead of doing a half cent we'll probably do a full cent,” he said this week. “We'll still keep the boundaries on it that we talked about and the back stop that was there.” If Ledbetter’s proposed changes occur, the 2% grocery tax cut could be fully implemented by Nov. 1, 2024.
Alabamians need immediate relief from near record high grocery prices. Reducing the tax rate by 1% each year will improve the bill and get that relief to citizens faster.
As of Thursday morning, Garrett’s grocery tax repeal had yet to receive a committee hearing. Before it can move to the House floor for debate, it needs to move through the House Ways and Means Education Committee, which Garrett chairs.
Despite the lack of movement this week, Ledbetter is still optimistic about the bill becoming law. “I don't think we'll have any problem moving it,” he said. “I think it's a good piece of legislation. I think the people of Alabama deserve it and I think it's the right time."
Ledbetter is right in noting that there has never been a better time to pursue a grocery tax repeal and other permanent tax cut measures. The ETF began the year with a $2.8 billion surplus. According to projections from the Legislative Services Agency, 2024 could bring over a $2 billion surplus. The legislature should use a significant portion of those funds to provide relief to Alabama families. They deserve it.
The grocery tax repeal is one of few issues that has widespread bipartisan support. More than 80% of Alabamians are in favor of it. It’s time for the legislature to make it a reality.
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.
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