In another sign that Alabama must pass significant tax relief soon to remain competitive with much of the rest of the nation, South Dakota Gov. Kristi Noem and West Virginia Gov. Jim Justice both announced major tax cut proposals for their respective states this week.
South Dakota Governor Kristi Noem told Fox News Wednesday she plans to eliminate the sales tax on all grocery purchases in her state if she's re-elected in November.
"I have seen families across South Dakota struggling to make ends meet with rising inflation because of President Biden's policies. His failed liberal agenda has caused the cost of food to skyrocket, and family budgets are being stretched thin," said Noem while announcing the new tax cut in Rapid City, South Dakota, on Wednesday. "This permanent tax cut will put hundreds of dollars in the pockets of the average South Dakota family."
According to Noem, eliminating the grocery sales tax would reduce taxes on South Dakotans by $100 million.
West Virginia officials are currently drafting a bill to phase out the state's income tax, according to The Center Square.
"We are starting the process right now, in 2022, of proposing to the West Virginia legislature that we start phasing out West Virginia's state income tax," West Virginia Secretary of Revenue Dave Hardy said during a news conference Tuesday with Gov. Jim Justice. "... That's our goal, and that's where we're going. The goal of this governor and this administration is to eliminate the state income tax in West Virginia as soon as we possibly and fiscally responsibly can do that."
Alabama was the only state in the Southeast to not offer its citizens any broad-based significant sales or income tax relief in 2021 or 2022.
A spokeswoman for Alabama Gov. Kay Ivey told 1819 News recently that "Governor Ivey has said that providing relief in the pocketbooks of Alabamians is important to her."
However, no specific goal or plan has been announced in Alabama other than proposals from some lawmakers for a one-time tax rebate or using the record state surplus for more education funding.
According to the Tax Foundation, every state in the Southeast United States except Alabama implemented or enacted some state sales or personal/corporate income tax relief within the past two calendar years.
Alabama has passed some smaller targeted tax relief measures in recent years. In May, Ivey signed into law a bill that phases out the business privilege tax for Alabama small businesses in 2024. Ivey also signed a bill passed by Alabama legislators to exempt $6,000 of taxable retirement income for taxpayers aged 65 and older. Additionally, Alabama passed a slight increase in the optional standard deduction in 2022.
The state's General Fund budget as of September 1 had a little more than $94 million in total available funds in excess of total obligations. The Education Trust Fund budget as of September 1 had a little more than $1.6 billion in total available funds in excess of total obligations, according to Kirk Fulford, the state's Legislative Fiscal Officer.
The state's 2022 fiscal year ends on Friday.
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