Alabama GOP-backed $192M tax cut has bipartisan support, but House Democrats want more

MONTGOMERY, Ala. — A GOP-backed $192 million tax cut package, expected to be debated on the Alabama House floor today, has gained some bipartisan support from advocacy groups and lawmakers.

House Democrats say they’ll be pushing for more, particularly as it relates to extending the state’s tax exemption on overtime pay.

“I don’t think (the proposed tax cuts) go far enough, but it’s one of those things that I applaud them (for) listening and trying to move forward at reducing the tax burdens on our citizens even more,” said Rep. Curtis Travis, D-Tuscaloosa, speaking with Alabama Daily News Monday.

Introduced by Rep. Danny Garrett, R-Trussville, who chairs the House Education Budget Committee, the $192 million tax cut package includes four bills that would lower the state sales tax on groceries from 3% to 2%, authorize local municipalities to lower their own sales tax on groceries, increase tax exemptions for seniors drawing from retirement and increase tax-exempt income for middle- and lower-income earners.

“While I am proud that Alabama’s taxes are consistently among the lowest in the nation, there are still commonsense, conservative measures we can take to put more money back into the pockets of hardworking Alabamians,” Garrett said in a statement when the package was revealed earlier this month. ““Including the previous cut in the grocery tax, these tax cuts will save Alabama families approximately $314.6 million per year.”

At a total estimated cost of $192 million, however, the package is being advocated for in lieu of continuing the state’s tax exemption on overtime pay, which ended up costing the state an estimated $230.7 million over a nine-month period, far higher than the original projection of $34 million per year. Earlier this month, Garrett said that had lawmakers known the true cost of the overtime tax cut, the Legislature likely would not have passed it.

Introduced and championed by House Minority Leader Anthony Daniels, D-Huntsville, the overtime tax cut remains a key priority for House Democrats, however, and could produce debate on the House floor today should lawmakers have to choose between that and the GOP-backed tax cut package.

“Especially now, as we deal with the economic chaos and uncertainty that has been caused by trade-war tariffs, massive layoffs, volatility in the stock market, and rising prices on almost everything, we can’t afford to let this tax cut expire,” Daniels said Monday in a statement.

“Republicans say we can’t afford to help hard-working, overtime-working Alabamians. We say we can’t afford not to.”

Earlier this month, House Democrats unveiled their own tax cut package, which included three bills that would completely eliminate the state sales tax on groceries, reduce the state income tax rate from 5% to 4% and permanently extend the state’s tax exemption on overtime pay.

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Rep. Adline Clarke, D-Mobile, was among the House Democrats that unveiled the tax package, and told ADN Monday that their proposal would better and more broadly help Alabamians.

“Although we continually fight to improve, Alabama is the fifth poorest state in the nation, with 17% of adults and almost one out of every four children facing food insecurity,” Clarke told ADN in a written message. “So, we are proposing a tax cut package that would have a more positive impact on the lives of so many people that see the costs of everything skyrocketing. Our proposal would be fair to working Alabamians.”

House Speaker Nathaniel Ledbetter, Rainsville, has championed both the GOP-backed tax cut package and continuing the overtime pay tax cut in some form, though passing both as proposed by House Democrats and Republicans – a combined hit to state budgets of more than $422 million – is fiscally impossible.

“Alabama’s financial footing has never been stronger and I’m proud that our responsible budgeting has allowed us to provide even more relief to our citizens,” Ledbetter said when the package was revealed.

On the case for extending the full tax cut on overtime pay as it exists today, Travis said reducing or eliminating the tax cut would jeopardize Alabamians’ trust in state government, and that it would be wrong to introduce a tax cut and “then turn around and take it back.”

“How can you give a tax break, then turn around and give it away?” Travis said. “We’ve got people who are working hard right now to restore utilities back to people, they can’t say this is the end of my work day; they are continuing to work to a point of exhaustion. For all that overtime that they work, when we give them that relief, that puts money into their pocket.”

Still, Travis and other House Democrats say they’re not outwardly opposed to the GOP-backed tax cut proposal, with the one percentage point cut in state sales tax on groceries in particular also getting support from Alabama Arise, a nonprofit low-income advocacy organization.

“Ending the state grocery tax in a responsible way has been a long time priority for Arise members,” said Chris Sanders, communications director for Alabama Arise, in a written statement Monday. 

“Alabama is one of only 10 states still taxing groceries. By ending the remaining 3% state grocery tax, lawmakers could save Alabamians the equivalent of a week and a half worth of groceries each year.”