Words by Matt Woods | Image by Al Blanton
With just a couple of weeks left, we are nearing the end of the 2023 legislative session. The budgets are beginning to come into focus and could be finalized next week.
However, this week I would like to highlight three bills made possible because of the state’s conservative budgeting in previous years, which has helped to create the current state budget surplus. The first bill is another piece of pro-life legislation that is part of the pro-life package that we have been working on this year. The other two are tax cuts intended to help average Alabamians. Recall from the beginning of the session, I wrote about the state’s budget surplus. In some states with more liberal lawmakers, the debate would be about how the government should spend the extra money. What new programs could be created, or which government agencies could be expanded? I have a different perspective. I believe in limited government. To me, the question should be: how can we give the taxpayers a tax break or get the money back into their pockets?
On Tuesday, the Alabama House approved the Pregnancy Resource Act. I co-sponsored this bill which would provide state tax credits to individuals and businesses that donate voluntarily to eligible pregnancy centers or residential maternity facilities. These non-profit pregnancy centers typically serve low-income or single moms by providing financial assistance, free ultrasounds, birth and motherhood education, and other needed services. Because of the U.S. Supreme Court’s overturning of Roe v. Wade and Alabama’s passage of the Human Life Protection Act, we expect demand for the services offered by pregnancy centers across the state to grow, and providing the tax credit will help generate the funding necessary to provide those services. If you are pro-life and want to support these organizations, your financial donations may soon get you a corresponding tax credit.
Also this week, the House approved a bill that expands a tax cut on retirement income that was initially passed last year. In 2022, the Republican legislature approved a tax cut for retirees that exempted the first $6,000 of taxable proceeds from retirement income. Currently, only income from defined benefit retirement plans, such as those provided to teachers, state employees, military service members, and others with traditional pension systems, is fully exempt from state taxes. This bill would expand the tax exemption to include the first $10,000 of income and add defined contribution plans, such as 401(k) retirement plans utilized by many businesses, therefore making more retirees eligible for the tax cut.
Behind the scenes, there has been a serious look at reducing the state sales tax on groceries. Precisely what that may look like is still in flux, but the idea is to reduce the state’s portion of the sales tax that people pay on groceries. The question is: how much can the tax be reduced without creating a budget problem in future years when the economy has a down year? That calculus requires some guesswork, but the good news is that there is a move to provide some tax relief, which I think is a good thing.
I’ll let you know what happens next week.
Representative Matt Woods represents Alabama State House District 13, which covers parts of Walker County. You can contact him at email@example.com. WL