Arise’s Carol Gundlach discusses what we’re watching for as the 2024 General Fund budget advances to the House floor. She also reviews the package of business tax breaks that the Alabama Legislature enacted last week.
Issue: Budgets
Alabama lawmakers allocated the state’s final $1 billion of ARPA funds. What comes next?
As the Alabama Legislature begins to craft the 2024 General Fund budget, decisions made during last month’s special session should provide lawmakers with more flexibility to meet ongoing needs for our state. With additional near-term funding already in place for key priorities, legislators should seize the opportunity to improve the quality of life for every Alabamian. Investments that would further this goal include providing funds for public infrastructure like Medicaid expansion and public transportation.
On March 16, Gov. Kay Ivey signed HB 1 to end the special session she called to distribute the remaining federal funds that Alabama received under the American Rescue Plan Act (ARPA). This act provided states with federal funding to help cover losses and expenses incurred because of the COVID-19 pandemic. Lawmakers previously distributed the majority of the funds, leaving $1.06 billion to be allocated in this year’s special session.
Arise priorities eligible for funding
The Department of Finance received $55 million in ARPA funding for direct services for people likely to face economic hardship. These categories include older Alabamians and victims of domestic violence. Service providers will receive this money through departmental grants.
Further available categories for this funding include food banks, long-term housing security and mental health care. Summer education programs for schoolchildren and services to families involved in child welfare also are eligible for this funding.
Arise has advocated for using a portion of Alabama’s ARPA aid for affordable housing. While the ideal path would have been a specific allocation to housing, this funding pool provides a path for that important investment. Direct food assistance is likewise a vital public good. And increased mental health funding could help improve the well-being of Alabamians of all demographics.
Health care receives significant funding
Lawmakers allocated $339 million for direct health care expenses and related services. The largest portion will be used for hospital and nursing home reimbursements at $100 million each. Increased expenses for state employees’ health insurance will account for $80 million of the remaining $139 million.
The remaining $59 million will go toward several programs to expand health care availability and efficacy for Alabamians. These funds include:
- $9 million for telemedicine infrastructure expansion, particularly focused on specialist coverage for Alabamians in rural communities.
- $20 million for research into increasing access to personalized health care.
- $175,000 in cost reimbursement for COVID-19 vaccinations provided to college and university students.
Also notable is a $25 million line item for mental health care investment. This expenditure can help bring state programs up to the requisite standard of care. This amount is in addition to the permissible use of a portion of the Finance Department’s $55 million in funding.
Infrastructure improvements receive lion’s share of ARPA aid
Lawmakers allocated the largest share of this round of funds, $660 million, to infrastructure improvements in water and sewer systems. Of that amount, $260 million will go toward broadband internet access.
This decision is consistent with the state’s emphasis on increasing internet connectivity during recent legislative sessions. These funds are also available for use by state agencies to modernize and improve access to state computer infrastructure. This has been another recent priority for the Legislature.
The remaining $400 million in this category will go toward water and sewer infrastructure improvements. This includes $195 million for high-need water and sewer projects. A further $100 million will be available for water projects in growing communities. And an additional $100 million will be designated for grants that require 35% funding matches by local governments.
The Alabama Department of Public Health has designated $5 million to conduct wastewater system improvements in areas with high poverty rates, low populations and difficult soil conditions for septic systems. This expenditure aims to improve longstanding sewage disposal issues in the Black Belt.
In several Black Belt counties, recent major sewage problems due to inadequate investment in public sewage disposal have drawn international condemnation. This ARPA allocation will help mitigate the problems, though further investment will be necessary to fix them fully.
Final thoughts
Overall, state lawmakers used this final round of ARPA funds as generally intended: to improve Alabamians’ lives and mitigate shortfalls due to the COVID-19 pandemic. The relative flexibility of the appropriations bill still leaves open the possibility that some funds could be used in counterproductive ways. But the Legislature performed much better in allocating ARPA funds equitably this session than with the first round, when they devoted $400 million of relief funding to prison construction.
Thankfully, this special session created numerous pathways to help Alabamians by directly providing important public goods. The opportunity to make significant improvements in vital areas includes funding adequate housing and providing food for people who need it. It includes investments in mental health care and improvements in state agency reliability. And it includes mitigation of some harms resulting from decades of state disinvestment in Black Belt communities with mostly Black populations.
Make no mistake: Many urgent and vital needs remain unmet after the special session. But ARPA funding nonetheless will provide a generational opportunity to make substantial improvements to the lives of all Alabamians. Lawmakers should build on that momentum by expanding Medicaid, funding public transportation and making other investments in a brighter, more inclusive future for Alabama.
Alabama Arise Action Legislative Day 2023
Arise held our 2023 Legislative Day on Tuesday, April 11. More than 100 supporters joined us in Montgomery to hear updates on our policy priorities and urge their lawmakers to untax groceries, expand Medicaid and end debt-based driver’s license suspensions. Thank you to everyone who spoke out for a better Alabama for all!
What would an ideal plan to untax groceries in Alabama look like?
Several tax bills (including grocery tax cut bills) will be discussed this year in the Alabama Legislature. What makes a tax reform bill good for Alabamians? Here are four important factors to keep in mind:
It provides a tax cut for families with low incomes (not just wealthy households).
Alabama’s state sales tax on groceries is a cruel tax on survival. It increases hunger rates, drives struggling families deeper into poverty and adds pressure to household budgets with every trip to the grocery store.
The average Alabama family spends approximately $600 a year on state grocery tax. By reducing or eliminating the state grocery tax, we are taking an important first step toward making it easier for working families to make ends meet.
It protects education revenue to ensure our children’s classrooms are adequately funded in the years to come.
Revenue from Alabama’s individual income tax and sales tax (including the grocery tax) goes to the Education Trust Fund, which supports public education throughout the state.
Lawmakers should ensure their proposals to untax groceries protect funding for public schools while making life better for families across our state. We can and should do both.
It is broad enough to have a meaningful and long-lasting impact.
It is important that any bill to reduce the grocery tax allows SNAP-eligible foods (rather than only WIC-eligible foods) to be untaxed.
If only WIC-eligible foods are untaxed, grocers would have a hard time implementing the bill. Families would be confused when grocery shopping, as relatively few items would be untaxed, while most would not be.
The reduction should be sustainable in the long term, rather than just being a temporary fix.
An ideal grocery tax proposal will do all the things on this list while eliminating the state’s entire 4-cent grocery tax, rather than just a fraction of it.
It provides an immediate grocery tax reduction.
As prices continue to rise on many of the essentials that folks need to survive, families across Alabama are struggling now.
We need to help Alabamians at a time when they need a grocery tax reduction the most, rather than putting it off until future years.
Arise legislative update: March 27, 2023
Arise’s Pres Harris invites you to our Legislative Day on April 11 in Montgomery. Legislative Day is an annual opportunity for Arise supporters to meet their lawmakers and make the case for policy changes to improve life for every Alabamian. We expect this year’s advocacy to focus on expanding Medicaid, untaxing groceries and funding public transportation.
Arise legislative update: March 6, 2023
Before the Alabama Legislature returns this week, Arise’s Akiesha Anderson welcomes everyone with an update on an upcoming special session on federal American Rescue Plan Act funds and an overview of Arise’s member-chosen policy priorities for 2023.
Fresh opportunities to push for a better Alabama
The Alabama Legislature will welcome 37 new lawmakers to its halls when its 2023 regular session begins March 7. Alabama Arise sees this as an opportunity to educate new legislators and identify new allies on issues of importance to our members. We urge folks to join us in calling for change, including at Arise Legislative Day on April 11.
Eliminate the state grocery tax
In early February, 11% of Alabama households said they sometimes or often didn’t have enough food to eat. And those hunger challenges are even more severe in communities of color. More than 23% of Black Alabamians and 13.6% of Hispanic Alabamians said they sometimes or often didn’t have enough food.
Untaxing groceries would help families across Alabama keep food on the table. As we have for more than two decades, Arise once again will support bills this year to remove the state’s 4% sales tax on groceries. We also will support replacing the grocery tax revenue by limiting or ending a tax loophole for the wealthiest households. This legislation by Sen. Andrew Jones, R-Centre, and Rep. Penni McClammy, D-Montgomery, would empower Alabama to untax groceries while protecting funding for public schools.
Expand Medicaid to close the health coverage gap
For nearly a decade, Alabama has been outside looking in on a good deal. While hundreds of thousands of Alabamians continue to struggle without health insurance, state leaders have failed to expand Medicaid. Alabama is one of just 11 states that has yet to expand Medicaid. And that inaction has left more than 220,000 Alabamians in a health coverage gap.
Fifteen rural hospitals in Alabama are at imminent risk of closing this year if state leaders don’t act soon to protect health care access. Gov. Kay Ivey should act swiftly to expand Medicaid herself, but the Legislature’s support also will be vital. Arise will keep working to educate lawmakers and the public on the economic, budgetary and humanitarian benefits of Medicaid expansion.
Take bold steps to reform our criminal justice system
Legislators have an opportunity and an obligation to make strides in solving the many problems within Alabama’s criminal justice system. This issue has added urgency as Alabama faces a U.S. Department of Justice lawsuit alleging unconstitutional prison conditions.
Many avenues for progress exist. Arise will urge lawmakers to end the practice of suspending driver’s licenses for debt-based reasons. We will advocate for reform of the state “three-strikes” law, known as the Habitual Felony Offender Act. And we will support a bill to require the jury to be unanimous before imposing the death penalty.
Address housing and transportation needs
State House insiders expect the Legislature to go into a special session this spring to decide how to use remaining federal funds under the American Rescue Plan Act (ARPA). From the start, Arise has taken the position that Alabama should use some of its ARPA funds to jump-start public transportation and help thousands find an affordable place to call home.
During the probable special session, we will continue to uplift the need for these investments in the people of Alabama. Learn more at alarise.org/arpatoolkit.
Budget priorities for the people
Two weeks before the Alabama Legislature’s 2023 regular session, lawmakers, lobbyists and advocates packed into the State House in late February for the annual joint legislative budget hearings. One might call it the Super Bowl for budget nerds.
After years of scarcity, both Alabama budgets are starting out with a revenue surplus. There’s $351 million in “excess” revenue for the General Fund, and $2.7 billion for the Education Trust Fund. That’s not even counting the remaining $1.1 billion in American Rescue Plan Act (ARPA) funds still awaiting allocation.
What we heard at this year’s budget hearings was not surprising. Public services like education, health care, mental health and supportive services need more resources after years of underinvestment. State agencies are struggling with worker shortages and the consequences of underfunding – and understaffing – critical programs. It’s no surprise that lawmakers heard a long, detailed list of opportunities to meet these needs. Most agency heads were clear that new funding can’t fix all of the problems – but it’s a start.
Some lawmakers have floated the idea that this one-time surplus is a sign we need a tax rebate. If that proposal materializes, Arise will be front and center advocating for funds to go directly to low- and moderate-income households bearing the brunt of higher costs. But Arise’s proposal, which comes directly from listening to our members, is a longer-term solution to our upside-down tax code. Our bill to untax groceries would help families keep food on the table while also protecting funding for public schools. It’s a solution that goes beyond just one year to create more foundational and sustainable change.
One concern you may have heard is that nobody has enough workers. Too many Alabamians are still disconnected from the workforce due to missing critical infrastructure investments in child care, public transportation, health care and affordable housing. This year, we’ll be pushing for investments in these supports to help people get and keep work, and to build the healthy and educated workforce Alabama needs.
Our 2023 policy proposals provide that roadmap for change. Expand Medicaid to ensure nobody has to die for lack of preventive care or live in poverty because they have a chronic health condition. Invest in infrastructure to support workers, including child care, housing, public transportation and education. Stop funding public services with punitive fines and fees, and start ensuring the wealthiest Alabamians pay their fair share.
We look forward to seeing you all at our Legislative Day this April. If we continue to stand and work together, we will make significant progress for Alabama.
Alabama Arise unveils 2023 roadmap for change in Alabama
Expanding Medicaid and ending the state sales tax on groceries will remain top goals on Alabama Arise’s 2023 legislative agenda. More than 400 members voted on Arise’s issue priorities in recent days after the organization’s annual meeting Saturday. The seven issues chosen were:
- Adequate budgets for human services like education, health care and child care, including Medicaid expansion to make health coverage affordable for all Alabamians.
- Tax reform, including untaxing groceries and capping the state’s upside-down deduction for federal income taxes, which overwhelmingly benefits rich households.
- Voting rights, including automatic universal voter registration, removal of barriers to voting rights restoration for disenfranchised Alabamians, and other policies to expand and protect multiracial democracy in the state.
- Criminal justice reform, including retroactive application of state sentencing guidelines and repeal of the Habitual Felony Offender Act.
- Death penalty reform, including a law to require juries to be unanimous in any decision to impose a death sentence.
- Public transportation to empower Alabamians with low incomes to stay connected to work, school, health care and their communities.
- Payday and title lending reform to protect consumers from getting trapped in debt.
“Arise believes in dignity, equity and justice for everyone,” Alabama Arise executive director Robyn Hyden said. “Our 2023 issue priorities reflect the need to work together to break down policy barriers that keep people in poverty, and that disproportionately harm Black and Hispanic Alabamians. We must build a healthier, more just and more inclusive future for our state.”
The time is right to expand Medicaid in Alabama
One essential step toward a healthier future for Alabama is to ensure everyone can afford the health care they need. Arise members believe Medicaid expansion is a policy path to that destination, and research provides strong support for that position.
Expanding Medicaid would reduce racial health disparities and remove financial barriers to health care for more than 340,000 Alabamians. It would support thousands of new jobs across the state. And most importantly, it would save hundreds of lives every year.
Medicaid expansion would ensure health coverage for more than 220,000 Alabamians caught in the coverage gap. These residents earn too much to qualify for the state’s bare-bones Medicaid program but too little to afford private plans. Expansion also would benefit another 120,000 Alabamians who are stretching to pay for coverage they cannot readily afford.
Alabama is one of only 12 states that have not yet expanded Medicaid to cover adults with low incomes. But an Alabama Arise poll earlier this year found that more than seven in 10 Alabamians (71.5%) support Medicaid expansion. That figure included 65.8% of Republican voters.
“Medicaid expansion would boost our economy and improve the lives of hundreds of thousands of Alabamians,” Hyden said. “It’s time for Gov. Kay Ivey and lawmakers to say yes to the generous federal incentives for Medicaid expansion. Making this crucial investment in Alabamians’ well-being now will make our state better for decades to come.”
Why and how Alabama should untax groceries
Alabama’s state grocery tax makes it harder for people with low incomes to make ends meet. The tax adds hundreds of dollars a year to the cost of a basic necessity for families. And most states have abandoned it: Alabama is one of only three states with no sales tax break on groceries.
The state sales tax on groceries brings in roughly 6% of the Education Trust Fund’s annual revenue. But lawmakers have a path available to end the state grocery tax while protecting funding for public schools. Arise will continue to support legislation to untax groceries and replace the revenue by capping the state income tax deduction for federal income taxes (FIT).
The FIT deduction is a skewed tax break that overwhelmingly benefits the richest households. It is also exceedingly rare: Alabama is one of only two states to allow this deduction in full. The FIT deduction and grocery tax are two policies that contribute heavily to Alabama’s upside-down tax system. On average, Alabamians with low and moderate incomes must pay twice as much of what they make in state and local taxes as the richest households do.
“By untaxing groceries and capping the FIT deduction, lawmakers can make Alabama’s tax system more just and equitable,” Hyden said. “This plan would empower more families to keep food on the table while also protecting funding for our public schools. The Legislature should seize this opportunity to make life better for every Alabamian.”
Here’s what Alabama Arise heard from you in summer 2022!
We deeply value the input we get from Alabama Arise members, our allies and most importantly, those directly affected by the work we do together. We depend on what we hear to help guide our issue work and our strategies.
Despite the ongoing challenges of connecting in person, we kept working at finding ways to listen. We did another series of three statewide online Town Hall Tuesdays. And we held seven additional listening sessions around the state, engaging about 200 people.
The town halls happened every two weeks, starting July 12 and ending Aug. 9. Other meetings took place throughout the summer. Below are summaries of what we heard in those meetings.
Town Hall Tuesdays
Food and health
Most participants deeply cared about Medicaid expansion. They discussed how it would help many people, including rural communities struggling with access to care. Many were frustrated that Gov. Kay Ivey has not yet expanded Medicaid in Alabama. Others discussed the connection between health and access to healthy food and nutrition. Some participants noted that other barriers like transportation also directly impact health, nutrition and employment.
Related issues raised were the needs to address the racial wealth gap and increase wages for front-line workers. Many people expressed appreciation for food banks and pantries but acknowledged that they cannot meet all food security needs. Participants encouraged Arise to remain vigilant about the threat to impose stringent work requirements for Medicaid and SNAP food assistance. Many participants also mentioned untaxing groceries as a way to improve food security.
Democracy and justice
Many participants expressed concerns about legislative attempts to suppress voting rights and said Election Day should be a state holiday. Others also expressed concerns about ballot access for people with disabilities, limited numbers of voting precincts and gerrymandering. Bottom line: We should make it easier to vote, as ballot access is key to a strong democracy.
Several participants expressed concerns about the need for more services for people leaving incarceration. We need to expand community corrections programs, enact real prison reform and get rid of unjust fines and fees.
Some participants identified language accessibility as a potential barrier to receiving many services and participating fully in our democracy. Others were concerned about allocation of American Rescue Plan Act funds and wanted more funding for the Housing Trust Fund.
The path forward
This town hall was an opportunity to talk about any issues of concern people wanted to highlight. Participants raised the following needs and concerns:
- Expand Medicaid in Alabama now and address health disparities, including women’s health issues.
- Untax groceries and improve our regressive tax system.
- Improve voting access, including restoration of voting rights for people who were formerly incarcerated.
- Address environmental issues, including working to improve air quality in schools.
- Improve affordable housing access and language access, fully fund the child home visitation program and address gun violence.
Group and regional listening sessions
Session participants around the state strongly affirmed Arise’s work on the current 2022 issue priorities. They also emphasized the ongoing work to be done in those areas. Current issues highlighted were Medicaid expansion, criminal justice reform (particularly in the area of unjust fines and fees), more funding for child care and first class pre-K, public transportation and death penalty reform.
Session participants also discussed issues that aren’t on the Arise agenda but are of concern to them and their communities. Some of those issues include:
- Affordable housing, with a focus on increased funding and availability. One example was discussion of whether to limit the number of vacation rental properties one person could own in an area, as this can contribute to the shortage of affordable housing. Many renters also discussed the soaring prices of rent.
- Automatic organ donor registration linked to getting and renewing driver’s licenses.
- Broadband internet extension to reach more rural households and Alabamians with low incomes.
- Constitutional reform.
- Government intrusion on private medical decisions. One example shared was concern over lawmakers interfering with rights of transgender teens to seek medical care. Another concern raised was doctors being able to provide medical care during pregnancy and decide the right time to intervene on a pregnancy that threatens the life of the mother.
- Gun violence prevention.
- Marijuana sentencing reform.