Alabama Gov. Kay Ivey on Tuesday proposed one-time tax rebates of $400 for individuals and $800 for married couples — as well as 2% pay raises for teachers and state employees — as she sent her proposed budgets to lawmakers.
The governor submitted the proposed spending plans for the fiscal year that begins Oct. 1 to lawmakers as they resumed the legislative session. Lawmakers will debate the legislation over the next several months, likely accepting some of Ivey’s proposals and rejecting others.
“Just as every Alabama family budgets to invest, pay their debts and increase their savings, my budget proposals do just that for our state. From returning our taxpayers’ hard-earned dollars back to them to making historic investments in our students’ education, these budgets will help foster a strong Alabama today and a stronger Alabama tomorrow,” Ivey said in a statement about the proposed budgets.
Legislators this session face decisions on what to do with the rare surplus, including how much to save and how to spend the rest. The state budget that funds education has a $2.8 billion surplus, according to the Legislative Services Agency. The state general fund has a smaller surplus of $351 million.
“We believe it is important to provide immediate assistance to families while the state has access to these one-time funds on hand,” Finance Director Bill Poole said of the governor’s rebate proposal.
The proposed tax rebates, which Ivey first announced in her State of the State address, are about double what some lawmakers initially discussed.
The governor’s rebates would be limited to people who filed state income tax returns. Poole said that was the most efficient way to provide the rebates. Individuals who earned under $4,000 annually and married couples earning less than $10,500 do not have to file returns.
The governor has proposed pay raises of 2% for state employees and for educators. Poole said they were trying to provide sustainable pay raises, while also increasing pay.
“We know we have a teacher shortage. We know this is a tight labor market. It’s critical educators have career pathways in classrooms,” Poole said.