MONTGOMERY, Ala. — An Alabama House committee advanced nearly $3.9 billion in General Fund spending plans Tuesday, the bulk of which came from House Bill 186, the proposed $3.7 billion 2026 General Fund budget, sponsored by Rep. Rex Reynolds, R-Hazel Green.
While described by lawmakers as fiscally conservative, the record-high budget proposal comes amid unexpected stability in state revenue.
“Going into the (this legislative) session, we did not project any growth, yet our numbers show we are seeing growth in Alabama,” Reynolds, who chairs the committee, told Alabama Daily News Tuesday. “The interest rates have not dropped at a rate we thought they would, so we’ve got a lot of additional revenue.”
The 2026 GF budget represents a $6 million increase over Gov. Kay Ivey’s early February budget recommendations, with key differences being the inclusion of an additional $7.5 million for the state’s Airport Development Grant Program and $2.5 million for Capitol security. Other increases include an additional $2 million for the Department of Commerce and $1.5 million for the Forestry Commission.
Cuts in comparison to Ivey’s recommendations include $5 million less for Medicaid and nearly $3.7 million less for the Department of Mental Health, though Reynolds said the cuts were due only to those agencies experiencing a surplus of funds, and that both would receive additional funding in 2027 equal to the proposed cuts for 2026.
“The (cuts) from Mental Health and Medicaid, they absolutely still need that money, they just worked with us and we extended that need out to the 2027 budget,” Reynolds told ADN. “So it’s really not going away, all we did was decrease the amount that the governor put towards those two agencies, and we’ll plus them back up in 2027 to make up for it.”
The significant share of the unexpected strength and stability of state revenue comes from interest on state deposits, which has been a main source of growth for the General Fund in recent years thanks to high interest rates and federal COVID-19 relief money accruing interest in state accounts before its spent. An anticipated drop in that revenue hasn’t been as significant as anticipated.
“The interest on state accounts remains strong; they have fallen about $3 million or $4 million, so the next cuts, we will see a drop off, but because of what this committee passed today, we’ll be ready for it,” Reynolds said.
Nevertheless, Reynolds and other members of the committee expressed the need to remain conservative when crafting state budgets going forward, especially given that revenue from interest on state deposits will dry up eventually.
“We still are very fortunate with the amount of interest on our state deposits, it stands up a lot of the money we have in the General Fund,” said Rep. Chris Blackshear, R-Smiths Station, a member of the committee a cosponsor of HB185. “We continue to say that that’s coming to an end; we sound like a broken record, but it is. It’d be a lot easier to tighten our belts and be more efficient now (rather than) when you absolutely have to and it’s necessary.”
While not discussed during the committee meeting, several funding cuts were highlighted later Tuesday on the Senate floor by Sen. Rodger Smitherman, D-Birmingham. He listed the Alabama Jazz Hall of Fame and the Magic City Classic, the annual college football game between Alabama A&M and Alabama State University, the two largest HBCUs in the state, both funded in last year’s budget by $50,000 and $200,000, respectively.
Other funding omissions named by Smitherman include the Selma and Wilcox Housing Authority, which help provide affordable housing options for low-income Alabamians, and the Birmingham Police Youth Athletics Program, which works to foster a relationship between youth and law enforcement in the city. Both items were funded in the previous year’s budget to the tune of $100,000 and $50,000, respectively, with the cuts originating from Ivey’s original budget recommendations.
Smitherman slowed action in the Senate Tuesday and said he thought the cuts were part of a larger anti-diversity, equity and inclusion efforts.
“It’s unfortunate, but I think there’s a crazy wave going on; anytime that you can take folks’ pictures off of something, because you don’t want the work to know that Black folks did something,” Smitherman said.
“… You want us to be extinguished, you want to shut our museum down, you want to shut us all the way down. You don’t want us to have nothing… that’s not going to happen. And if it does, it will happen with the most resistance using our rules and tools and procedures that I can use in this body.”
Democratic Rep. Juandalynn Givan, who also represents Birmingham, told ADN Tuesday that she viewed the cuts as “a slap in the face, especially to people of color,” and characterized them as Alabama Republicans trying to replicate federal cutting efforts spearheaded by the newly created U.S. Department of Government Efficiency, or DOGE.
“It’s DOGE in Alabama, all of those organizations impact people of color,” Givan said.
Givan predicted, however, that Smitherman – who is well known in the Senate for his ability to filibuster for hours on end – would ultimately see to it that funding for the four aforementioned line items is restored by the end of the legislative session.
“I have a feeling, knowing Sen. Smitherman, before we (adjourn for the legislative session), all of those entities will be put back in the budget, you can bet your bottom dollar,” she said.
Other major spending bills passed out of the committee Tuesday include House Bill 185, which includes $33.4 million in supplemental spending for the current year, also carried by Reynolds. It would allocate roughly $12.5 million allocated toward the state’s Unified Judicial System and increase appropriations to the Department of Transportation by roughly $13 million for bond debt service funding.
The committee passed several other bills during its meeting that increased state spending, including House Bill 183, which would authorize $36.6 million to be appropriated to the state’s Children First Trust Fund, and nearly $44.2 million across four state agencies, including the 21st Century Debt Service and Medicaid. All spending under HB183, however, is pulled from the state’s share of tobacco settlement funds, and would be appropriated in fiscal year 2026.
Alabama Daily News’ Mary Sell contributed to this report.