A new bill to modify how a portion of the tax revenue collected from online purchases is distributed to Alabama cities and counties has apparently hit a snag because of concerns about “winners and losers.”
The Senate General Fund budget committee was expected to vote on Senate Bill 347 on Tuesday, but committee chair and bill sponsor Sen. Greg Albritton delayed it.
The Simplified Sellers Use Tax was established about a decade ago to collect a flat 8% on online purchases from distributors without a physical presence in Alabama. Half of the revenue from SSUT goes to the state, 30% to cities and 20% to counties, based on population.
Under Sen. Greg Albritton’s Senate Bill 347, the state would gather population data from the U.S. Census Bureau Population and Housing Estimates Program every five years beginning in 2027, instead of every 10 years from the census.
“Everyone (last week) thought that was a great idea,” Albritton said Tuesday.
Then, some looked harder at the numbers, he said.
“This proved one thing: This matter is a lot more complicated than they thought it was,” Albritton said. “There’s winners and there’s losers and there are circumstances in these numbers that sometimes do not appear to make complete sense.”
He said more discussion is needed and carried over the bill until the committee’s next meeting. It hasn’t been scheduled yet.
Albritton said the bill isn’t intended to be a full solution to the ongoing SSUT dispute, but a good faith effort to show parties that the Legislature wanted to resolve ongoing conflicts about the annual distribution of what is now about $1 billion in annual tax revenue split between the state and local governments.
The City of Tuscaloosa and other municipalities previously brought a lawsuit over the state’s collection and distribution of sales tax revenue from online purchases, arguing they lose money on the current tax structure compared to traditional sales taxes applied to in-person purchases.
The cities voluntarily dropped the lawsuit in mid-February, instead hoping to find a solution in the Legislature.
Greg Cochran, executive director of the Alabama League of Municipalities, said that the organization hadn’t heard any opposition to the new legislation.
Sonny Brasfield, executive director of the Association of County Commissions of Alabama, said it is still analyzing the impact that the change will have on each county.
“(Simplified Sellers Use Tax) revenue is vital for every community in our state, so we must be careful in every step that we take,” Brasfield said.
After the meeting, Albritton said he’s been told that basing the distribution on a five-year population count splits the state’s largest 10 cities among winners and losers, some of them getting more revenue and some getting less.
“We’ve gotta find a way, or an acceptance at least if that’s what we’re going to live with, we gotta find an acceptance of that, but everybody that’s going to be a loser, you don’t know it until after you do the count,” Albritton said. “We’ve gotta find a better way of doing this.”
A statement from the Big 10 Mayors, the group of leaders from the largest cities, expressed support for the Legislature’s focus on SSUT distribution, a “critically important issue to the future economic success of our state.”
“This is an issue that must be addressed and we look forward to continuing to work with our elected leaders on solutions that fix the current system,” the mayors said.
Alabama Daily News reporter Claire Harrison contributed to this report.