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Ivey budgets: 2% pay raises for state employees, teachers; $400-$800 tax rebates

MONTGOMERY, Ala. – Gov. Kay Ivey on Tuesday sent lawmakers state spending plans that include 2% raises for educators and state employees and one-time tax rebates of $400 for individuals and $800 for couples who filed income tax returns for 2021. 

Along with the proposed $8.8 billion education budget and $2.9 billion General Fund budget for 2024, Ivey sent supplemental proposals to spend and save recent surplus tax revenues. 

State Finance Director Bill Poole told reporters Tuesday that Ivey has three themes in her fiscal plans.

“One is to make targeted, strategic investments that are responsible, sustainable and are designed to yield returns for the state of Alabama and its citizens for many years to come — not just one-time, feel-good opportunities,” Poole said.

Second, he said, is to reduce the state’s obligations — her proposals include paying off about $40 million in debt. Third is to increase reserve accounts “in anticipation of potentially difficult economic times ahead.” 

Ivey is proposing $50 million toward a General Fund rainy day reserve account.

Other increases in the record General Fund proposal include significant increases for Medicaid, $69 million, and the Alabama Department of Corrections, $58 million.

“(The ADOC increase) is primarily driven by a competitive contract for inmate health care,” Poole said. 

Across other agencies, there are “targeted” increases, including some inflation-related spending hikes.

“Like every business and household in the state, (state agencies) have experienced inflationary costs relative to their operations,” Poole said.

Rep. Rex Reynolds, R-Huntsville, said he planned to file Ivey’s General Fund proposal legislation Tuesday, allowing lawmakers to get to work making possible changes. Reynolds chairs the House General Fund Committee, where that budget will start this year.

In the Education Trust Fund, the surplus, separate from the 2024 budget, is an astonishing $2.7 billion.  Ivey’s spending proposal includes more than $59 million for the Public Education Employees’ Health Insurance Plan, the insurance provider for state educators. It has had nearly $100 million in COVID-19 related expenses since March of 2021. Some lawmakers expressed frustration earlier this month when a $1 billion American Rescue Plan Act spending plan allocated only $40 million to PEEHIP.

The supplemental also spends $31 million on a proposed health care-focused public high school in Demopolis.

Targeted capital improvement projects at both K-12 and higher education are also in the supplemental spending bill. 

“There are across the board capital investments related to our education facilities within K-12 and higher education,” Poole said.

Both the education budget and supplemental bill have increases for workforce development programs.

The proposed income tax rebate would also come out of the supplemental revenue. Single tax filers would get a one-time payment of $400 and a family of four would get $800. According to the proposed legislation, it would cost $966.7 million. 

“We believe that it is very important to provide immediate assistance to families while the state has access to these one-time funds,” Poole said.

If lawmakers approve the rebate, the money could be to Alabamian in two to three months, Poole said. 

But it’s not a done deal.

“I think we would prefer permanent tax cuts,” Senate Majority Leader Clay Scofield, R-Guntersville, said. “I’m not sure if our caucus has the appetite for rebates, or at least that much of one. We’re still in discussions.”

Rep. Curtis Travis, D-Tuscaloosa, said he wants to make sure educational needs are met before the state starts giving rebates.

“I just noticed that they increased starting pay for people that work in the state prisons to $50,000; I think that’s awesome, they need it, but I also think when you look at what starting pay is for teachers, that needs to be considered if we’re going to attract people,” Travis told Alabama Daily News. The starting salary for Alabama teachers with bachelor’s degrees is $43,358.

“Same way we’re trying to attract people into prison (jobs), we need to be finding ways to attract teachers into education, and it’s got to have a comfortable pay,” Travis said. “So I’d like to see those types of things met before we start meeting and giving those debates (on issuing rebates).”

The proposed education budget, which is a 6.5% increase over the current year, will now move to the Senate education budget committee. Chairman Sen. Arthur Orr, R-Decatur, said he hopes to have committee action on it in late April. The budget includes more money to support the Alabama Literacy Act and Numeracy Act, approved in 2019 and 2022, to improve reading and math education.

Alabama Daily News’ Alexander Willis contributed to this report.

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