June 2024 Group Watch: State Revenue Status Update
Revenue growth in Alabama’s General Fund is still being propelled by high interest rates and was up nearly 5.5% in May compared to a year ago, and nearly 9% for the fiscal year. Revenues into the Education Trust Fun were up more than 18% in May, but overall growth is flat at .2%. The one-month growth was due to individual income tax refund payments being down compared to a year ago. Income and sales taxes are the largest sources of revenue for the ETF. As of the end of May, income tax revenue had risen .75% this year. Sales tax revenue growth is -1.5%. Separately, hourly workers in Alabama no longer have to pay income tax on overtime earnings. The cut on overtime is is having a larger impact on the ETF than originally expected; the ultimate loss in revenue could be as much as $184 million. The current year’s education budget is $8.8 billion; the General Fund budget is $3 billion. In both budgets, legislators did not appropriate all possible revenue. For FY 2025, which begins October 1, lawmakers and the governor approved $9.3 billion and $3.4 billion spending plans, respectively.
