Alabama Education Trust Fund Revenues Show Mixed Results Amid Exemption Effects
Tax receipts for Alabama’s Education Trust Fund (ETF) saw an uptick from October to November, yet remain down more than 5.4% in the early months of fiscal year 2025 compared to the prior year. A key contributor to this decline is a significant 9.2% drop in income tax collections, equating to roughly $88.7 million.
Rep. Danny Garrett, Chairman of the House Education Budget Committee, reassured that the ETF remains on track with its $9.3 billion budget obligations for 2025, despite fluctuations in revenue. “Income tax collections were down, sales tax collections were up, so overall it was kind of a modest net decline,” Garrett stated, indicating no immediate cause for concern.
Notably, November’s gross individual income tax receipts dipped by 5% ($36.9 million), alongside a decrease of $2.1 million in corporate tax receipts. This decline partially stems from a 2023 temporary exemption regarding the taxation of overtime earnings for hourly workers, which has reportedly cost the state more than anticipated, with current estimates now at $184 million. The average taxpayer is expected to save around $56, leading lawmakers to deliberate on the exemption’s extension later this year.
In contrast, the ETF’s sales tax revenues rose by 2.85%, amounting to $380.4 million, a positive change following a reduction in the sales tax on groceries.
Meanwhile, Alabama’s General Fund reported a 1.92% increase in revenues, totaling $602.3 million. However, interest from state deposits has seen a notable 17.8% decline, marking a first drop in over two years. As federal interest rates fluctuate, officials expect continued downward trends in interest revenue, prompting caution moving forward.
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