Members of the Alabama National Guard could soon receive a significant tax break—at the expense of the state’s public schools.
On Wednesday the Alabama Senate Finance and Taxation Education Committee passed House Bill 341, introduced by State Representative Jerry Starnes, R-District 88, a bill that would exempt the first $5,000 of drill pay for members of the Alabama National Guard from state income tax. According to Representative Starnes, seven other states—South Carolina, Oklahoma, Pennsylvania, New York, Utah, Arizona and Nebraska—provide similar tax exemptions to their National Guardsmen.
Per the bill’s fiscal note, HB341 would cost the state $1.9 million beginning in Fiscal Year 2027, followed by an annual loss of $2.6 million each year thereafter. Before the committee discussed the bill, a sunset amendment was approved that would end the exemption after the 2029 calendar year unless an extension is later approved.
Several Democratic members of the committee criticized the bill for taking money out of the hands of Alabama’s public schools in order to fund the tax break.
“I’m for the National Guard, but I’m also for my students in public schools,” said Senator Rodger Smitherman, D-Birmingham. “We’re taking money directly out of their coffers, and that’s a problem.”
“I know it feels good to do that for the National Guard but it don’t feel good to take money out of these kids’ pockets for reading and everything else,” Smitherman added.
Smitherman further criticized the bill for failing to find an alternative revenue stream to make up for the loss it would impose on the Education Trust Fund.
“We’re cutting [from] our kids and we aren’t showing anywhere else where we’re going to put that money back,” said the senator. “So I have a serious problem with this.”
Senator Vivian Figures, D-Mobile, echoed Smitherman’s concerns, sarcastically remarking that state lawmakers should exempt their own income from taxation while they were at it.
“Since we’re tax exempting everybody I think, since the legislatures don’t have retirement, we ought to exempt our income too,” Figures said.
The committee went on to vote along party lines, with the Republican members voting in favor while Smitherman, Figures and Senator Bobby Singleton, D-Birmingham, all voted against the bill. The only other Democrat on the committee, Senator Kirk Hatcher, D-Montgomery, abstained.
After the bill passed, Figures underscored the fiscal impact that the bill would have on public education.
“Mr. Chairman, that’s right at $4 million in less than ten minutes that we just took from the Education Trust Fund,” Figures noted.
“Well, it hasn’t passed yet,” retorted Senator Arthur Orr, R-Decatur, the committee’s chairman.
HB341 will now go to the Senate floor for further consideration.
