MONTGOMERY, Ala. (WIAT) — State officials say it’s too early to know whether another percent will come off Alabama’s grocery tax.
A new law reduced the 4% tax to 3% this September, with another one percent reduction set for next September as long as the Education Trust Fund Budget grows 3.5% in Fiscal Year 2025.
Legislative Fiscal Officer Kirk Fulford presented to the state’s new Grocery Tax Joint Study Commission Tuesday, telling members that October 2023 receipts to the ETF budget were down $74.4 million, or nearly 14%, compared to last October.
The decline comes after significant growth in FY 2022 leveled off. Fulford says the ETF budget saw almost no growth in FY 2023.
“This may very well be the new normal, and the new normal is below obviously where the high growth period was,” Fulford said.
But Fulford says that’s not a reason for alarm. October is just one month into the new fiscal year, and he says it’s hard to say how much the state may bring in over the next several months.
“Way too early to try to guess on something like that,” Fulford said.
Commission Co-Chair Sen. Andrew Jones (R- Centre) sponsored the grocery tax cut bill. He says the group will monitor the revenue receipts, continue to meet and eventually make a report to the legislature by 2026 on how to fully eliminate the tax.
“We’ll be watching and seeing, and our report I think by the end of this quadrennium will detail how we can move on with our next steps and hopefully tackle that next two percent,” Jones said.
If that 3.5% growth isn’t projected for FY 2025, the percentage will come off in the following year the budget does grow that much.