Sponsor plans to refile SSUT bill next year

Rep. Chris England, D-Tuscaloosa, speaks during a debate in the Alabama House of Representatives on April 25, 2024 at the Alabama Statehouse in Montgomery, Alabama. (Brian Lyman/Alabama Reflector)

A bill to raise Alabama’s online sales tax rate that was rejected during this year’s regular legislative session will be filed again next year.

HB 17 , sponsored by Rep. Chris England, D-Tuscaloosa, would have changed the Simplified Sellers Use Tax, an online sales tax from 8% to 9.25%. The additional amount would have been allocated to the State Treasury for the General Fund and Education Trust Fund; local governments; and local boards of education.

A second bill related to SSUT that would have recalculated the tax rate every few years based on a formula and was tied to the passage of another bill that created a sales tax holiday.

The bills were not approved in committee. A message was left with House Ways and Means Education Chair Danny Garrett, R-Trussville, Tuesday.

Local sales tax rates can be higher than the online sales tax rates. England said they don’t need to keep the lower rates now that the Supreme Court has said that they can tax online purchases.

“Now it is mandatory, and we’re with the SSUT, with the way that it’s distributed, it is substantially now affecting money going to our schools,” he said.

England’s bill would have provided more discretionary funds for school districts to use for local needs.

“A lot of the things that school systems are now paying for, which include transportation and gas and so forth, or local growing costs, while local money isn’t increasing,” he said. “So my hope with the SSUT is to begin to help local school boards pay for some of the cost that they’re eating locally.”

Education Trust Fund funding is earmarked in a way that the local funds are not.

“Those local funds are critical for each system to meet the needs how they see fit,” said Vic Wilson, executive director of Council for Leaders in Alabama Schools.

Ryan Hollingsworth, executive director of the Alabama Superintendents Association, said over email Monday the SSUT is an issue that needs to be addressed.

“ We were disappointed to see a bill fail that would have shared a portion of the online sales tax collections with our schools,” he wrote. “While we have some county commissions sharing SSUT revenue with our school systems, most are not.  Most of our districts are seeing local sales tax revenue decrease as people make more and more purchases online instead of in person. The revenue from SSUT continues to grow at a very rapid pace as local sales tax collections decrease.”

Sally Smith, executive director of the Alabama Association School Boards, wrote in a Tuesday statement said they were proponents of local boards “receiving the same share of revenue from SSUT as sales taxes at the local level.”

“Since SSUT was enacted in 2015, local boards of education have consistently been left out of this growing revenue stream, while revenues from local brick-and-mortar sales taxes continue to decline,” she wrote. “As the gulf between online sales tax and traditional sales tax continues to widen, that equals fewer and fewer dollars in local revenue available for public schools.”

She wrote they would continue to push government leaders for public education to receive a “fair share.”

“Those missing dollars represent a values decision,” she wrote.

England is planning to file the same bill next year, and it would be similar in affecting distribution to school systems on a per pupil basis.

“A lot of people see this big number out there, and they say the Education Trust Fund has spent eight, nine, $10 billion on education, and they begin to feel like that money translates the same way on a local level, but it actually doesn’t because different school systems are funded at a different rate,” he said.

Wilson said he was “comfortable” but didn’t “love” the later version of the bill.

“We have to give and take to get some things that we want or we feel very confident and comfortable with, just like somebody who’s opposed to it needs to get something where they can feel comfortable with it as well,” he said.

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