Rebate relief languishes in Legislature

By Bob Johnson • The Associated Press • April 26, 2008

Alabama residents will begin receiving federal economic stimulus tax rebate checks next week -- about $600 for most single taxpayers and $1,200 for most families -- but they may not be able to spend it all in one place.

Barring quick action by the Alabama Legislature, some of the federal tax rebate will have to go to pay state income taxes. A bill that would exempt the federal rebate checks is stalled as the Legislature enters the final six days of the 2008 regular session.

The bill to exempt the rebates from state income taxes is waiting to be considered in the House and still must go to the Senate. The bill is stalled behind the state's education budget and a controversial corporate income tax measure.

Debates on the corporate income tax bill and the $6.3 billion education budget are expected to take up all of the time in the House next week, leaving just two days for the bill to pass in time to be considered in the Senate.

Early in the session, Gov. Bob Riley and the Democratic and Republican caucuses in the House and Senate had made it a priority to exempt the rebate checks from income taxes. But since the bill by Rep. Terry Spicer, D-Elba, was approved by the House Education Appropriations Committee in March it has been sitting on the calendar in the House.

"It is in line to be considered," House Speaker Seth Hammett, D-Andalusia, said.
Spicer said he hoped to be able to bring the bill to the floor for a vote after the House passes the education budget.

The bill was amended by the education appropriations committee to remove an incentive for businesses that's offered in the federal tax rebate package.

The federal package allows businesses to increase the amount that they deduct for the depreciating value of equipment. State law ties Alabama's depreciation schedule for businesses to the federal schedule, which means Alabama's schedule would go up automatically under the federal legislation. But the House committee voted to allow businesses to take only the current deduction.

Committee chairman Richard Lindsey, D-Centre, said the change in the business deduction was made to prevent a loss of about $59 million in tax revenue that goes to the state's education budget. Article Source: http://www.montgomeryadvertiser.com/apps/pbcs.dll/article?AID=/20080426/NEWS/804260339