The 2025 Legislative Session is quickly coming to a close, and after 11 weeks in action, only three legislative days remain. Major legislative events of the week include final passage of SB 174, the REALTOR® priority bill on business license reporting and appeals, and House passage of HB 474, which extends the 2024 squatter removal process to real property and commercial property. In other news, both the Education Trust Fund and General Fund budgets secured final approval and were transmitted to Gov. Kay Ivey’s desk for signature with each representing record high appropriations. 

In a huge win for Alabama’s businesses, SB 174 passed the House 101-0 and was sent to Gov. Ivey for her consideration. Alabama REALTORS® sincerely appreciates the efforts of Sen. Clyde Chambliss (R-Prattville) and Rep. Paul Lee (R- Dothan) for pushing the bill through the process. Rep. Joe Lovvorn (R-Auburn) and Speaker of the House Nathaniel Ledbetter (R- Rainsville) also deserve thanks for including the bill on the House calendar. Our appreciation goes to all of the legislators who voted unanimously in favor of the bill, as well.

As a reminder, SB 174 eases the red-tape burden on businesses by requiring local governments to report business license schedules to the Alabama Department of Revenue and providing a one-stop-shop for owners to determine how much cumulative license tax they owe. The measure also allows taxpayers to appeal business license charges to the Alabama Tax Tribunal in Montgomery.

Another provision of the bill reduces the flood of mass letters from third party collection firms and creates a cause of action against firms for sending collection letters when they knew or should have known the charges are not lawfully due. It also requires that any letter sent to businesses must be accompanied by an official letter from the local government explaining that the collection firm is working on its behalf.

The REALTOR®-supported bill to update and broaden last year’s law on squatters passed the House of Representatives last week. In 2024, AAR successfully advocated for a new law that allows property owners to fill out an affidavit when a squatter occupies a home rather than being forced to engage in a lengthy and costly court case.

Sponsored by Rep. Craig Lipscomb (R-Gadsden), HB 474 strengthens the 2024 law by setting a timeline for removal by law enforcement, clarifying that municipal law enforcement has jurisdiction within city limits, expanding the process to include any building and real property, prohibiting law enforcement from turning away a property owner with a completed affidavit, and requiring law enforcement agencies to have a clear process for handling squatter removal affidavits, among other things.   

Record-high budget appropriation bills received final passage and went to the governor’s office for consideration last week. Alabama’ s government operates under two budgets – an Education Trust Fund budget that essentially focuses on the state’s K-12 public schools, community colleges, and public universities and a General Fund  budget that includes all other non-education state agencies. Despite predictions that revenues would fall during this budget cycle, both budgets experienced growth, due mainly to high interest rates on state deposits. 

Education Budget – Education spending totaled about $12 million in the package approved by the Legislature, which implemented a new funding formula that determines the amount each school across the state will be allocated. Traditionally, the funding formula was based on a per student basis, which will stay as the base level, but additional funding will now be allocated to schools with high numbers of students in certain classifications, such as poverty, special needs, English language learners, or gifted students.

General Fund Budget – The General Fund budget for Fiscal Year 2026 amounted to roughly $3.8 billion, an increase of about $348 million over the 2025 budget. As usual, the Alabama Medicaid Agency and the Alabama Department of Corrections demanded the highest portion of the funding with a combined $2 billion between them. 

• Tax Cuts Package – A package of bills with tax cuts passed out of Senate committee last week with a few changes. Sen. Arthur Orr (R-Decatur) reflected in committee that the bills were a “work in progress” so more changes may be anticipated. The bills reduce the state sales tax on groceries down to 2% - estimated to save taxpayers roughly $122 million per year; reduce the sales tax on machinery to 1.25% - an estimated $11 million in reductions; double the income tax exemption to $12,000 for deferred retirement withdrawals for individuals 65 and older; and raise the standard deduction from $2,500 to $3,000 for individuals. 
• Birmingham Water Works – Legislation to restructure the Birmingham Water Works Board received final passage last week and is intended to give surrounding counties that are serviced by the utility more of a voice in its governance and operations.
• Alfa Health Plan - A bill allowing the Alabama Farmers Federation to offer a health plan to its members was passed and sent to the governor. Proponents of the bill argue that farmers, who often pay thousands of dollars in monthly premiums for family coverage, could save money by enrolling in the plan, which is similar to those offered by farm bureaus in 10 other states with Florida passing legislation in last month. 
• Shark Attack Notification System – A bill creating a shark attack notification system secured final passage last week. Called the Lulu Gribbin Shark Alert System Act, it was named after a 16-year-old Mountain Brook girl who was attacked while swimming and later pushed for the bill. HB 437 creates an emergency alert system for smart devices — similar to an Amber Alert — that can be triggered when shark attacks occur near shore. The notifications would be limited to Mobile and Baldwin counties and based on geographical proximity to the emergency.

The House and Senate reconvened today at 1 p.m. and 2 p.m., respectively. Lawmakers are currently expected to meet for two days this week – Tuesday and Wednesday — and then return for a final day on Wednesday, May 14, which would allow them to override any gubernatorial pocket vetoes of legislation.