The Alabama Legislature convened for two legislative days, and one committee day, this past week, completing now 8 days of the 2026 Regular Session. Lawmakers will return on Tuesday to begin their ninth legislative day, out of a maximum of 30.
FY 2027 Budget Outlook: Clouds on the Horizon
Lawmakers reviewed the Ivey Administration’s proposed Fiscal Year 2027 budget during a joint General Fund hearing this week. Legislative budget leaders warned of significant fiscal challenges ahead despite Alabama’s current strong financial position.
The proposed General Fund budget would spend approximately $28.5 million less in FY 2027 than the current FY 2026 year, due to a forecasted 4.2% decline in revenue when the new fiscal year begins on October 1, 2026.
Revenue Challenges:
- ARPA Funding Expiration: American Rescue Plan Act funds will be fully spent by the end of 2026, creating a revenue drop in FY 2028.
- Declining Interest Income: Interest on state deposits is declining as economic conditions shift.
- Online Tax Lawsuit: An ongoing lawsuit over online income tax distribution adds uncertainty to revenue projections.
- Revenue Decline: General Fund revenue is forecasted to decline 4.2% in FY 2027.
Spending Pressures:
- Employee Health Insurance: The State Employees Insurance Board is requesting a major funding increase to address rising healthcare costs in FY 2027.
- Medicaid: Medicaid remains the largest General Fund expense and is expected to need a significant increase.
- CHIP Funding Shortfall: Governor Ivey is requesting an immediate $19.2 million infusion from the $419 million Education Trust Fund supplemental funding bill to cover the Children’s Health Insurance Program’s budget shortfall. The shortfall resulted from faulty estimates when officials prepared the 2026 budget request in 2024, due to Medicaid coverage expiring from the waning COVID-19 pandemic.
Senate General Fund Chairman Greg Albritton said he plans to “hold the line” on General Fund expenses, with addressing the insurance shortfall as his first priority. When asked about pay raises for state employees, Albritton stated: “I know it’s an election year, I know there will be pressure, but I am extremely cautious about being able to do either and certainly not both.”
Education Trust Fund budget hearings are scheduled for Monday, February 2.
Age Verification for App Stores Advances Out of Senate Committee
HB161 – Sponsored by Rep. Chris Sells
Legislation requiring age verification and increased parental oversight for app downloads moved one step closer to final passage this week. After passing the House last week, the bill was voted out of the Senate Children and Youth Health Committee on Wednesday and is now in position for final passage on the Senate floor. The legislation will be handled by Senator Clyde Chambliss in the Senate.
Key Provisions:
- Age Verification: Requires app store providers to request age information from users and verify it using “commercially available methods.”
- Parental Oversight: Increases parental control over apps their children may download.
Mobile Bay Dredging Reform Clears House, Moves to Senate
HB181 – Sponsored by Rep. Rhett Marques
The House approved legislation to establish new requirements for dredged material from large coastal dredging projects. The bill addresses concerns from oyster farmers, fishermen, and environmentalists about the Army Corps of Engineers depositing dredged sediment back into Mobile Bay—a practice critics call “mud dumping.”
Key Provisions:
- Beneficial Use Requirement: Requires the Corps to use at least 70% of dredged material for beneficial purposes, including marsh creation, shoreline protection, industrial applications, and coastal habitat restoration.
- Defining Beneficial Use: Clarifies that dumping dredged material into public waters does not qualify as beneficial use under Alabama law, unless part of a shoreline restoration or marsh creation project.
- Federal Responsibility: The Corps remains responsible for maintaining the Mobile Harbor Ship Channel. The legislation does not alter dredging operations themselves.
- Federal Funding: All disposal costs remain fully federally funded.
- Regional Alignment: Places Alabama alongside Florida, Georgia, Louisiana, North Carolina, and Virginia in limiting in-bay disposal.
Child Predator Death Penalty Act Passes House
HB41 – Sponsored by Rep. Matt Simpson
The House passed the “Child Predator Death Penalty Act” on Tuesday by a vote of 73-6, with 17 abstentions. The bill makes the rape, sodomy, or sexual torture of children younger than 12 a capital crime punishable by death.
The bill faces constitutional questions, as the U.S. Supreme Court previously ruled such laws unconstitutional. However, supporters hope a more conservative Supreme Court bench will overturn earlier rulings. The bill, which is supported by Governor Ivey, now heads to the Senate where Senator April Weaver will sponsor it.
Key Vote Analysis:
- “No” votes: Voiced opposition to the likely costs the State will incur defending the currently unconstitutional bill.
- “Yes” votes: Hope the issue returns to the U.S. Supreme Court where a more conservative bench will overturn earlier rulings, paving the way for the punishment to become legal.
Alabama Resilience Council Passes Senate, Heads to House
SB137 – Sponsored by Sen. Steve Livingston
The Senate passed legislation this week to permanently establish the Alabama Resilience Council, bringing together state, local, and private-sector leaders to strengthen Alabama’s infrastructure, economy, and communities against future disasters. The bill now moves to the House.
Key Provisions:
- Permanent Advisory Council: Establishes the Alabama Resilience Council as an appointed advisory group within the executive branch.
- Chief Resilience Officer: Creates a Chief Resilience Officer position to coordinate statewide disaster preparedness and recovery efforts.
- Statewide Resilience Plan: Requires a comprehensive resilience plan within two years, including risk assessments, prioritized actions, and implementation strategies.
- Dedicated Funding: Creates the Alabama Resilience Council Fund to support operations, beginning in fiscal year 2028.
Artificial Intelligence Regulation Bills Raise Concerns
HB324, HB325, HB327 – Sponsored by Reps. Parker Moore and Ben Robbins
Three bills introduced this week reflect a growing trend of state-level artificial intelligence regulation creating new private rights of action.
Key Provisions:
- Age Verification Systems: Require age verification systems for AI chatbots.
- Safeguard Protocols: Establish mandatory safeguard protocols and therapy chatbot requirements.
- Private Rights of Action: Create new private rights of action, allowing individuals to sue providers directly.
Federal Response: President Trump issued an executive order calling for a uniform, minimally burdensome national framework for AI regulation. The order directs the Justice Department to challenge state AI laws that inhibit innovation or extend beyond state borders. It also authorizes federal agencies to restrict discretionary funding, including broadband funds, for states enacting overly burdensome AI regulations.
State Alignment with “Trump Accounts” Advances
HB250 – Sponsored by Rep. Danny Garrett / SB79 – Sponsored by Sen. Dan Roberts
Legislation to align Alabama’s tax code with new federal savings accounts established by the federal “One Big Beautiful Bill” (OBBB) moved out of committee in both chambers this week.
Key Provisions:
- Trump Accounts: Excludes employer contributions to new birth-to-retirement custodial accounts from an individual’s Alabama gross income.
- Education Loans: Makes the state tax exclusion for employer-paid student loans permanent, providing long-term relief for workers whose companies help pay down their debt.
Our legislative team is tracking the following bills:
|
Bill |
Sponsors |
Title |
Last Action |
Latest Version |
|
AL 2026rs |
Volunteer fire departments; authorized to deposit funds with financial institutions (Banking and Insurance (Senate)) On the agenda – Senate Banking and Insurance Standing Meeting Feb 04, 2026 09:30am Committee Room 320 |
Senate, Jan 29, 2026: Pending Committee Action in House of Origin (Banking and Insurance) |
||
|
AL 2026rs |
Taxation; to exclude credit card transaction fees from sales and use tax calculations (Finance and Taxation Education (Senate)) |
Senate, Jan 29, 2026: Pending Committee Action in House of Origin (Finance and Taxation Education) |
||
|
AL 2026rs |
Data privacy; processing of data regulated, consumer actions related to data authorized (Commerce and Small Business (House)) |
House, Jan 29, 2026: Pending Committee Action in House of Origin (Commerce and Small Business) |
||
|
AL 2026rs |
Volunteer fire departments; authorized to deposit funds with financial institutions (County and Municipal Government (House)) |
House, Jan 29, 2026: Pending Committee Action in House of Origin (County and Municipal Government) |
||
|
AL 2026rs |
Alabama Uniform Trust Code; amended to conform with Alabama Qualified Dispositions in Trust Act, limit property subject to creditors’ claims House Calendar: Regular Calendar (February 03, 2026) Position: 68 Companion Bills: SB 179 |
House, Jan 29, 2026: Read for the Second Time and placed on the Calendar (Financial Services) |
||
|
AL 2026rs |
Trusts; amend Alabama Principal and Income Act, permit trustee to adjust between principal and income House Calendar: Regular Calendar (February 03, 2026) Position: 67 Companion Bills: SB 178 |
House, Jan 29, 2026: Read for the Second Time and placed on the Calendar (Financial Services) |
||
|
AL 2026rs |
Cryptocurrency; measures to prevent fraud imposed, penalties established, Alabama Securities Commission authorized to enforce (State Government (House)) |
House, Jan 21, 2026: Pending Committee Action in House of Origin (State Government) |
||
|
AL 2026rs |
Uniform Disposition of Unclaimed Property; allow finders to contract and locate State Treasurer property, account for digital assets (Finance and Taxation General Fund (Senate)) |
Senate, Jan 20, 2026: Pending Committee Action in Second House (Finance and Taxation General Fund) |
||
|
AL 2026rs |
Debtors homestead exemption; in bankruptcy cases; increase homestead exemption for seniors and disabled (Finance and Taxation Education (Senate)) |
Senate, Jan 20, 2026: Pending Committee Action in Second House (Finance and Taxation Education) |
||
|
AL 2026rs |
Taxation and Revenue; disabled veterans’ homestead taxes inclusion in debt-to-income ratio under certain circumstances prohibited (Finance and Taxation General Fund (Senate)) |
Senate, Jan 20, 2026: Pending Committee Action in Second House (Finance and Taxation General Fund) |
||
|
AL 2026rs |
Stablecoin; license required for issuance or sale of stablecoins, payment, authorize use of payment stablecoin by governmental entities for contracting, Alabama Securities Commission to enforce and authorize, penalties provided (Financial Services (House)) |
House, Jan 15, 2026: Pending Committee Action in House of Origin (Financial Services) |
||
|
AL 2026rs |
Campaign finance; campaign contributions required to be held in federally insured institution (Ethics and Campaign Finance (House)) |
House, Jan 15, 2026: Pending Committee Action in House of Origin (Ethics and Campaign Finance) |
||
|
AL 2026rs |
Taxation and Revenue; Homestead ad valorum taxes of certain veterans prohibited from inclusion in debt-to-income ratio under certain circumstances (Finance and Taxation General Fund (Senate)) |
Senate, Jan 13, 2026: Pending Committee Action in House of Origin (Finance and Taxation General Fund) |
||
|
AL 2026rs |
Mortgages; require lenders to all mortgagors to make additional mortgage payments (Financial Services (House)) |
House, Jan 13, 2026: Pending Committee Action in House of Origin (Financial Services) |
