Alabama tax revenues continue to trend toward more normal patterns after a wild post-pandemic ride. The Education Trust Fund, powered by state income and sales taxes, grew modestly, collecting 2.2% more than the previous year. Meanwhile, growth in the General Fund cooled but still posted an unusually high increase of 7%, boosted by high interest earned on state deposits and continued growth in tax revenue from online sales, insurance, and property taxes.

The General Fund (GF) supports non-education spending, while the Education Trust Fund (ETF) supports spending on K-12 schools, colleges and universities. From FY 2021 through FY 2023, the two funds saw unusual surges of growth related to post-pandemic economic conditions and shifting patterns of consumption.

In 2024, the GF maintained its winning streak. Thanks to budget surpluses, replenished stockpiles of rainy day reserves, and federal relief and investment funds deposited in state accounts, Alabama has a growing body of cash in its accounts, which earn interest. At the same time, interest rates have stayed high as the Federal Reserve tries to cool inflation. As a result, the state revenues from interest grew by more than $150 million, up to $557 million.

Scroll below or click this link to continue reading PARCA’s latest report, Alabama State Tax Collections, 2024: Increases, Decreases and Trends in the Revenue Supporting the State Government.