PARCA’s How Alabama Taxes Compare, 2022 Edition, uses data published by the U.S. Census Bureau’s Annual Survey of State and Local Finances to compare tax revenues across the state. This most recent set of revenue and expenditure data cover state and local fiscal years ending between July 1, 2019, to June 30, 2020, identified as the fiscal year 2020. That means the state of Alabama’s data is from the fiscal year that ended September 30, 2019.

Key Findings

• In 2020, Alabama had the nation’s second-lowest state and local tax collections per capita.

• Alabama has the lowest per capita property tax collections in the nation.

• Alabama has among the highest sales tax rates in the U.S.

• Alabama is now the only state that allows state individual and corporate income taxpayers to fully deduct federal income taxes paid. That provides a tax advantage for high earners.

• Despite a recent change that provides some relief, Alabama begins taxing income at the lowest threshold in the U.S.

Alabama state and local taxes collections are low due to two factors: lower rates and a smaller resource base to tax. Alabama’s Per Capita Gross Domestic Product, the total value of all goods and services produced, ranks in the bottom five of states, meaning we have a lower resource base to tax. However, these other states make a greater tax effort and, thus, generate more money to provide services.

This gap between Alabama and other states will not be so obvious when newly elected lawmakers convene in March to craft budgets for FY 2024. A strong inflationary economy, high employment levels, and a flood of federal relief have supplemented state spending and stimulated record levels of state and local tax collections in the most recent year.

But as proposals are floated to make changes to tax rates, it’s important to understand the tax system in context, including a history of underinvestment compared to other states. Any changes should ensure adequate revenue, promote fairness and opportunity, and increase ease of collection and compliance.

How Alabama’s Taxes Compare, 2022 Edition, explores Alabama’s tax system in more depth and context.

Printable PDF version available here

Below are interactive versions of the charts in the report.

With elections for governor and legislature pending in the fall, Alabamians are united in support for public investment in education and healthcare, divided on how to raise money for new investments, and express a preference for local leadership and decision-making. That is according to PARCA’s annual public opinion survey.

The poll of over 400 Alabama residents was conducted by Dr. Randolph Horn, Samford University, Assistant Vice President for Enrollment Research and Professor of Political Science. 

Results from this year’s survey are consistent with previous years’ results in some important ways.

• Alabamians continue to rank education as the most important state government activity.
  

• Large majorities of Alabamians say the state spends too little on education and healthcare.
  

• Alabamians have an aversion to taxes but say upper-income residents pay too little.
  

• A slim majority say budget surpluses should be reinvested in state services, specifically education, rather than used to cut taxes.
  

• If budget surpluses are used to cut taxes, the most popular tax cut is the sales tax on groceries.
  

• Alabamians are willing to pay more taxes to support education but do not agree on which taxes should be increased.
  

• Alabamians are essentially split on tax-funded vouchers to pay for private school tuition. However, a majority believe vouchers, if allowed, should be available to all students.
  

• Alabamians continue to believe that they have no say in state government and that government officials in Montgomery do not care about their opinions.

Results of the survey indicate many opportunities for officials to demonstrate responsiveness to public concerns and leadership in crafting public policy solutions.

Download the full report here.

– Economic Security: While 16% of Alabamians live in poverty, 23.9% of Alabama children live in poverty (ex. a household of 4 making $24,750 or less). Further, 1 in 5 children in Alabama are food insecure.

– Education: Poverty leads to significant disparities in education. For Alabama 4th graders in poverty, only 37.9% are proficient in reading and 12.1% are proficient in math.

–  Safety and Permanency: In 2021, 3,453 children entered foster care. While cases can have multiple causes of entry, 48% of cases involved parental substance abuse.

See how children in all 67 counties of our state are faring in education, health, economic security, and more.

Access the 2021 Alabama Kids Count Data Book here.

PARCA BELIEVES

Alabama can do better.
Sound public policy is essential.
It requires open, transparent and responsive government.
It is based on fact, pursues a clear goal, and is assessed honestly.

PARCA’s 2021 public opinion survey finds a growing majority of Alabamians support spending more on education but a lack of consensus on how to pay for the increase.

Among the findings:

Taxes

• 61% of respondents say upper-income Alabamians pay too little in state taxes. The percent of respondents who believe upper-income earners pay too little increased by 10% from 2020.
   
• 53% say lower-income earners pay too much, up from 40% in 2016.
   
• 49% say they pay the right amount of taxes, compared to 57% in 2016.

• Despite Alabama’s low per capita tax yield, 69% of residents believe they pay the same or more taxes than people like themselves in other states.

Public Education

Alabamians believe education is the most important service state government provides, but its lead over other services is declining.

• 44% rank education as the most important service, while 31.3% rank healthcare No. 1.

• 78% believe the state spends too little on education, compared to 74% in 2019 and 68% in 2013. Large majorities in every subpopulation have this belief.
   
• 69% support increasing taxes to support education, but no single tax increase option garners majority support.

• This year, respondents were asked what supplemental programs might improve education. No program received a majority response, but the top priorities were expanded tutoring, increased technology funding, and more mental health counseling.
  
  
• When asked what respondents’ top priority for new education funding would be, the highest percentage (41%) said that new revenue should go to increasing salary and benefits for teachers 
  
  
• 59% say local boards of education are best suited to decide how education dollars are spent.
  
  
• Respondents believe that the local board of education are best suited to decide school spending, school policy, and school closings.

Other notable education findings:

• 77% believe that taxes on Internet sales should be distributed to local schools in the same way as sales tax revenue from brick-and-mortar sales.
   
• Alabamians are almost evenly split on tax-funded vouchers to pay for private school tuition. However, 61% of Alabamians believe vouchers, if allowed, should be available to all students. 

Trust in State Government

Alabamians’ trust in state government improved slightly compared to 2019 but is still well below rates reported in the early 2000s.

• 77% support keeping the General Fund and Education Trust Fund separate, down from 80% in 2020 and 82% in 2019, but still well above the 69% reported in 2016.
   
• 63% believe state government officials do not care about their opinions, down from 66% last year. This compares to a low of 55% in 2008 and a high of 74% in 2010.
   
• 61% believe they have no say in state government, up from 55% last year, but well above the low of 43% in 2008.

Download the full report here.

In March, the nonprofit Business Education Alliance commissioned PARCA to provide research describing the unprecedented challenges and opportunities in education faced by the state in this moment.

For more than a year, schools have coped with the Covid-19 pandemic: reshuffled learning environments, the unknowns of delivering education digitally, and the disruptive and unequal effects that those conditions have had on student learning.

Meanwhile, the schools are working to meet the demands of the Alabama Literacy Act, the 2019 law that requires all children to be reading at grade level by the end of third grade in order to be promoted.

At the same time though, to meet those daunting challenges, the state and federal governments are making an unprecedented amount of money available. For that investment to pay off, the money must be spent with care and forethought if Alabama is to seize this generational opportunity,

Read the full Business Education Alliance report here: Stop the Slide, Start the Climb: Concepts to Enable Alabama Students to Achieve Their Fullest Potential

VOICES for Alabama’s Children recently released its 2020 Alabama Kids Count Data Book last month. This annual statistical portrait is meant to provide a roadmap for policymakers who seek to improve the lives of Alabama’s children. PARCA provides research support for the project.

The Data Book can be used to raise the visibility of children’s issues, identify areas of need, set priorities in child well-being, and inform decision-making at the state and local levels.

See how children in all 67 counties of our state are faring in education, health, economic security, and more.

View the 2020 Alabama Kids Count Data Book here.

When voters go to the polls on November 3, they will not only be voting in the primary race for President, Vice-President, one U.S. Senate seat, seven U.S. House of Representatives, multiple state judicial positions, and various other state and county offices, but voters statewide will also be asked to vote on six new amendments to the Alabama Constitution of 1901. An additional 36 amendments to the state constitution will appear on the ballots of individual counties across the state.

As always, PARCA provides a high-level analysis of each statewide amendment. We study the ballot wording, but also the authorizing legislation behind the language. We do not make recommendations or endorsements, rather we seek to understand the impact of the proposed changes and the rationales for them.

The Alabama Constitution is unusual. It is the longest and most amended constitution in the world. There are currently 948 amendments to the Alabama Constitution. Most state and national constitutions lay out broad principles, set the basic structure of the government, and impose limitations on governmental power. Such broad provisions are included in the Alabama Constitution. But Alabama’s constitution also delves into the minute details of government, requiring constitutional amendments for basic changes that would be made by the Legislature or by local governments in most states. Instead of broad provisions applicable to the whole state, about three-quarters of the amendments to the Alabama Constitution pertain to particular local governments. Amendments establish pay rates of public officials and spell out local property tax rates. An amendment from a few years ago, Amendment 921, granted municipal governments in Baldwin County the power to regulate golf carts on public streets.

Until serious reforms are made, this practice will continue, and the Alabama Constitution will continue to swell.

Read the full report here.

The National Institute of Early Education Research (NIEER) at Rutgers University has recognized research on the persistence of the impact of First Class Pre-K.

Researchers from the University of Alabama at Birmingham, PARCA, ThinkData, and the Alabama Department of Early Childhood Education published a peer-reviewed article in the International Journal of Child Care and Education Policy showing the persistence of gains in math and reading for students who received First Class Pre-K. This article is the culmination of several years of work involving five cohorts of students over time.

The article, written for an academic audience, offers a detailed statistical analysis of recent findings of the research team already shared with policymakers and pre-K advocates in Alabama and authored by UAB, the Alabama Department of Early Childhood Education, and PARCA.

Results indicate that children who received First Class Pre-K were statistically significantly more likely to be proficient in both math and reading compared to students who did not receive First Class Pre-K. Further, there was no statistical evidence of fadeout of the benefits of First Class Pre-K through the 7th grade, indicating the persistence of the benefits into middle school.

You can read the published article here.

To read previous research about additional academic benefits of Alabama First Class Pre-K, especially as it pertains to educational equity, click here.

Alabama schools are set to re-open in August, with plans for local systems to offer educational services through traditional on-campus schools, remote on-line education, and a hybrid of traditional and remote learning options.

With the novel Coronavirus still spreading, all plans are subject to change. Already, the state’s largest system, Mobile County, and the Selma City School System have decided not to open school buildings and to proceed with only remote learning for all of its students this fall.

As policymakers, educators, and parents prepare for what will likely be a most unusual school year—including the possibility of additional shutdowns— PARCA gathered information from local reports and two major national polls that attempt to describe what parents and students experienced during the school closures this spring. As schools plan for the fall, these experiences are important to understand.

According to the polls, parents worried the online school experience was resulting in:

The Shutdown

As COVID-19 spread this spring, schools across the country closed. By March 20, 45 states had closed all schools. By early May, the number climbed to 48 states and the District of Columbia—affecting more than 55 million students. Only Montana and Wyoming allowed schools to remain open, although some systems in those states did close. ¹

Almost overnight, schools entered uncharted waters. States, systems, and local schools mobilized resources for parents and students and reimagined teacher-student interaction. For most schools, this entailed some version of virtual education.

According to a Gallop Survey conducted in March 2020, 70% of parents of K-12 students not in school at that time reported their child was participating in an online education program run by his or her school. The survey found that among parents whose children were not enrolled in a formal online education program, 52% were homeschooling with their own materials, 25% were using a free online learning program not associated with their child’s school, and 35% were not engaged in any formal education. ²

Some schools had the capacity to respond to COVID-19 closures comparatively easily. That includes schools in Alabama and elsewhere that were already designed as virtual schools. Other systems in other parts of the country are more experienced in online education because of long winter breaks with harsh weather. Conversely, most schools, educators, parents, and students were thrust into a new learning environment for which they were little prepared.

Parents and students around Alabama reported a wide variance in student experiences, varying according to system, school, grade, and teacher. Some reported students having more work than before the shutdown and spending hours each day with regular virtual check-ins. Others reported that work was considered optional or that students finished nine-weeks of work in just a few days. The long-term effects of the academic transition and the inconsistency of students’ experience will take time to assess.

Parent Reactions

The national nonprofit educational organization Learning Heroes conducted a survey of parents in April and March 2020. The survey, which reached 3,645 parents from across the nation, was conducted in conjunction with the Council of Chief State School Officers (CCSSO), National Board for Professional Teaching Standards (NBPTS), and the National Association of State Boards of Education (NASBE).

Results show that parents, now in the role of educators or critical partners in their child’s learning, have gained a new appreciation for what teachers and schools do. ³

Figure 1

Some parents reported being overwhelmed, while others reported more involvement in their child’s learning has given them a healthy sense of engagement and better insight on how to help their children learn. These parents look forward to being more involved in schools and their child’s education once schools re-open.

Academic Concerns – Loss of Learning Assessed

Seventy percent of parents expressed concern about the loss of learning and how this will be made up.  Fifty-four percent are concerned their children will not be ready for the upcoming school year. These issues raise more fundamental questions about the nature of teaching and learning. High-quality teaching and learning can presumably occur in different forms. With state testing postponed, measuring the impact on student learning gain or loss will be complicated but is an important objective.

Figure 2

States such as California and South Carolina are planning to implement new tools for assessing learning loss. Quick, real-time assessments conducted by teachers in the classroom, or virtually, will likely be most effective. Assessments that take time to report results will have limited utility for teachers but may be instructive for administrators and researchers.

Researchers have tried to predict the magnitude of pandemic-related learning loss by analyzing normal summer learning loss — the degree of academic regression between the end of one school year and the beginning of the next – and treating the COVID shutdown as an extended summer. Some researchers estimate that students likely ended the school year with only 40% to 60% of learning gains achieved during a typical school year. [efn-note] M., Soland, J., Tarasawa, B., Johnson, A., Ruzek, E., and Liu, J. (2020). Projecting the potential impacts of COVID-19 school closures on academic achievement. Edworking Papers, May 2020. Annenberg Institute for School Reform at Brown University [/efn_note] Other studies estimated much lower losses. ^{4 5 6}

Some experts believe the projected learning loss is over estimated.

They note that estimates using summer loss as a baseline are not taking into account the learning that occurred through virtual forums and support provided by schools this past spring. Likewise, most of the content students were expected to learn was already introduced to students by March, although students did not have an opportunity in class to practice skills, and develop mastery. Furthermore, teachers are prepared to work with students coming back at different levels of preparation after the summer break, so they will not be caught off-guard. At the same time, this will likely be much more challenging and will be taxing for teachers who are less prepared and motivated to work with diverse learners.

These same experts, however, are alarmed about the challenges facing beginning readers, who usually need continued re-enforcement throughout the year. This could affect future literacy rates and have implications for implementing Alabama’s Literacy Act in the lower grades. ⁷

Social and Mental Health Concerns

Parents expressed fear about the impact of COVID-19 on their children’s social-emotional well-being, and 59% worry about the impact of reduced social interactions. For young children in unsettled or abusive home environments, the school can be a safe place. Long-term absence from this safe place can become a source of heightened trauma with long term consequences.

Many children may be coping well, but medical experts are concerned about the stress and trauma children (and adults) are experiencing during the pandemic, especially those with underlying mental health conditions. School-aged children experienced sudden changes in their educational setting and routines. Many experienced shock. Some families have had the stress of sickness and death in their families as a result of the virus – though overall a relatively small percentage. Many more families are under financial strain. Concerns have been raised about abuse, neglect, loneliness, and isolation. The virus has affected every facet of the life of children and adults. ⁸

Symptoms of trauma in school-aged children can include:

Physical Symptoms	Over-or under-reacting to stimuli (physical contact, doors slamming, sirens) Increased activity level (fidgeting) Withdrawal from other people and activities
Cognitive	Recreating the traumatic event (e.g., repeatedly talking about or “playing out” the event) or avoiding topics that serve as reminders Difficulties with attention Worry and fear about safety of self and others Disconnected from surroundings, “spacing out”
Social-Emotional	Rapid changes in heightened emotions (e.g., extremely sad to angry) Difficulties with controlling emotions angry outbursts, aggression, increased distress) Emotional numbness, isolation, and detachment
Language and Communication	Language development delays and challenges Difficulties with expressive (e.g., expressing thoughts and feelings) and receptive language (e.g., understanding nonverbal cues) Difficulties with nonverbal communication (e.g., eye contact) Use of hurtful language (e.g., to keep others at a distance)
Learning	Absenteeism and changes in academic performance/engagement Difficulties listening and concentrating during instruction Difficulties with memory 9

Parents can reduce the risk of stress by creating a calm, safe, and predictable environment, communicating and building a positive-supportive relationship with their children, and encouraging their children to develop self-regulation skills.

Teacher Interaction

Parents expressed concern about the lack of regular ongoing contact they and their children have with their children’s teacher(s). This is perhaps less critical for self-motivated students with highly resourceful parents or guardians with time devoted to learning at home. But many students depend on regular high-level teacher interaction. Parents indeed may have the will and skill to perform in this role but are working in fulltime jobs. Others express concern about not having the background to adequately support their children. Still, others may be in stressful life situations that rob them of the motivation and energy to serve in this role. In each of these situations more ongoing contact with teachers and community support specialists would likely make a significant difference.

Figure 3

Though parents find communication with teachers extremely helpful, the majority did not receive this support on an ongoing basis.  Teachers have found themselves in uncharted territory for which they were not prepared. They too may not have the skills and background needed for online teaching and tutoring.  The awkwardness of online communication and technical hiccups can generate additional frustration. Everyone is learning and adapting.

Resources Provided by the School

An especially important issue for schools this past spring was providing guidance and resources to parents to assist them in working with their children. The figure below shows the percent of parents indicating they received key resources from their child’s school during the pandemic this past Spring.

Figure 4 

But sometimes what parents received was not what they needed or found most useful. In Figure 5 below, resources are ordered by the percent of parents who found the assistance useful (red bar), from highest to lowest, and the percent receiving the guidance or resource.  

Figure 5

The most useful assistance included:

• school provided personal technology
• online guidance
• one-to-one tutoring with teachers
• ongoing regular contact with teachers
• printed versions of class materials
• remote classes delivered online

Parents found printed materials more helpful than digital materials.

The gap between what was offered and what was found most useful, when offered, was largest for the following:

• personal guidance in supporting your child’s learning at home
• remote one-to-one tutoring by teachers
• school provided technology
• access to mental health services

COVID-19 and Equity

A number of observers have focused attention on the profound inequities in education magnified by COVID-19.  Systems vary in funding, resources, curriculum, extracurricular offering, teacher experience and in many other ways. These disparities are likely exacerbated when the home becomes, not by choice, the primary learning environment for all students.  

Virtual education has the potential for system-by-system and house-by-house differences in capacity to compound each other.

Differences in capacity across households include the following:

• Income and educational attainment of parents.
• The knowledge and experience of parents, guardians, or other adults.
• The time and availability of parents, guardians, or other adults to actively facilitate or assist in their children’s learning.
• Family structure: One and two-parent families where responsibilities are shared.
• Relationships between parent-child, parent-teacher, and student-teacher.
• Access to communication, guidance, and support from teachers and schools. 
• Access to community supports and enrichment.
• Access to computer technology and high-speed internet. Capacity and motivation to make use of these resources.
• Access to nutritional food daily.

These obstacles may be greater, but in no way limited, to lower-income areas.

The general public and government leaders most frequently cite a child’s school and teachers as the primary difference in their education. But research has long noted that children do not enter school as a blank slate, and that inequalities begin at birth as a result of different prenatal conditions, and too often are made worse during those early years before school.  Children enter school with vastly different levels of preparation. The achievement gap, from this point of view, is a symptom of broader inequality, past and present. Improving education on campus and on-line and building a solid workforce calls for addressing these inequalities in the home and school. ¹⁰ Strauss, V. (2020). How COVID-19 has laid bare the vast inequities in U.S. public education. The Washington Post, April 14, 2020. /efn_note]