By Mike Cason
al.com
(TNS)
Alabama lawmakers may tweak how the state doles out revenue from the online sales tax, a move the sponsor of the bill said would be an effort to show good faith in trying to resolve a complex disagreement involving the state, cities, counties, and school boards.
The flat 8% tax, known as the Simplified Sellers Use Tax, has been collected since 2016 and is a vital and growing source of tax dollars. It generated $851 million in 2024, up 34% in two years.
Some of Alabama’s largest cities, led by Tuscaloosa, as well as some school systems, filed a lawsuit last year, saying the SSUT was no longer valid. They said they were losing revenue because they said a 2018 U.S. Supreme Court ruling authorized Alabama to collect its regular sales taxes on online sales.
The Association of County Commissions of Alabama and many smaller municipalities opposed the lawsuit and defended the SSUT as a practical system and critical source of revenue to support law enforcement and other services.
The plaintiffs voluntarily dropped their lawsuit in February hoping to pursue a legislative fix.
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Sen. Greg Albritton, R-Atmore, chairman of the Senate’s General Fund committee, filed a bill Thursday to make a change he said was agreed to by all sides in the dispute.
Under current law, 50% of the revenue from the SSUT goes to the state, 30% goes to municipalities to be distributed according to population, and 20% goes to counties to be distributed by population.
The populations used for those calculations are taken from the 10-year census.
Albritton’s bill says the population figures used to allocate the money for cities and counties would be updated every five years based on U.S. Census Bureau reports, rather than waiting for the 10-year census.
Albritton said the parties in the disagreement have been meeting regularly and concurred on the idea Thursday morning.
“We have some consensus on some matters, but there’s many items to this complicated issue that we have not resolved,” Albritton said.
“However, we did come to an agreement that we needed to do something in this session if possible.”
Richard Rush, head of government relations and external affairs for the city of Tuscaloosa, said the city supports Albritton’s bill.
“Senator Albritton’s bill is a positive step forward and reflects progress toward a constructive partnership on this issue,” Rush said in an email.
“While this is not a final resolution, it is an important part of the ongoing discussions and helps create a path for continued negotiations.
“Most importantly, it moves Alabama toward a more accurate distribution model by allowing SSUT allocations to better reflect growth and population changes, rather than relying solely on outdated census figures.”
Albritton introduced the bill Thursday. He said it still has time to pass, with 11 meeting days remaining in the session.
“The purpose of this is to show good faith to everybody in the state that we’re working on an issue that’s controversial, that’s difficult, and that we’re doing something in good faith to try to move it forward.”
Sonny Brasfield, executive director of the Association of County Commissions of Alabama, said counties are not opposed to the bill.
Brasfield said the ACCA has consistently followed three principles in its approach to the SSUT.
“We’re opposed to any legislation that dismantles the SSUT system, to any bill that puts the program in constitutional peril, or any bill that reduces essential funding to Alabama’s 67 counties,” Brasfield said.
“So with that said, this bill introduced today doesn’t do any of those things. And so we are, we’re not opposed to that legislation.”
Brasfield the change would also be consistent with a provision in the Rebuild Alabama Act, which passed in 2019 and increased the state gas tax for the first time since 1992 to fund road construction and maintenance.
Brasfield said that law based fuel tax revenue distribution on population adjustments made every five years, as Albritton’s bill proposes for the SSUT.
Lawmakers return on Tuesday.
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©2026 Advance Local Media LLC. Visit al.com. Distributed by Tribune Content Agency LLC.
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