Photo by Jon Anderson.
Chris Patel checks out at the Desi Brothers Farmers Market in The Plaza at Riverchase shopping center in Hoover.
Some state legislators say they are working to amend state law to allow the city of Hoover and other municipalities and county governments to reduce their local sales tax on groceries without having to meet certain requirements put in place last year.
When the Legislature in June 2023 passed a law to cut the state sales tax on groceries from 4% to 3% on Sept. 1 of last year, it also allowed cities and counties to cut city and county sales taxes on groceries, but there were conditions.
If a city wants to cut its sales tax on groceries, it can only do so by 25% at a time, and that city’s general fund must have grown by at least 2% in the previous year, according to the law passed by the Legislature.
Those requirements were not initially in the bill, but they were added at the request of the Alabama League of Municipalities and the Association of County Commissioners of Alabama, said state Rep. Danny Garrett, R-Trussville, who sponsored the legislation in the Alabama House of Representatives.
There was concern that if the state reduced the sales tax on groceries, it would put pressure on local governments to do the same, and local governments tend to be more heavily dependent on sales taxes for operations, Garrett said.
Garrett said while he didn’t really favor adding those limitations into the bill, he did so as a compromise to help get the bill as a whole passed. Now, he’s ready to remove those limitations because he believes local governments should be able to decide for themselves whether to reduce the sales tax on groceries or not.
He plans to introduce an amendment to the 2023 law in the next legislative session, and state Sen. Andrew Jones, R-Centre, who sponsored the original legislation in the Senate, is supportive of the amendment as well, Garrett said.
The Hoover City Council voted in October 2023 to reduce Hoover’s sales tax on groceries from 3.5% to 3% on Oct. 1 of this year. However, the state this summer informed Hoover its ordinance did not comply with state law because a reduction from 3.5% to 3% was not a 25% reduction. A 25% reduction would put Hoover’s sales tax on groceries at 2.625%.
However, Hoover also did not qualify to reduce its tax this year because its general fund did not grow by at least 2%, after transfers to other funds were taken into consideration, Hoover Chief Financial Officer Jennifer Cornett said.
State Rep. Mike Shaw, R-Hoover, said removing the limitations that were added into state law last year will “put the power in the cities’ hands, which is where it should be.”
Hoover Councilman Casey Middlebrooks said he doubts the city will be in a position to lower the sales tax on groceries anytime in the near future because of obligations the city has taken on since its vote a year ago. Tax breaks and incentives for projects such as Riverwalk Village in Riverchase have obligated the city to payments, he said.
Lowering the city sales tax on groceries from 3.5% to 3% would have cost the city an estimated $2.5 million to $3 million in revenue, but lowering the tax to 2.625% would cost the city $3.5 million to $4 million, he said.
The reduction in Hoover sales taxes on groceries, at the time it was approved, was expected to save the average Hoover resident $17.65 per year.
