Since 2020, Alabama’s state government has directly received nearly $4 billion in federal COVID-19 pandemic relief funds. The state was allocated $1.9 billion under the Coronavirus Aid, Relief, and Economic Security Act, and approximated $2.1 billion through the American Rescue Plan Act (ARPA). Billions of additional dollars in pandemic relief have flowed directly to state agencies, healthcare providers, and individual citizens. Alabama’s state government has $1 billion in remaining ARPA funds that must be appropriated or returned to the federal government by 2024. The bulk of the first round of ARPA spending included $400 million towards the construction of two state prisons, approximately $500 million for broadband expansion and water and sewer infrastructure projects, $80 million for hospitals and nursing homes, and a $79.5 million payment to Alabama’s unemployment compensation trust fund.

In determining how to spend the remaining $1 billion in ARPA funds, lawmakers should consider ways to achieve tax reform in order to provide relief to taxpayers. Tax cuts have been achieved in other states and have been upheld as an acceptable use of ARPA funds by federal courts.