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Fiscal Cliff Settlement Costs Ala. Schools $70 M

A Montgomery judge is letting three parents intervene in the Alabama Education Association's lawsuit challenging the state's new private school tax credits.
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A Montgomery judge is letting three parents intervene in the Alabama Education Association's lawsuit challenging the state's new private school tax credits.

Financial experts say the fiscal cliff agreement in Washington will cut funding for Alabama's public schools and colleges by at least $70 million annually.

The fiscal cliff settlement affects Alabama differently than most other states. That's because Alabama is one of the few states that provides its citizens with a state income tax deduction for the federal taxes paid. The federal settlement allowed a temporary reduction in payroll taxes for Social Security and Medicare to expire. It also raised the tax rates on the wealthiest 1 percent of Americans.

The director of the Legislative Fiscal Office, Norris Green, says the two changes should reduce Alabama's income tax collections by $70 million to $75 million annually.

The impact is on education because Alabama sets aside its income tax receipts for education.

Copyright 2013 The Associated Press.

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