State finance director Drayton Nabers said the governor is pleased with the overall result.
The budget would increase spending 16 percent for the next fiscal year. It fully funds state employees' benefits, but it does not provide a cost-of-living raise.
The budget is balanced by several tax increases, including an $88 million increase in cigarette taxes. The increase will take effect once the measure is signed by the governor.
The leader of an anti-smoking organization is praising the legislature for raising the state tax on cigarettes by 26 cents a pack. But critics say it will drive smokers to lower-cost products on Indian reservations or across state lines.
The increase will give Alabama the second highest cigarette tax in the Southeast behind Arkansas. It will boost the total state tax on a pack of cigarettes to 42.5 cents. For the typical pack-a-day smoker, that means an additional $94.90 in taxes. The legislation also doubles the tax on other tobacco products.
William Corr, executive director of the Campaign for Tobacco-Free Kids, called the legislation a "win-win'' measure that will generate much-needed tax revenue and reduce smoking among children and adults.