This is a hoax according to snopes.com, New Mexicans for Science and Reason, and Advance Local.

There was a proposal for a bill known as the Indiana Pi Bill (read it here) in 1897, according to Wikipedia. Notably, it had no basis in religion. Setting pi is not the main point of the bill, but it does say

the ratio of the diameter and circumference is as five-fourths to four

which sets the ratio of circumference to diameter, pi, as 4/1.25=3.2.

I have shit on Alabama my whole life(from Georgia) and I’ve never heard this, I clearly was too kind