| Alabama's fiscal woes may shake
up tax laws
May 18, 2003 By Tom Baxter The Atlanta Journal-Constitution Atlanta, Georgia To submit a Letter to the Editor: letters@ajc.com Alabama's Bob Riley isn't the first Republican governor to come right out of the box this year asking for a tax increase. But the scope of his ambition is breathtaking. In a special legislative session beginning Monday, Riley will unveil a sweeping reform package that attempts to overhaul one of the nation's most regressive tax codes, as well as set up a college scholarship program that sounds like Georgia's HOPE, without the lottery. For spare change, the package may also tackle the teacher tenure question. Details of the plan were being closely held at the end of the week, to the frustration of legislators and lobbyists in Montgomery. But Riley has already acknowledged that along with much greater oversight over how the money is spent, it will include the largest tax increase in the state's history. After several years of using stopgap measures to plug its budget holes, Alabama this year faces a shortfall of about $500 million -- a big deficit in a state where revenue collections are about half what Georgia takes in. But even that, Riley is arguing, doesn't accurately measure how far the state is in the hole. "Our government has lived like a family paying the power bill on their credit card every month, just postponing the inevitable," Riley said in his State of the State speech in March. Riley -- who won a narrow election last fall over incumbent Democrat Don Siegelman -- will address the entire state from his office Monday night in a speech consciously patterned after the one Ronald Reagan gave when he had to ask for a tax increase in his first year as governor of California. To meet the state's responsibilities, Riley is expected to argue he needs $1 billion to $1.2 billion in new revenues, including income and property taxes, tobacco taxes, sales taxes on cars and taxes on banks and utilities. What he's asking the Legislature to do is to pass a referendum bill so voters can decide on the reform package in September, and to put the state budget on hold until the voters have spoken. Legislators who saw an outline of the plan last week said it puts the heaviest burden on corporations, banks, the wealthy and large landowners -- which would amount to a revolution in the way tax burdens have been shared in Alabama. Riley has vowed to revamp the system in which the state taxes income starting at $4,600, by far the lowest level in the country. In a letter to legislators, Riley said a family of four with a yearly income of $75,000 or less would break even or gain from the plan. "It's ironic this type of leadership is coming from a Republican governor," said Rep. John Knight. But the Montgomery Democrat, who chairs the House Government Finance and Appropriations Committee, said it doesn't matter to him which party takes the lead. Last year, he introduced a bill that would have made similar changes in the income tax structure. Perhaps the boldest piece of Riley's package -- at least as outlined -- is the effort to revamp property taxes, which have traditionally favored timber interests and other large landowners. David Azbell, Riley's communications director, said Friday the governor had been consulting with Alfa, the powerful Alabama Farm Federation group, and is "not writing off" getting it to support the package. Alfa, which includes the state's largest landowners in its membership, has successfully battled previous efforts to revamp state property taxes. Campaign for Alabama, a pro-tax reform business group, is expected to provide backing for the campaign to sell the package if the Legislature approves it, but other business groups were waiting last week to see the details of what Riley is proposing. Legislators of both parties know the state is broke and something has to be done, said Republican Sen. Jack Biddle of Gardendale, a Birmingham suburb. The hard part, he predicted, will be selling the package to the voters. "They don't trust us, they don't believe anything we say -- and you can't blame them for that," Biddle said. |