Riley says tax package needed
Published 12:00 am Monday, May 19, 2003
Gov. Bob Riley gave a statewide address Monday evening, explaining his reasons for calling a special session of the Alabama Legislature and marking his first attempt to publicly sell his $1.2 billion tax increase plan.
Speaking from behind a desk, Riley said the tax package was needed to solve "the most severe financial crisis since the Great Depression." He touched on Alabama's projected $675 million dollar shortfall and the pressing financial needs of the state's schools, prisons and senior citizens.
Still, Riley didn't mention any details for solutions in his address. Information about the plan was released to the media Monday afternoon in Montgomery, but even legislators are still trying to digest the substance of Riley's plan.
"We just got the stack of bills this afternoon at about 5 o'clock," said Rep. Alan Boothe (D - 89th District). "It's still preliminary, but I'll tell you one thing: I'm committed to letting the people vote on it. I'm not comfortable voting a billion-dollar tax increase on anybody."
The package will be presented to the Legislature in the form of 23 bills - 10 revenue bills and 13 bills designed to promote financial accountability. In addition to raising income taxes, property taxes, car taxes, taxes on banks and cigarette taxes, the accountability bills include such measures as banning tenure for principals and superintendents and mandating binding arbitration as a substitute for tenure.
If passed by the House and Senate, the revenue package will go before Alabama voters in a special election - likely in early September. The state is required to have a balanced budget by the time the new fiscal year begins Oct. 1, meaning that if the voters reject the tax hike package, little time will remain to cobble together a plan to fund basic services.
"If this doesn't pass, it'll be a patchwork," said Sen. Wendall Mitchell (D - 30th District). "You don't like to think about plan B when you have a proposal this ambitious."
Still, Boothe and Mitchell, both of whom represent Pike County, said the tax hike package, even if it passes through the Legislature, will be a tough sell for Alabama voters.
"I like the word 'courage' that the governor used in his speech because this is a time that we've got to have enough courage to stop patching things," Mitchell said. "But I think it'll be tough to get Legislators on board. This address was the first step towards selling it, but it may be that this package is too large."
The Senate will take up the reform bills Wednesday morning, while the House will begin to analyze and debate the taxation portions of the package today. According to Boothe, the second reading of the bills will occur Wednesday night and, depending on proposed changes and debate, a vote could come soon thereafter.
Still, the debate is not expected to break down along party lines. Some Democrats support the plan for raising the tax burdens on the wealthy and large corporations and banks. Some Republicans may oppose the plan since it bucks the nationwide trend among conservatives, such as President George Bush, to cut taxes. Even Riley admitted in Monday night's address that he had spent most of his career fighting against higher tax rates.
Riley compared the tax hike package to the revenue-generating plans of then-governor of California Ronald Reagan.
"We have no other choice," he said.
Among early reports from Riley's plans: higher ad valorum taxes expected to raise $380 million, lowering of mils from 6.5 to 3.5 and higher property taxes, raising $50 million in corporate income taxes, $10 million in additional taxes on banks, taxing intangible wealth - such as certificates of deposit - and not just interest accrued, eliminating the federal income tax deduction and imposing a variety of education reforms.
A major element of Riley's plan is the non-earmarking of the funds: a move that would increase the power of the Legislature to allocate the funds as it sees appropriate.