Twinkle Andress, the director of appointments for Gov. Bob Riley, spoke to the Exchange Club of Troy on Thursday about the governor's new tax package.

"Governor Riley inherited a severe crisis," she said.

"This state has not been managed well."

She told members that when Riley took office, he had three choices: to do nothing, to do just enough to fix the deficit or to do something to fix the problem.

There was a $675 million dollar hole in the budget and Riley could either ignore it and cut services and programs or produce just enough money to cover it.

The second choice would have still called for the largest tax increase ever and leave the state in the same condition.

Riley's tax package addresses the third option and works to fixing the entire problem of money management.

Andress said Riley's tax package is modeled after President Ronald Reagan's tax package when Reagan was governor of California in 1967.

Reagan increased taxes after promising not to, but two years after implementing his new tax structure, Reagan gave Californians one of the biggest tax cuts in history.

Riley finds himself in a similar situation, Andress said.

He never voted to raise taxes as a congressman, but he believes it is the only way to fix Alabama's financial crisis.

Riley's tax plan will go before voters on September 9 and Andress said the outcome will give Riley an indication about what voters really want.

"If that does not pass, the state will tell him that they enjoy paying the lowest taxes and are fine with the way things are," she said.

"He says the outcome will be an indication of where we want him to go with the state."

If the package should fail, Andress said the governor will be forced to make drastic cuts.

The cuts include the loss of 97 state troopers (there are currently less than 200); the release of prisoners whether or not they've served their time; the loss of nursing home care for 6,900 seniors; drastic cuts in the Department of Human Resources; the loss of 5,200 teachers in the 2004-2005 school year; the loss of over 700 judicial employees; the closing of seven more of 14 mental facilities; and the closing of 60 senior service centers.

Already Riley has been cutting waste.

State employees now have to check cars out before they use them and check them back in when they are finished.

He also refused to renew contracts for over $70,000 to pay for Weight Watchers for state employees.

Andress said the savings won't be instantly noticeable, but they will be recognizable "along the pathway."

To help ensure accountability, Riley is "letting the sunshine in on budgeting," Andress said.

He does not want funds earmarked, or designated for specific funds.

Instead, Riley wants to put it into an Alabama Excellence Fund so the state can spend the money on its ever-changing needs.

This year, Andress said the funds will go to the Alabama Reading Initiative.

The fund will also prevent legislators from hiding money inside other budgets.

Any project using money from the Alabama Excellence Fund will be a line item, making the terms of the money's use specific. Passing money from one entity to another will be illegal.

Money will also be distributed on the local level through a grant process and local schools or governments will have more freedom to determine what they want to use it for.

Other tax changes include-but are not limited to-a 5 percent income tax raise for individuals making less than $75,000 a year and couples making less than $150,000 per year; a 6 percent increase will be put in place for individuals who make over $75,000 per year and couples that make over than $150,000 per year; property will be appraised at 100 percent value instead of 10 percent and the current 6.5 mil will decrease to 3.5 with a $50,000 deduction; land will be appraised at 22 percent value with a maximum value of $650 per acre increase; and no more than 2,000 acres of timberland can be claimed.

Sales tax will also increase from 2 percent to 2.5 percent for cars and a tax will be imposed on repairs, installation and service and a lubricant oil tax will be imposed.

"No one wants to pay higher taxes," Andress said.

But, she said they are necessary to improve the condition of the state.

"If the lowest taxes meant better living, why are we the 48th, 49th and 50th in everything we do?" she asked.