New Taxes, Bond Issues Proposed To Help Pay for Ala. Reforms

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Gov. James E. Folsom Jr. last week unveiled a proposal under which Alabama would raise more than $2.2 billion over the next few years to pay for sweeping, court-ordered education reform through a combination of new taxes, bond issues, and income from the state's education trust fund.

The plan has been well-received by legislators and seems to have allayed some fears about exorbitant new taxes, said Sen. Fred Horn, the chairman of the committee that oversees educational finance and taxation.

In his State of the State Address last week, Mr.Folsom focused solely on education.

He urged the legislature to pass his education-reform plan, known as the "Alabama first plan for academic excellence,'' as well as the revenue-raising measures, saying that he and the legislature should "provide the money needed to achieve real, fundamental reform.''

He urged the legislature to pass the measures "now and not at some undefined date in the future.''

"It is unfortunate,'' the Governor added, "that, in Alabama, we've always been able to pay for a road or a prison, but we've never been able to pay for our children's education.''

The state ranks last out of all 50 states in per-pupil funding for K-12 education.

"That is a record which must be changed--and we will change,'' Mr. Folsom said.

$664 Million in New Taxes

The five-year funding plan, presented in outline form, would raise $166 million a year in new taxes each year from 1996 through 1999, and counts on deriving the balance needed to underwrite the operations part of the plan from growth in the state's existing educational trust fund.

That fund receives tax monies earmarked for education, with the largest portion coming from income and sales taxes. Its current growth rate is about 9 percent.

The plan also proposes the issuance of three separate bonds in 1994, 1996, and 1998, totaling nearly $1.3 billion.

The bonds would help raise $976 million for construction of new school buildings and improvements on existing ones, $200 million to put computers in classrooms, and $117.6 million for the replacement of school buses.

The plan calls for raising an additional $83.7 million for these purposes through local tax hikes.

The plan calls for legislation to require every school district to levy a minimum local ad valorem tax of 20 mills. About $90 million a year would be raised that way, to supplement the bond funds and to meet other expenses at the local level.

Among the state's 129 school districts, 107 do not currently impose such a 20 mill levy.

Local districts would also be required to levy 15 mills in "equivalency tax,'' which could be sales, occupational, ad valorem, or any combination of taxes that would equate to 15 mills of property tax. The funds raised this way--about $76 million per year--would be spent at the local level.

Noting that Montgomery County Circuit Court Judge Eugene W. Reese's order last year directed the state to act to make its school system equitable and adequate, James C. White Sr., Alabama's finance director, said that one of the plan's strengths is its reliance on a minimum local tax effort.

Pessimism Softens

Legislators and others were dubious last fall about the prospects of fully funding education reform in an election year, when legislators are worried about asking for new taxes--even though local tax increases are put to a popular vote. (See Education Week, Dec. 1, 1993.)

But last week Mr. Horn said he is now more optimistic, largely because of the quality of the Governor's funding plan.

"It is not only a good plan,'' Mr. Horn said, "but a plan that is within reach, and I'm optimistic the people are going to buy and support it.''

While he said the plan is not without its flaws, "it is perfect to show the doubters of the ... plan that they have no reason now not to accept education reform,'' he said.

A separate proposal for overhauling the state's impoverished schools, released by the Governor in December, calls for greater accountability, a high school core curriculum without separate "tracks,'' higher teacher salaries, and school-based decisionmaking. (See Education Week, Dec. 8, 1993.)

In his speech last week, Mr. Folsom called education "a subject I believe is more important to our future than any other, a subject that is critical to every other problem or challenge we face ... because make no mistake, education is the key to fighting crime, education is the key to providing better paying jobs for all our people.''

"We have no choice'' but to reform schools, Mr. Folsom said, not because of Judge Reese's order, but "because in our hearts we know that it is right.''

In the four days preceding his address, Governor Folsom, who faces an election challenge this year, crisscrossed the state speaking in communities on what was billed an "education-reform tour.''

Vol. 13, Issue 17

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