Budget & Finance

Ala. Measure Would Raise Taxes and Hopes

By Erik W. Robelen — September 03, 2003 8 min read
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Several hundred people filed into Frazer Memorial United Methodist Church here on a recent summer evening to hear the arguments for and against Gov. Bob Riley’s crusade to rewrite the state tax code and, he hopes, transform Alabama.

The stained-glass windows were overshadowed by large video screens spotlighting key points and statistics for the crowd at this state-of-the-art church, where Sunday services are televised. The two speakers offered sharply contrasting visions of what the complex package—with its $1.2 billion tax hike, promise of new money for education programs, and accountability demands on schools and state government—would mean for Alabamians.

It was just one of many events convened at churches, schools, Rotary Clubs, and other venues across the state to educate voters, who will have the final say in a referendum next week.

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View the accompanying table, “Governor’s Plan for Alabama.”

For his part, Waymon Pockrus, a retired state employee, hadn’t made up his mind after listening to the Aug. 6 church forum. But he’s worried the money might never reach the programs the Republican governor has in mind.

“Where is there going to be a guarantee the legislature is going to appropriate this [as indicated]?” Mr. Pockrus said just outside the church sanctuary.

GOP Gov. Bob Riley talks to reporters.

GOP Gov. Bob Riley talks to reporters at the state Capitol. He’s pushing his tax and accountability plan throughout Alabama.
—Photograph by Dave Martin/AP

“If I knew this would go to education and things they’re saying, and would help the people that need the helping,” he said, his vote would be yes. “I’m wondering if it’s really going to do that.”

Such distrust of state government, especially the legislature, is widespread in Alabama, where political scandal and rampant spending on “pork” projects in lawmakers’ home districts are all too familiar, political experts say. That distrust could well be one of the biggest obstacles for the tax referendum.

A lot is at stake for the state’s education system. Gov. Riley says he wants to extend the school year by five days, greatly increase money for teacher professional development, and offer merit-based college scholarships, to name a few of the items. As proposed, more than half the new tax revenue expected under the measure would go to education.

The plan, proponents say, would also help stave off the midyear spending cuts caused by revenue shortfalls—referred to as proration—that Alabama schools have weathered 15 times over the past half-century. In addition, it would mandate changes aimed at making it easier to dismiss incompetent teachers and avoiding financial mismanagement in school districts.

Recent polls, however, suggest the referendum faces an uphill battle.

‘Clouding’ the Issue

Opposition radio and television ads are seeking to capitalize on the anti-tax sentiment of many Alabamians, and their cynicism about government.

One TV commercial says: “Now, Montgomery insiders are pushing a $1.2 billion tax increase. Promising more money for schools. But the truth is, their plan puts the money in a spending fund controlled by Montgomery politicians. Not in our classrooms. Same old insider game. ...”

“I don’t know how to get [the message] out,” Gov. Riley said with frustration shortly after delivering his stump speech Aug. 8 at the Prattville High School gymnasium, about 20 miles north of the state capital. “I talk about [college] scholarships, I talk about the reading initiative. You heard what I said in there, and I say it literally six times a day.”

He added: “There’s no way the legislature could ever do anything else with that money. ... But when the opposition has TV ads saying, ‘It’s not going to education,’ then it clouds it.”

Like many states, Alabama is facing a fiscal crisis. The first-year governor—a conservative known for his anti-tax stance during his six years in Congress—estimates that the deficit for next fiscal year, which begins Oct. 1, will be nearly $700 million. Alabama’s fiscal 2003 budget is $17.1 billion. He has warned that without more revenue, the state will be forced to make draconian cuts, from education to prisons and public safety, to programs for senior citizens.

He isn’t the only governor who has sought to shore up state finances with higher taxes. Even fellow Republicans in such states as Idaho, Nevada, and Ohio have pitched tax hikes this year.

But Mr. Riley aims to do more than just fill the deficit. He wants to raise enough extra cash to remake the state, which has the lowest combined state and local taxes per capita in the country. And his central focus is education. He often laments that Alabama typically is ranked last of the states, or close to last, on many measures, including education.

Gov. Riley has marshaled a broad coalition to back his plan, including education and business leaders. Groups representing school boards, school administrators, and the powerful Alabama Education Association, are big advocates. On the business side, he is backed by some local chambers of commerce and statewide business groups.

But the referendum faces stiff opposition. The timber and agribusiness industries, which own large swaths of land in Alabama and would take a big hit from higher property taxes, are helping to finance the opposition. The state chapter of the National Federation of Independent Business has said no, as has the Christian Coalition of Alabama—although, in an unusual twist, the Christian Coalition of America, the Washington-based parent organization, backs it.

And the governor’s own party, through its state executive committee, voted 122-100 last month to formally oppose the plan.

Shock and Surprise

More than a few eyebrows shot up when the Republican chief executive, who was narrowly elected last November, put forward a massive tax hike.

“Governor Riley shocked and surprised us all,” said James F. Vickrey Jr., a communications professor at Troy State University in Troy, Ala., who attended the Frazer Church forum. “It truly is a ‘Nixon goes to China’ event. Only a Republican could have gotten to this point.”

Two women chatting together after the church event, who asked not to be named, made clear their opposition.

“I think we’re way overtaxed,” the first woman said, citing concern about how the property-tax increase would affect the 800 acres of farmland her family owns.

“This education? There’s money there,” the other woman added. “I think it’s mismanagement. And I don’t think I should pay for other children’s college educations. ... I just don’t think that’s right.”

The complaint of mismanagement in education cuts close to home for the 39,000-student Jefferson County public schools, the state’s second-largest school system. Poor management is the very reason the state took control of the district’s finances in 2000.

“We crashed and burned,” recalled Carolyn Blackwell, the principal of Pleasant Grove Elementary School, located in a suburban community near Birmingham. But she’s convinced the district is back on track. In June, the state handed the financial reins back to local officials two years ahead of schedule.

“We’re in better shape [than other districts],” Ms. Blackwell said.

She believes the programs Gov. Riley is proposing will make a big difference.

“First of all,” she said, “I truly love the idea of more professional development for teachers.”

Lengthening the school year is also critical, Ms. Blackwell argues. “It’s more days of instruction, more hours of instruction,” she said. “Everything to me is instruction.”

Two brothers lunching in nearby Bessemer at the Bright Star, a popular restaurant, said they expect to vote yes.

“The governor inherited a real mess in terms of the state of the books,” said Tom Pittman who, along with his brother Billy, is a graphic designer. “Typically, I’m not in favor of tax hikes, but it’s also addressing inequities in the tax code.”

But Rita Weems, a 57-year-old waitress who has worked at the Bright Star for 20 years, isn’t convinced the plan will help her.

“It’s going to tax the rich people,” she said. “They’re just going to put it back on us. We’ll have to pay more for their goods. If they’re taxed more, it’ll be bad for us. And I say no.”

Winners and Losers

One of the ironies for Gov. Riley is that the very voters he says stand to gain the most may well play a decisive role in defeating his plan.

Alabama has one of the most regressive tax codes in the country, and the plan would take steps to change that. For example, a worker in a family of four now starts paying state income tax at an income of $4,600. Under the proposed tax changes, the threshold would eventually increase to an income of about $20,000 for the same family. Property taxes in the state, which affect the wealthy and some large corporations more heavily, are very low.

The governor estimates that two-thirds of Alabama residents would pay less in state income taxes under the plan. “Where we’re losing is with people that actually get a tax cut,” he said.

The governor may have undermined his cause with some black leaders when he vetoed a bill that would have made it easier for felons to regain voting rights upon their release from prison.

Mr. Riley has since sought to mend fences over the issue. He has succeeded with some, but the Rev. Abraham Lincoln Woods Jr., the pastor of St. Joseph Baptist Church in Birmingham, said he remains bitter and increasingly distrustful of the governor.

A longtime civil-rights activist, Mr. Woods criticized parts of the referendum, such as ending tenure for some school officials and giving four-year college scholarships only to students who score at least a 20, out of a possible 36, on the ACT college-entrance exam.

“Most blacks don’t make 20 on that,” he said. “You know where most of those scholarships are going.”

“I’m just like a lot of Alabamians,” Mr. Woods added. “We just don’t trust the administration, the governor, and the legislature to really do the right thing with all of that money down there. They’re going to find ways to ... cut their friends in.”

But Ms. Blackwell, the principal at Pleasant Grove Elementary, said she believes the governor will ensure that the money reaches schools.

And if the referendum doesn’t pass, she suggested, she may well leave her post.

“I think the pressure that will come ... is going to be more than I am willing to take on. The frustrations, the cuts,” she said, “knowing that you’re not succeeding because you can’t succeed with too many [children] in a classroom, and the resources not there. ... How can you face that every day and come to a job?”

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