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During the special legislative session the Alabama Legislature had a chance to do something that would convince the voters of Alabama that they were serious about accountability in state government—but they didn’t do it.
Throughout the special session almost all of the attention has been focused on the proposed massive tax increase. The media for the most part has pushed the tax increases with little or no attention to the proposed accountability measures regarding state spending except when they thought AEA union boss Paul Hubbert might mess things up. However, Alabamians from all walks of life have been very consistent in their skepticism about the tax increase and very focused on what they see as the greatest need in their government: accountability for how the state spends its citizens’ money.
Fortunately, not everyone in Montgomery is deaf to the frustrations of Alabama’s taxpayers. Led by Rep. Scott Beason, R-Gardendale, a bi-partisan group of legislators tried to pass a Taxation and Expenditure Limitation (TEL) bill that would bring real accountability to state government. The TEL bill would have set limits on how much the state could increase its spending each year. For example, state government spending increases could be limited to the inflation rate plus the percentage increase in population growth.
In short, a TEL bill would create a cap on spending that would force the state to live within its means. Under the TEL bill, if revenues exceeded the spending cap the surplus funds would be transferred into a Budget Reserve fund as a hedge against any future drops in revenues. The Budget Reserve fund would also be capped and any surplus funds automatically rebated back to the taxpayers.
In addition to limiting the growth of state spending by establishing caps, the TEL bill would also help the state to develop more realistic budgets. One of the most important features of the TEL bill is the requirement that the state base its budgets on the revenue that the state actually collected the previous year. Given that over the last 50 years revenues have gone up from one year to the next every year except two, the state’s budgets would continue to increase 96 percent of the time. As a Birmingham News editorial pointed out, this is a way to bring financial sanity to state government.
Moreover, the News points out that requiring budgets based on the previous year’s revenues could put a stop to the pork-laden budgets the legislators like to pass during an election year. All the state legislators know this, but only the conservative legislators have been willing to do anything about it. The others are perfectly content to raise your taxes by a billion dollars and throw it down a rat hole.
The Alabama TEL bill is not a groundbreaking bill; there are at least 26 other states that have similar spending limitation legislation in place. The Alabama TEL bill was modeled after a similar law in effect in Colorado. In 1992 the voters of Colorado passed a referendum to limit the growth in state and local spending to the inflation rate plus the percentage increase in the population growth. The effect on the state of Colorado has been dramatic. From 1995 to 2000, Colorado’s gross state product (GSP) grew by 54 percent, the highest increase in the nation, and state personal income went up 51 percent, ranking the state second nationally in state personal income growth during that time span.
In addition, under the leadership of Gov. Bill Owens, Colorado enacted a major education reform program and implemented a transportation improvement program without raising an additional dime in new taxes. In fact, between 1997 and 2002 over $3 billion were rebated back to Colorado taxpayers.
It is also noteworthy that years ago another western governor was a pioneer in the movement to limit the growth in state spending. As governor of California, Ronald Reagan proposed a revenue limitation bill that limited state spending to a percentage of California’s estimated personal income. Reagan’s objective was to slow the growth of state government by limiting the proportion of personal income that could be taken in taxes. In other words, he tied the well-being of the state to the well-being of its people.
That goal—linking any growth in state spending with the financial success of its citizens—would no doubt be a good one for our state legislators. As it now stands, the billion dollar tax increase package includes some accountability measures, but none strong enough to convince the people that they will make much difference in Montgomery. Real accountability starts with the budget because that is where the money is spent.
Unless the Legislature passes a real accountability bill such as TEL during the remainder of the regular session the Legislature will have failed to address the primary concerns of Alabama voters. Failure to fix the real problem will prove what most people have already concluded— Montgomery politicians and their special interests friends are not serious about accountability. They just want to spend our money.
Gary Palmer is president of the Alabama Policy Institute, a non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.
June 4, 2003
NOTE: This column is a copyrighted feature distributed free of charge by the Alabama Policy Institute. For information or comments contact: Gary Palmer, Alabama Policy Institute, 402 Office Park Drive, Suite 300, Birmingham, Alabama 35223, (205) 870-9900, e-mail firstname.lastname@example.org. To subscribe to this column, please go to www.alabamapolicyinstitute.org/subscribe. To unsubscribe, go to www.alabamapolicyinstitute.org/unsubscribe.