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    Alabama Tied in Knots by Tax Vote

    BY Dale Russakoff, Washington Post Staff Writer
    08/17/2003

    Sunday, August 17, 2003; Page A01

    PELHAM, Ala. -- Amid suburban sprawl that has obliterated farms and timber stands and even a hideout where the Ku Klux Klan plotted the infamous Birmingham church bombing, Alabama Republican Party Chairman Marty Connors paused on a recent day over hash browns and eggs in a local Cracker Barrel, struggling to make sense of the latest turn in Alabama politics.

    "We've got a conservative, evangelical Christian,Republican governor," he said, enunciating each word as if to get his head around the details, "trying to get a massive turnout of black voters to pass a tax increase so he can raise taxes on Republican constituents."

    In a stunning subplot to the fiscal crises roiling the states, Alabama Gov. Bob Riley (R) -- who for three terms in Congress boasted that he never voted for a tax increase and was elected governor on a promise not to raise taxes -- is proposing to raise state taxes by a record $1.2 billion, eight times the largest previous increase and almost twice what is needed to close a $675 million budget deficit.

    Seizing Alabama's crisis as an opportunity to right historic wrongs, he says the state should act to improve schools funded at the nation's lowest level per child and to lift the tax burden from poor people, who pay income taxes starting at $4,600 a year for a family of four while out-of-state timber companies pay $1.25 an acre in property taxes. The changes would move Alabama from 50th to 44th in total state and local taxes per capita, he says.

    "I'm tired of Alabama being first in things that are bad and last in things that are good," an impassioned Riley told a Rotary Club in Prattville the other day as he traveled the state, sleeves rolled up, hawking what he calls Alabama's "Foundation for Greatness."

    In most states, governors and legislatures decide whether to raise or cut taxes, but Alabama's tax code is written into its constitution -- a 1901 document whose wealthy, landed framers set out to concentrate power in their own hands -- and cannot be amended without a statewide referendum. Thus, Riley's proposal, which passed the legislature in June, will go before the voters Sept. 9. The resulting campaign -- complete with tracking polls, negative ads, political action committees, buttons, yard signs, media advisers and boiling-point rage on conservative talk shows -- has become a battle literally for Alabama's soul.

    The born-again Baptist governor is telling voters in this Bible Belt state that their tax system, which imposes an effective rate of 3 percent on the wealthiest Alabamians and 12 percent on the poorest, is "immoral" and needs repair. "When I read the New Testament, there are three things we're asked to do: That's love God, love each other and take care of the least among us," Riley said in his office in the antebellum state Capitol.

    And he is telling the state's timber and agricultural interests, who for generations have thrived on Alabama's low land taxes and cheap labor and who helped elect Riley last November, that they should pay more taxes so that public schools can produce a 21st-century workforce and a modern economy and the state can address other long-standing needs -- such as 28,000 inmates now jammed into a prison system built for 12,000 and a state police force at 50 percent capacity, with only six troopers patrolling 67,500 miles of roadway after midnight.

    "We have a philosophical difference of opinion," Riley said of these one-time supporters. "I believe in a fair tax code. They don't. I believe we have to make investments in education that keep us from being tied for dead last. They don't. They have had special treatment at least for all of my adult life. And even after this modest increase, they'll still be paying less than in any of our surrounding sister states."

    The former door-to-door egg salesman, who made a fortune selling poultry, then cars, then real estate, has turned Alabama politics inside out with this latest product. The state Republican Party has come out against his tax plan; the state Democratic chairman has endorsed it. State teachers union president Paul Hubbard, Alabama's most powerful lobbyist and a nemesis of conservatives, is for it, having won an agreement from Riley to rehire more than 5,000 laid-off school employees. Also on board is a coalition of major insurance, banking, utility and consumer product companies that have clamored for years for more education funding to help modernize the economy.

    "Alabama needs to raise some revenue; there's no question about that," said the GOP's Connors. "But this is not a tax increase any longer. This is a massive redistribution of wealth. We are the Republican Party -- of Alabama! If a Democrat had proposed this, we would be burning down cities."

    "A Democrat couldn't have done this," Hubbard said. "Many say it's like Nixon going to China."

    Dividing the Faithful

    Now, the battle is taking on national dimensions, with conservative Republican groups in Washington mobilizing to defeat Riley's plan. "If this can pass in Alabama, it could be a precedent to attempt it elsewhere, and muddy the anti-tax message," Connors said. Grover Norquist, head of Americans for Tax Reform, who gave Riley as congressman his group's Friend of the Taxpayer Award every year from 1997 through 2002, vowed to make Riley "the poster child for Republicans who go bad. I want every conservative Republican elected official in the United States to watch Bob Riley lose and learn from it."

    The American Conservative Union, Citizens for a Sound Economy, National Taxpayers Union, Eagle Forum, Family Research Council and other grass-roots conservative groups signed a letter with Norquist denouncing Riley for a "grab for the special interests and unions" that "will burden every segment of society."

    With four weeks of campaigning left, polls showed Riley's proposal at least 20 points behind. His opponents say the margin shows that Alabama voters cannot tolerate such a large tax increase, but the governor and his supporters insist the plan is so complex that voters -- particularly those who would benefit -- do not understand it yet.

    The plan would raise the tax threshold from $4,600 to $20,000 for a family of four, and raise the exemption per child from $300 to $2,200, which Riley says would cut or leave income taxes unchanged for two-thirds of the state's taxpayers. The top third of earners would pay more, as would corporations and large land and timber holders. Alabama's lowest-in-the-nation property taxes would rise on average to $490 a year on a $100,000 home (a $136 increase) and to $1,540 on a $250,000 home (a $536 increase), according to the governor's figures.

    Somewhat paradoxically, polls show the strongest opposition is among black voters, who make up about a fourth of the electorate, and people with incomes under $30,000 -- the very Alabamians who would receive the largest tax cuts. Riley and his emissaries are campaigning hard among black voters, who opposed him overwhelmingly in November. He is encountering distrust embedded in Alabama history.

    "Black people in particular and poor people in general have always been very suspicious when somebody in Montgomery says, 'I'm going to help you,' because usually in the end we get ripped off," said state Sen. Hank Sanders, an influential black politician. Sanders has taped ads supporting Riley's plan, but many other black leaders, including pastors, have been conspicuously silent.

    Riley's opponents also have targeted black voters, airing a radio ad on stations with mostly black audiences featuring a man with poor diction warning, "Our property taxes could go up as much as fo' hundred percent," and blaming "Montgomery insiders who have been ignorin' us for years." The ad was paid for by a political action committee whose top contributors are the state's largest bank, a leading insurance company, two timber and paper companies and county farmers federations -- all of which supported Riley last November. The state farmers federation also controls the insurance company, which would lose a large tax break that gives it an advantage over other insurers.

    Riley's appeal to Christian morality -- a standard theme in Alabama campaigns -- has taken some unusual bounces. "What would God have Alabama Baptists do as individuals and what would He have us do with the influence entrusted to us in this state?" wrote Bob Terry, editor of the Alabama Baptist, the newspaper of the Alabama Baptist Convention. Terry called for a yes vote: "The Bible is clear that 'to whom much is given, much is required.' "

    But the Christian Coalition of Alabama, which opposes all tax increases, staked out the other side. "We applaud tax relief for the poor. You'll find most Alabamians have got a charitable heart; they want to do that," said the group's president, John Giles. "They just don't want it coming out of their pocket."

    Confusing the faithful even further, Christian Coalition national president Roberta Combs flew to Alabama recently to give her blessing to "Alabama's courageous Christian governor" and his "bold and rightful mission." Combs then left Alabama, but Giles stayed and vowed to keep fighting.

    Riley's Toughest Sale

    Crusading for a mega-tax increase is a role reversal for Riley, 58, a Newt Gingrich Republican in the House who voted for President Bush's 2001 tax cut and said he would have voted for this year's, as well. As a candidate for governor, he filled out a questionnaire saying he opposed property and income tax increases. But the state's deficit is now triple what it was during the campaign, he said, even after he cut $230 million in spending. As does every state but Vermont, Alabama has a constitutional requirement for a balanced budget.

    Riley said his alternatives were to cut $675 million in spending, triggering a "catastrophic failure of government," or to raise taxes by that amount -- four times the largest previous increase. "The largest tax increase in state history just to maintain the status quo?" he asked. "I don't believe so. I believe you have to offer the people of Alabama a chance for a better future." The extra $600 million will go into an Alabama Excellence Initiative fund for statewide math, reading and science initiatives and merit college scholarships.

    Riley said his views on education were shaped by his friendship in Congress with Rep. Bobby R. Etheridge (D-N.C.), previously North Carolina state school superintendent. In stump speeches, Riley recounts talking with Etheridge about that state's dramatic increase in education spending in the 1960s under then-Gov. Terry Sanford (D) and the rising student achievement that followed. "North Carolina is Andy of Mayberry country; it's just like Alabama," he told the Rotarians in Prattville. "But when the national writing scores came out the other day, where was Alabama? Tied for dead last with Arizona. Where was North Carolina? They were number five in the United States."

    Alabama's low taxes and limited services are legacies of generations of distrust of government fed equally by big business -- known here as "Big Mules" -- populists such as the late Gov. George Wallace (D) and, now, a growing Republican majority.

    "For 100 years, Alabama relied on extractive industries, low wages, low skills and low taxes, and the business community told voters government was wasteful and we didn't need taxes," said Auburn University historian Wayne Flynt, who has written 10 books on Alabama history. "Now the business community says we need a heck of a lot of money to train a workforce for the 21st century. It's confusing when the people who told you everything was fine are now telling you everything is terrible."

    As for Riley, Flynt said, "I find him absolutely amazing. He just doesn't fit. There's no historical explanation for him."

    In interviews around the state, voter disgust toward state government was palpable, with most people saying they did not trust legislators -- notorious for purveying pork even as Medicaid cuts loom and teachers are laid off -- to spend money as Riley wants.

    "My problem with paying more taxes is they can't handle what they've already got," said Virginia Angrisano, dining with five relatives at Birmingham's sprawling and popular Niki's West cafeteria. "Is it needed? Yes it's needed. Will it go where it's needed? I doubt it. "

    Compared to others interviewed, Angrisano sounded wildly supportive. "NO!" screamed Keith Crockett, a salesman for a towing company near Birmingham, when a reporter mentioned Riley's tax proposal. "No more taxes!" Eddie King, an equipment business manager, proclaimed Riley's proposal "unbelievable" with so many jobs in peril. "Raising taxes is never the answer," he said.

    Of those who said they liked the proposal, most sounded tentative. "If it helps the schools I'm for it, because our kids are our future, but I really don't know enough yet," said Patricia Lewis, a single mother who works in the kitchen at Ryan's Steak House in Prattville, where Riley made his speech to the Rotary Club. She said she was not aware that the plan would cut her income taxes or pay college tuition for students who maintain B averages.

    Meanwhile, Riley keeps selling, occasionally hitting pay dirt. After the Prattville speech, an 81-year-old lawyer named Harold Howell rose. "I think everybody here feels like we're overtaxed," Howell began, "but you know, when you get down to it, what you're asking for is peanuts compared to the incomes that people in this room here make. And it's payback time for us. I got my education in this state, and I make a living out of this state, and it's time to help the kids that's coming up. I support you."

    What could the governor possibly have added? "God bless you," he said.

    © 2003 The Washington Post Company

    by Dale Russakoff, Washington Post Staff Writer on 8/17/03.