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“Riley warns of dysfunction if plan fails”
MONTGOMERY | Gov. Bob Riley needs only one word to describe state government if Alabama voters reject his $1.2 billion tax plan Tuesday: dysfunctional.
Riley estimates the largest budget deficit since the Great Depression will result in Alabama turning loose 5,000 inmates, increasing class sizes by as much as 50 percent, cutting 10 percent of the state employees and ending nursing home care for hundreds of elderly Medicaid patients.
"You will completely make this government dysfunctional," Riley said.
Opponents downplay such talk. They say there is plenty of budget cutting Riley could have done rather than proposing the largest tax increase in state history.
Former House Majority Leader Dick Armey of Texas, co-chairman of Citizens for a Sound Economy, said Alabama shouldn't be talking about a tax hike as long as it's spending state tax revenue on Junior Miss pageants, a hockey arena and hundreds of pork-barrel projects.
"The state is saying to families: 'You rearrange your priorities and we will continue to have self-indulgent spending priorities,' " Armey said.
Riley acknowledges that there is some spending that could be cut, but he says it would come nowhere near erasing the $675 million shortfall for the budget year beginning Oct. 1.
House Speaker Seth Hammett, a Democrat who's supporting Riley's plan, said he expects it to fail Tuesday. Then the Legislature will have to go into special session to write state budgets that will take effect three weeks later.
The Legislature can't raise property taxes and some parts of Alabama's income tax without a vote of the people. But some parts of Riley's plan could be levied with just a legislative vote, including raising cigarette taxes, eliminating some income tax deductions and levying sales taxes on repairs.
Riley says that if his plan fails/sTuesday, he won't propose any other taxes to the Legislature in the special session.
Hammett said he would support the Legislature raising some taxes that don't require a statewide vote because that would soften dramatic budget cuts, but he's in the minority.
"The vast majority of members I've talked to say if the package fails, they will not vote for new taxes," he said.
Hammett said the impact of no new taxes will be softened some by the $270 million Alabama received from the federal government as part of the federal tax cut. But even with that money, he predicts spending on education programs will be trimmed at least 6 percent below this year and non-education programs will get slashed 12 percent to 18 percent.
Rep. John Knight, chairman of a House budget committee, agrees with Hammett that the Legislature won't be in a taxing mood after Tuesday's referendum.
"If the people vote this down, it will be very hard for the Legislature to come back and support statutory taxes that the people have rejected," Knight, D-Montgomery, said.
If the package fails, some legislators expect to see another attempt made to bolster state revenue by legalizing casinos or a state lottery.
Dan Ireland, executive director of the anti-gambling Alabama Citizen Action Program, said it would be a rare session of the Legislature if the gambling issue didn't come up.
"That will be a perpetual attempt," Ireland said.
Sam Webb, a historian at the University of Alabama at Birmingham, looks back 70 years in Alabama history to see what might happen after Tuesday's referendum.
He noted that the first referendum to levy an income tax in Alabama in 1932 failed by a 2-1 margin. Gov. Benjamin Miller cut state services and public schools dramatically. When voters saw the impact, they approved the income tax in 1933.
If Riley's referendum fails, state pension chief David Bronner expects the Legislature to repeat history by waiting a few months to see how the voters react to big budget cuts.
"Why bloody yourself if the public doesn't understand the consequences?" he said.
Sen. Hinton Mitchem, co-chairman of a Senate budget committee, said the public will understand the impact of budget cuts by the time legislators begin their 2004 regular session in February.
"The Legislature will look at what's happened in the last three or four months. Then we may have to make a revenue decision," said Mitchem, D-Albertville.
BC-AL Ã³ Tax Plan-Box, Adv08,530
For Release in AMs newspapers of Monday, Sept. 8
Highlights of governor's tax, accountability plan
With BC-AL Ã³ Tax Plan-Failure
By The Associted Press
Highlights of Alabama Gov. Bob Riley's $1.2 billion tax plan:
Ã³ Eliminate the state income tax deduction for federal income taxes paid.
Ã³ Raise Alabama's lowest-in-the-nation threshold for paying income taxes from $4,600 for a family of four to nearly $17,000 next year and nearly $20,000 in three more years.
Ã³ Raise the state income tax rate from 5 percent to 6 percent for individual incomes over $75,000 and family incomes above $150,000, and reduce the rate for corporations from 6.5 percent to 6 percent.
Ã³ Reduce the state property tax rate from 6.5 mills to 3.5 mills, but start assessing property at 100 percent of its market value or current use value.
Ã³ Update current use values on agricultural land to more accurately reflect the land's value.
Ã³ Increase the homestead exemption for property taxes from $40,000 to $50,000.
Ã³ Exempt the first 200 acres of agricultural property from state property taxes if the owners live on the land and elect current use.
Ã³ Increase the sales tax on cars from 2 percent to 2.5 percent.
Ã³ Increase the lease tax on cars from 1.5 percent to 3 percent.
Ã³ Levy state and local sales taxes on the labor for repairs.
Ã³ Increase the state cigarette tax from 16.5 cents a pack to 31 cents.
Ã³ Increase deed recording fees from 1 mill to 2 mills.
Ã³ Increase mortgage fees from 1.5 mills to 3 mills.
Highlights of the governor's accountability plan:
Ã³ Don't earmark, or set aside, any new tax revenue for a specific purpose so the Legislature and governor can decide its best use each year.
Ã³ Provide free college tuition to Alabama students who maintain a B average and meet other academic standards, provided the Legislature approprites money each year.
Ã³ Require many state employees and public education employees to pay more for their health insurance coverage.
Ã³ Require state workers and public education employees who retire with less than 25 years of service to pay more toward their health insurance.
Ã³ Prohibit "pass through" pork, where legislators hide their special projects in the budgets of state departments.
Ã³ Direct the State Board of Education to create financial incentives for teachers who go into underserved regions and hard-to-staff subject areas.
Ã³ Provide scholarships to students who agree to teach in underserved regions or hard-to-staff subject areas.
Ã³ Abolish the state Tenure Commission and use arbitration in teacher dismissals.
Ã³ Remove tenure for new school administrators, supervisors and financial personnel.
Ã³ Require the state superintendent of education to educate and test local superintendents on fiscal management.
Ã³ Require financial audits of all public school systems.
Ã³ Increase the school year from 175 to 180 days.
Ã³ Increase funding for the Alabama Reading Initiative so it is available to every child.
Ã³ Expand the Alabama Math and Science Initiative, which provides students with intensive training in math and science.Provide every school with distance learning capabilities so a teacher in one city can instruct classes in other cities.