quot;Holequot; in legislation calls for examination

Published 12:00 am Wednesday, October 17, 2001

Governor Don Siegelman and legislative leaders from both the House and Senate met at the Governor's mansion last week to discuss the status of revenues coming into the state treasury.

The news from the governor's staff charged with responsibility for managing revenues was not good.

Henry Mabry, State Finance Director, reported that corporate income taxes are down 30.2 percent, or nearly $78 million in fiscal year 2000-01 which ended September 30.

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The State Revenue Commissioner said sales taxes declined 1.1 percent last year and personal income taxes grew by only 1.2 percent.

Sales and income taxes are the primary sources of income for the $4.2 billion Education Trust Fund.

This fund was supposed to be propped up by a franchise tax revision which was approved by voters on March 21, 2000.

It now appears, according to the governor and the finance director, that the revenues from this new franchise tax are not coming in in the amounts predicted and there is possibly, according to the them, a &uot;hole&uot; in the legislation itself which is giving some unexpected breaks to those who pay this particular tax.

Governor Siegelman called on the legislators present to consider a proposal to close this &uot;hole&uot; and to further examine this most recent legislation for its overall effectiveness.

The education budget was passed in the recently concluded Regular Session at the prorated figure of 6.2 percent from last year's budget.

In other words, when proration was declared last year in the education budget, the new fiscal year budget was adopted using the prorated figures.

In the opinion of the sponsors of this measure, this was enough cuts to take care of education needs in the new school year, but Dr. Ed Richardson, State Superintendent of Education, has suggested as of last week that the state stands to lose an additional 4 percent of education revenues at the rate income is reaching the state treasury.

It is on the basis of Dr. Richardson's projections and the reports from the State Finance Director that Governor Siegelman is apparently going to recommend some increase in state taxes.

In last week's column, I asked you to send me your views on these proposals for new taxes, and I appreciate very much those of you who took the time to do this.

I have received a few of your responses as of my deadline for submitting this column, and I am certain I will receive others before next week.

I will give you a full report on the response to those questions.

Sometimes things are just a matter of reality, and we must deal with it by facing the facts.

The stock market and the general economy have been on a consistent downturn since last October.

Even before the events of September 11, it was evident that this was not a short term recession and the terrorist attacks only added negatively to a bad situation.

There are other considerations than raising taxes.

We should be looking, in my opinion, at cuts in spending, and the legislature

annually should be setting aside &uot;rainy day funds&uot; to help during times of economic downturn.

The governor's meeting last week did not produce any specific tax increase legislation, nor did it result in any recommendations to remedy the problems.

Mainly, the theme of the meeting seemed to be creating an awareness about the continuing shortfall in state revenues.

If I can assist you at any time, remember &uot;I'll go with you or I'll go for you&uot; to help you solve any problem related to state government.

You may write me at P O Box 225, Luverne, Alabama 36049, or call me at 334-242-7883.