Opponents say Riley’s plan not the answer
Published 12:00 am Wednesday, August 20, 2003
There are always two sides to every issue, and Gov. Riley’s tax plan is by no means an exception to that rule.
The proposed tax plan, which will be voted on Sept.9, has some hefty opponents in the state, including but not limited to the Alabama Forestry Association, the Cattlemen’s Association, the Tax Accountability Coalition and the Alabama Policy Institute.
If you go online, you will find myriad websites devoted to dissuading you from giving your okay to the new legislation.
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Here’s what the fuss is all about. On its website, www.riley rate.com, the Tax Accountability Coalition highlights these points from the plan:
n Any home valued at more than $50,000 will pay an increase in state property tax. The state tax rate will drop from $6.50 per $1,000 of assessed value to $3.50 per $1,000 of assessed value. But at the state level, homes will be assessed at 100 percent of value instead of the current 10 percent.
n For the first time, you will pay sales tax on home and auto repairs, appliance repairs and oil changes.
n What is withheld from your paycheck for federal income tax, Social Security and Medicaid, will now be taxed by the state instead of being allowed as a tax deduction, which is currently the law. Under the Riley plan, you will pay tax on tax money you never received in your paycheck.
o Raises state income tax rate from 5 percent to 6 percent for individuals with taxable income of $75,000. It reduces the corporate income tax rate from 6.5 to 6.0 percent.
o While individual property taxes go up, those for the big utilities are frozen. They are now taxed at 30 percent of value at the local level, but they will be phased down to 22 percent.
o It raises the current use value on cropland and timber by 22 percent; limits current use valuations to 2,000.
o It raises the state sales and lease tax on cars and other motor vehicles from 2.0 percent to 2.5 percent. It raises the sales tax on vehicle leases from 1.5 percent to 3.0 percent.
o It doubles state filing fees on deeds and mortgages. The deed tax is $1 per $1,000 in value now. The mortgage fee is $1.50 per $1,000 in value.
o It raises the cigarette tax from 16.5 cents to 31 cents.
Most opponents agree that their biggest concern with the tax package is accountability.
To support their claims, most will refer to Sen. Roger Bedford’s often-quoted statement, &uot;This is free money, unearmarked. And it can be spent on anything the legislature deems appropriate, whether the governor supports it or not.&uot; Bedford is known by most as the state’s &uot;king of pork.&uot;
Local attorney Calvin Poole echoes Bedford’s sentiments on accountability.
&uot;This tax package is being proposed as adding more accountability to our state system,&uot; Poole said. &uot;But that’s not going to happen as it’s set up in the package.&uot;
Poole points out that the legislation puts all of the additional revenue that would be generated into a single fund that the legislature can then dole out to whomever it pleases – there are no restrictions on how the money is spent.
&uot;None of this money is required to go anywhere,&uot; he said. &uot;They can take money from the new Excellence fund, and spend it however they want. And they say we have to trust them to spend it on the right things.&uot;
Poole said that is exactly where the problem lies – trusting the legislature to do the right thing.
&uot;If you look at a copy of the Education Trust Fund budget for the current year, the first few things in the budget have nothing to do with education,&uot; he said. The first three items on the budget posted on the Alabama Legislature’s Fiscal Office website are Archives and History, which received $504,930; Arts Council, $4,009,935; and State Building Commission, $531, 413.
The budget also shows funding to the Music Hall of Fame in the amount of $86,382; Sickle Cell Oversight Committee – $1,573,782; and Sports Hall of Fame – $125,073.
&uot;Theoretically, you can say that anything is education to somebody,&uot; Poole said. &uot;but those entities aren’t teaching anyone to read or write. The accountability is not there. The problem is not a lack of funding, it’s a lack of proper allocation of resources. Money is being spent on all kinds of things.&uot;
Poole and other opponents of the plan ask that the legislature eliminate wasteful spending, such as this before asking for more money.
&uot;They are talking about throwing grandma out of the nursing home if this plan doesn’t pass,&uot; he said. &uot;Before we do that, let’s take the $12 million they are giving the Commission on Higher Education and use that to keep grandma in the nursing home.&uot;
The attorney said the commission is simply a study group created to prevent duplication in the education system.
&uot;They do nothing but issue reports,&uot; Poole said. &uot;Jim Bennett described them as a toothless tiger.&uot;
Eric &uot;Happy&uot; Cates is also on the &uot;Just say no,&uot; bandwagon. The Persimmon Ridge Farms owner says that accountability is not the plan’s only flaw.
&uot;This plan is so complicated that I don’t think anyone really knows what the total impact will be,&uot; Cates said. &uot;Both sides have websites that tell you how much certain things are going to cost you in certain situations, but none of them can accurately tell you what the impact will be.&uot;
For example, Cates said, none of them tell the tax payer that the governor’s revenue commissioner has already announced that the state will conduct yearly property value appraisals, beginning next year.
Tax Assessor Carolyn Middleton said that Butler County’s yearly assessment will begin in 2006.
&uot;The revenue department has said that we can expect a yearly increase of 3 to 4 percent on property values per assessment,&uot; Middleton said.
Cates said that’s something that is being left out of what Riley’s camp is pitching to the voters.
&uot;We don’t know what our property values are going to be from year to year,&uot; he said. &uot;How can they tell us what this tax plan is going to cost?&uot;
One of the biggest selling points for the tax plan’s supporters is their assertion that this plan will &uot;take from the rich and give to the poor.&uot;
One of the package’s provisions is increasing the state child tax credit from $300 to $2,100.
Cates and Poole said these kinds of statements are misleading voters because those benefits will be offset by the removal of federal income tax, Social Security and Medicaid tax from the allowable deductions list for state income taxes.
&uot;That change in the income tax procedure will have a bigger impact on the average person than the property tax,&uot; Cates said. &uot;It will offset any child tax credits a family receives.&uot;
Poole agrees that removal of those deductions will hit the state’s citizens the hardest.
&uot;Most people don’t realize how much money that is,&uot; he said. &uot;And we will be paying double taxation because we will be paying state taxes on the federal taxes we’ve already paid.&uot;
And it doesn’t stop there, he said.
&uot;Every time the state goes into proration, the education department starts talking about laying off nonessential employees,&uot; he said. &uot;If they are nonessential, why are they there?&uot;
Poole said the administrative overhead in the state school system was already ridiculous, and yet Riley’s plan asked that another administrative position be added for financial oversight.
&uot;Their idea of accountability is to create another position to oversee finances in the school system,&uot; he said.