House committee approves cigarette tax, other revenue bills
An Alabama budget committee has approved a cigarette tax increase and other revenue bills as lawmakers try to fill a budget shortfall. The House Ways and Means Committee voted 8-6 for a 25-cent-per-pack cigarette tax increase. The increase would raise $66 million annually. The committee also voted for bills to raise the car rental tax from 1.5 to 2 percent; increase the car title fee from $15 to $28; and adjusts the business privilege tax so smaller businesses pay less and larger ones pay more. Lawmakers for months have been at a stalemate over a projected $200 million general fund shortfall. The committee action was the first sign of budding agreement. However, the proposals face difficult floor and Senate votes ahead. The House could vote on the tax bills Thursday. Republished with permission of the Associated Press.
Robert Bentley details call for second Special Session of 2015
The office of newly beleaguered Gov. Robert Bentley on Thursday afternoon released the details of the call for the upcoming Special Session. Lawmakers will reconvene in Montgomery for the third time this year due to a failure to pass a budget for the next fiscal year. According to a release from the Bentley’s office, the following “reform” measures – i.e. ways of freeing up necessary revenue without raising taxes – are on the table: Transfer use tax revenue from the Education Trust Fund to the General Fund Un-earmark certain state taxes Amend the Education Trust Fund Rolling Reserve Act. Also included in the Session’s “call,” which defines the scope of what can be debated during the session, are the following proposals that would raise revenue in order to account for a looming budget shortfall: Amend the Business Privilege Tax Increase the Cigarette Tax Amend the individual income tax deduction for Federal Insurance Contributions Act (FICA) Any other revenue measures that provide revenue for the General Fund. House Speaker Mike Hubbard responded to the parameters of the call as follows: “We will certainly consider at least some of the bills in Gov. Bentley’s call and various members have their own proposals they will likely bring forward, as well,” said Hubbard in a release. “The House and Senate leadership have worked closely together in good faith, and I’m hopeful that both houses will come together on a common ground solution before the final gavel falls.” The Session is set to convene at 5:00 p.m. on Tuesday, September 8.
Robert Bentley won’t retreat on taxes as budget stalemate continues
Republican Gov. Robert Bentley said he will not retreat as he battles with members of his own party over tax increases. The cuts to state services, which will be required if lawmakers fail to plug a revenue hole, will cause a “tremendous amount of pain to the citizens of this state,” Bentley said. “We’re dealing with real people and real people’s lives,” Bentley told The Associated Press. “We have to have some taxes. We have to have new revenue.” The GOP governor has taken up a high-profile quest to convince the Republican-controlled Alabama Legislature to approve taxes to avoid budget cuts. So far he has failed. Lawmakers rejected his call for $500 million in taxes in the regular session that ended in June. A special session, in which Bentley sought $302 million, appears as if it will conclude next week without significant new revenue. The governor said a cut-filled budget headed to the Senate floor Monday is unworkable. Lawmakers say they expect Bentley to pocket veto the bill and bring them back for a second special session. State agencies are now seven weeks from the Oct. 1 start of the fiscal year and do not have an operating budget. The governor would not say when he expected to call lawmakers back, leaving open the possibility that he could call them back right before the start of the fiscal year. The sharpest resistance has come in the Senate. “That’s where we are on total different sides right now. You’ve got a lot of people, in the Senate anyway, who believe it’s just time to live within our means,” Senate President Pro Tempore Del Marsh said. “Right now there have not been the screams from our constituents that there is a problem,” Marsh said. The House has been more willing to work on revenue ideas. A 25-cent-per-pack cigarette tax failed in committee by one vote when both Republicans and Democrats voted against it. Speaker of the House Mike Hubbard said, “when that collapsed, everything collapsed.” However, Hubbard said he thought the House was “very close” to getting a consensus for something that could pass through the chamber in a second special session “We just have to do what we believe is in the best interest of the people of the state of Alabama. Let’s put a proposal together and let’s send it up (to the Senate) and try to put the pressure on them to try to do the right thing,” Hubbard said. Marsh has proposed taking $225 million from the education budget, saying a savings account for the fund and the fund’s other taxes, which grow every year, could absorb the loss. He said lawmakers could decide later about backfilling the revenue. The state Department of Education and other education groups have launched an offensive push against that idea. Hubbard said the House would not go along with taking money from education without replacing it. Marsh has also proposed letting voters decide on establishing a state lottery and casino although that money would not be available for the immediate budget. Despite two losses with lawmakers, Bentley said he remain optimistic. He said the pressure is beginning to build on lawmakers. However, lawmakers opposed to Bentley could have an advantage in a second special session. Marsh said senators will try to arrange their meeting days so there will be time to override a budget veto. Republished with permission of the Associated Press.
Alabama House committee votes down cigarette tax
A legislative committee on Tuesday voted down a proposed hike in Alabama’s cigarette tax, killing one of Gov. Robert Bentley‘s major proposals for filling a hole in the state’s general fund budget. Tempers and frustrations flared on the third day of Special Session as lawmakers grappled with a $200 million shortfall. Bentley said he was disappointed because lawmakers have had months to address the budget crisis. “The Legislature has failed to do that. They failed in the regular session and thus far they’ve failed in the special session,” Bentley said Tuesday evening. The House Ways and Means General Fund Committee voted down a 25-cent-per pack cigarette tax by an 8-7 vote. Committee Chairman Steve Clouse was visibly frustrated after the vote. He said the tax, which would have raised $66 million, would have helped level fund prisons, Medicaid and other crucial state functions. “I thought it was a good budget but evidently that all fell apart,” Clouse, R-Ozark, said. Clouse said he was frustrated that three of the seven ‘no’ votes were from Democrats even though their caucus endorsed the idea in past sessions. House Democrats have said they will not support tax increases as Republicans oppose Medicaid expansion and a vote on a lottery. In some political hardball, Clouse responded with a new budget that would cut the state’s Medicaid program by $156 million. State Health Officer Don Williamson said he was uncertain if the state could maintain a Medicaid program at that level. Clouse said Medicaid is the biggest problem facing the General Fund. The proposed budget will be up for debate Wednesday in the House of Representatives. Rep. Darrio Melton, D-Selma, called the move appalling. “To take and use Medicaid as a pawn is totally unfair,” Rep. John Knight, D-Montgomery, said. Testiness also was on display in the Alabama Senate as a committee narrowly approved a rival, but equally contentious, proposal to shore up the general fund by taking $225 million in use tax revenue from the state’s separate education budget. Sen. Trip Pittman, chairman of the Senate education budget committee, said taking the money increases the chances of future budget cuts and squelches chances for a teacher pay raise in coming years. Pittman said he could not support the shift without something to help backfill the budget. Senate President Pro Tem Del Marsh, the bill’s sponsor, said it was a way to help the anemic general fund. “Instead of backfill, we should be talking backbone,” Marsh said. Marsh is sponsoring a separate lottery and casino bill that he said could provide the money to the education budget if lawmakers and voters approve. Bentley has asked lawmakers to approve $302 million in taxes after failing to convince them to approve $541 million earlier this year. Lawmakers have rejected many of Bentley’s other ideas, but the cigarette tax until Tuesday appeared to have some traction in the House of Representatives. The governor on Tuesday partly blamed the gambling push for changing the landscape of the special session. “They really do not want a solution because they want to solve this with gambling,” he said. Republished with permission of The Associated Press.
John Rice: State government is acting more like Washington, D.C., every day
State government is acting more like Washington, D.C., every day. The state General Fund is spending close to $1 million more a day than the state General Fund can support. This means that for every five dollars state government is spending close to one of those dollars is being spent without continuous revenue behind it. How is this possible? This is possible because of using one-time money, and the Legislature swiping money from the Alabama Trust Fund. State General Fund agencies have not seen a balanced budget without these type of budget shenanigans in a decade. Alabama state government does not have a revenue problem. Alabama state government has a spending problem. Gov. Robert Bentley spent millions on campaign ads promising, “More Jobs. Less Government. No New Taxes.” Just nine months after he was running for office, the governor has broken his two biggest promises. He has proposed now two tax increase packages, and he is pushing for bigger government/more spending. Governor Bentley originally proposed spending more than $500 million more out of the pockets of state taxpayers in attempt to increase everyone’s taxes. The governor actually proposed new taxes that would have the typical family paying more than $1,800 a year for state services (excluding roads and schools). That is way too much for Alabamians to pay for prisons, Medicaid, and a smattering of other things. The governor needs to scale back his wish list and give us a balanced budget like he promised without increasng taxes or come up with non-tax increase solutions if he wants to spend more money. Has something changed since nine months ago, when Governor Bentley and every lawmaker was elected by riding on a no new taxes/less government band wagon? No, nothing has changed. They all knew they had taken money out of the Alabama Trust Fund to spend on everyday expenses for state government and they knew they were going to have to scale back this year. Promising No New Taxes and Less Government knowing full well the hole would be there from not having the Alabama Trust Fund money means either they were promising to scale back government after the election, or they flat knew that they were purposely deceiving the voters of Alabama in a calculated strategy of lying about their true intent to raises taxes after Election Day. Any lawmaker not falling in the categories of intent to shrink spending, or intent to lying to voters about breaking their no new tax campaign promise, must just be an imbecile. Just a decade ago, Alabama families were paying less than $1,000 a year for state services and now the governor wants to push that amount to $1,800? What has changed? What are Alabamians getting now that they did not get 10 years ago? Show us the money. State General Fund spending for Medicaid has tripled since 2004. And this is when emergency room treatment of Medicaid patients is on the rise and where only 20 percent of Medicaid emergency room visits are for emergency treatment, according to the Partnership for Medicaid. Instead of ballooning Medicaid spending, the governor and bureaucrats need to get emergency room spending in check and put some meaningful restrictions on the overuse of health care. And prisons? Ten years ago state dollars going to prisons was right at $300 million. Now? The governor has requested almost $520 million for Corrections, or 70 percent more. This is when the cost for the no-bid crony prison medical contract has tripled in 12 years to a huge $80 million a year. Inflation accounted for 22 percent increases in spending over the past ten years. What accounts for the other 50 percent to over 100 percent increase in numerous agencies? Thank goodness the Legislature had the sense to kill Governor Bentley’s half-billion dollar tax package, but Governor Bentley, just did not get the hint. Even though the governor failed to get legislators to vote for his tax package, now he is coming with another tax increase plan. The governor now wants to take more income tax from working Alabamians, and he has even proposed a soft drink tax if the income tax hike does not pan out. He wants to increase the tax on cigarettes and businesses for the privilege of operating in Alabama. Here is a prediction: many lawmakers who vote to abolish the FICA income tax deduction, vote to tax soft drinks, or vote to increase the tax on cigarettes or businesses is not coming back to Montgomery in three years because promises are promises. If politicians break a simple promise like not raising taxes, then what words can we believe coming from the mouth of that politician? None. People are tired of state government throwing money down a rat hole. People are tired of paying more for less. People have to pay more as it is while they are making less take home pay. Raising taxes is not an option. Here is an idea. Balance the budget with what you have, Governor Bentley and lawmakers. Come with solutions that do not call for raising one penny on the taxpayers if you just must spend more. We all pay enough as it is, and we elected all of you because you promised not to raise taxes, and not to increase an already bloated state government. The state legislature goes back to Montgomery on Aug. 3 to consider Governor Bentley’s tax increases. All Alabama taxpayers should tell their legislators to keep their promise to not raise taxes. John Rice is the president of Alabama Foundation for Limited Government.
House budget panel to vote on proposed cigarette tax increase
Alabama business leaders and advocates testified Tuesday before the House’s General Fund budget committee about the economic and health consequences of increasing the cost of tobacco products purchased in the state. The public hearing was to consider Rep. Patricia Todd’s House Bill 572, a proposal to increase the state tax on tobacco products by 25 cents. Advocates supporting higher cigarette taxes warned the panel that the bill didn’t go far enough to bring substantive health and economic benefits. Kimble Forrester, executive director of Alabama ARISE, said that an increase of at least 55 cents per pack is necessary for the state to see a decrease in health costs, as well. “The studies I’ve seen say that you have to raise taxes enough by at least 10 percent per pack to give people some sticker shock,” he said. Others spoke against a higher tax, warning that the increase would send consumers across state lines to purchase tobacco at lower costs per pack. A retailer from Andalusia said that dozens of his customers come from neighboring Florida “because it’s $10 a carton cheaper.” House Bill 572 is the smallest of three proposed cigarette tax increases lawmakers have considered. Originally, Todd had proposed a tax increase of 32.5 cents. And as part of his budget plan, Gov. Robert Bentley had proposed an 82.5-cent tax increase on cigarettes. Todd’s proposal was one of several before the committee today as lawmakers try to agree on a path to overcome an estimated $541 million shortfall in the state budget. The committee also heard comment on legislation to increase taxes on car sales and car rentals, along with two proposals to cut state employee pay through furloughs or by cancelling annual bonuses. The committee chairman indicated that the panel will reconvene on Wednesday for a formal vote.
