The best illustration of who really controls Alabama's state government can be found in Rep. Christopher John England's description of yesterday's votes:
Today we raised fees or taxes on rental cars, car titles, cigarettes, pharmacies and nursing homes. However, we declined to raise the business privilege tax.
We also borrowed 50 million dollars from the Rolling Reserve Fund to give to the General Fund and transferred all of the Use Tax from the Education Trust Fund to the General Fund.
Remember: this is the same legislature that put off this year's repayment of the money they had to borrow in 2012 to balance the state's budget. The borrowed money conveniently lasted until after the 2014 election, but now we're in a real fix.
And how do legislators propose to fix the problem? We're going to cobble together an underfunded General Fund budget that's dependent on consumer taxes:
- Soft drinks
- Nursing home beds
- Drag shows (seriously)
What's not being considered are measures that would bring in real money and bring more fairness to the tax code.
Senator Linda Coleman has again introduced a bill to provide for combined reporting of corporate income taxes. In this session, it's SB-12. While the nickel & dime – and quarter – taxes sailed through committee and the House, Coleman's bill has yet to have a hearing. Here's how she described her bill & explained why it's necessary earlier this year:
For years, we have asked the governor to close corporate tax loopholes that allows BIG BUSINESSES to avoid paying corporate income tax. Alabama businesses benefit from many tax breaks created by the legislature. As a result, highly profitable companies manage to pay NO income taxes.
For example, Exxon made $89 million in Alabama in 2003 but paid no taxes because it deducted payments to itself from taxable income, and there are other companies playing this shell game to avoid paying taxes according to the Alabama Revenue Dept.
24 states already have 'Combined reporting' that requires businesses to file one combined report allowing auditors access and see all records. It keeps them honest, levels the field, and allows states to capture tax without a new tax on citizens.
Another important item not under consideration is higher taxes on large out-of-state landowners. The situation hasn't changed much at all since 2002:
In Lowndes County, bordering on Montgomery County and the state capital, 78 percent of the land is owned by people and companies outside the county, according to the property tax records. Perry and Macon counties are close behind, each with more than 73 percent of land held by outsiders. More than a quarter of Bullock County's land is owned by people who don't even live in Alabama.
Property taxes across Alabama are the lowest in America, often forcing local governments to rely on high sales taxes to fund their schools and communities. The constitution protects land wealth while taxing commercial property at higher rates. In the Black Belt, almost all wealth is in the land.
The largest of the Black Belt's landowners, like the largest landowners across the state, pay far lower taxes per acre for their land than average Black Belt residents. Under Alabama's current-use system, which allows timber and farm owners to sidestep paying taxes on the land's actual market value, timberland owners in some Black Belt counties pay less than $2 an acre per year in property taxes, even for the most productive land.
The higher timberland property taxes in Mississippi and Georgia haven't blunted timber production. Like Alabama, Mississippi has more than doubled its annual timber production in the past 20 years. Georgia has nearly tripled production.
Alabama has also failed to implement any sort of accountability for the corporate welfare we hand out on a regular basis. Here are the numbers from 2012, you can bet it's higher now:
The NYT has created a searchable database of all the subsidies they were able to identify. For Alabama, that amounts to at least $277 million — $58 per Alabamian or 4% of the state budget. The biggest recipient of our largesse is Airbus (EADS) at $158 million. The company is locating a new assembly plant in Mobile. Would they have come to Alabama without the subsidy or with a lesser amount?
Are the jobs worth the cost to taxpayers? We'll never know because Alabama has no evaluation program in place to show what we get in exchange for $277 million in corporate gifts. A recent Pew Research Center report indicates that most states, like Alabama, don't properly evaluate the effectiveness of tax incentives and other “job creation” giveaways. Our public officials are blindly throwing money at corporations and thankful to get any crumb of economic development in return … plus a photo-op at the groundbreaking ceremony.
Of course, that kind of stuff is hard. Worse, it might cut into campaign contributions! Why worry about it, when you can scam the masses with smokescreens like being so totally against gay marriage that you want the state out of the marriage license business and prohibiting the sale of fetal tissue in Alabama – even though that's already illegal, we'll just spend several days of our $400,000 special session to make it even more illegal.
Who knows what else they'll come up with? The only thing we do know is that, without a budget in place, the state stops writing checks on October 1. Period. Full stop. No salaries, no utility bills, nothing.
Maybe our legislative supermajority is just jealous that DC Republicans have managed to shut down the government twice. Since that worked so well, our legislators are considering giving it a try in Alabama.