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4 years ago

Bentley calls for more revenue, but ‘No New Taxes’ campaign pledge leaves few options

Gov. Bentley signing bills in his office (Photo: Office of the Governor)
Gov. Bentley signing bills in his office (Photo: Office of the Governor)

Gov. Robert Bentley says Alabama’s state government needs more revenue to sustain its current operations and to deal with increasing costs.

“It’s going to require more revenue,” Bentley told the Associated Press. “Is everyone going to be happy? No, they’re not.”

That may be an understatement. Alabama has a well-earned reputation for being of the most anti-tax states in the country. Perhaps most notably, just over a decade ago 68 percent of Alabama voters rejected a $1.2 billion tax hike known as Amendment 1 that was being pushed by Bentley’s Republican predecessor Bob Riley.

And it’s hard not to note the parallels between the current budgeting predicament and the situation in which Riley found himself in 2003.

According to the Center for Individual Freedom, Riley inherited a budget shortfall of $675 million — a dire prognosis by any measure. But according to Bentley, Alabama’s current budgeting woes may be even worse.

“If you did things right, it would be $700 million,” Bentley said of the current General Fund Budget shortfall.

He gets to that number by adding the $125 million owed to the federal government for Medicaid; $140 million for cost increases in Alabama’s beleaguered prison system and Medicaid; $160 million owed to the state’s rainy day fund; and a few hundred million that is still owed to various other places from which the state government borrowed to prop itself up.

“I’ve made a promise that taxes would be my last resort on issues,” Bentley told the AP, and he was even more explicit during his re-election campaign. The phrase “No New Taxes” was featured prominently in most of his campaign advertising.

Bentley has rejected incessant calls for him to go back on his promise not to expand Medicaid, so it’s hard to imagine him wilting under the pressure and breaking his no new tax pledge.

So what options does that leave on the table?

Expanding gambling in the state has been one of the most frequently discussed options in recent months, but Bentley downplays its viability as a significant source of revenue.

“The way we’ve been looking at it, we’re really not going to get that much money out of a compact,” Bentley said in reference to a so called “gambling compact” the state could enter into with the Poarch Creek Indians, who operate gaming facilities on tribal lands. “We’re really not going to get that much money out of a lottery for a small state like Alabama… The two of them together might add up to $200 million.”

Readdressing current tax deductions is another option being discussed, but it would be very difficult for the governor to argue that eliminating deductions somehow does not constitute a tax hike.

“We’re one of the only states in the country that allows FICA to be deducted off of your state income tax,” Bentley said by way of example. “We’re one of the only states in the country that allows the full deduction of your federal income tax off of your state income tax.”

Alabama is also one of only three states in the country that operates out of two separate budgets — the Education Trust Fund (ETF), which obviously funds the state’s education system, and the General Fund (GF) that funds everything else. As a result of the control the Alabama Education Association (AEA) had over Alabama’s state government for decades, the vast majority of the growth taxes are funneled into the ETF, often leaving the GF incapable of meeting its responsibilities.

Some lawmakers have expressed their belief that combining the two budgets is the longterm solution that makes the most sense, but they concede that it may not be politically palatable at this point.

In an effort to patch the General Fund shortfall in previous years, line items that have traditionally appeared in the GF were moved into the ETF. Republican legislative leaders have discussed the possibility of moving some of the growth taxes from the Education Budget into the General Fund in return for moving those items back to their traditional side of the budgets, but those discussions are only tentative at this point and will be ongoing for the next several months ahead of the 2015 legislative session.

Making matters worse, 88 percent of Alabama’s tax revenue is earmarked. That’s by far the highest percentage of any state in the country, and it leaves very little flexibility for lawmakers to increase government efficiency or to move money around to patch holes.

But even with those challenges, the governor and Republican legislative leaders partnered over the past four years to cut over $ 1 billion per year in spending. Senate President Pro Tem Del Marsh (R-Anniston) has frequently referred to the effort as “right-sizing” state government.

With campaign promises having taken new taxes off the table and very few legitimate options available to increase revenue, economic growth and government “right-sizing” will need to continue if Alabama hopes to fulfill its obligations.


Follow Cliff on Twitter @Cliff_Sims
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7 hours ago

Port of Mobile welcomes home a Harley-Davidson used during World War I

A true piece of history arrived at the Port of Mobile yesterday.

The 1918 Harley-Davidson Model J motorcycle was brought over from France to drive on American soil for the first time since it was manufactured some 100 years ago.

Its current stage of life began about 10 years ago when a wealthy Frenchman named Christophe de Goulaine, of the notorious Château de Goulaine in Nantes, purchased the Model J and had it refurbished, with the intentions of bringing it home to its land of birth.

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Last month, the Harley was put on a ship docked at Port Saint-Nazaire in France and sailed to Alabama’s Port City.

Until Monday, the GulfQuest National Maritime Museum in Mobile will be displaying the Model J for visitors to see though on Saturday morning, those who want to see it will have to visit the Mobile Bay Harley-Davidson.

“We thought it was a rare opportunity for us to showcase a piece of military history that transited seaports 100 years ago, assisted the war effort, and found its way back home through the Port of Mobile,” Brent Beall, Interim Executive Director for the museum, said in a press release.

After that, de Goulaine and the bike’s restorer, Pierre Lauvergeat, will drive it all around the country: first stop, Jacksonville, Florida.

The two also intend to stop in Milwaukee, Wisconsin, at the Harley-Davidson Headquarters.

“In all, we plan to complete 9000 kilometers (5600 miles) on a 1918 motorcycle without any special technical assistance,” de Goulaine said.

8 hours ago

Are we making the opioid problem worse?

Opioid abuse is taking a tremendous toll on America, with 42,000 opioid-related deaths in 2016 and 343 in Alabama.  The problem involves both prescription opioid-based painkillers and illegal heroin and fentanyl.  Might our public policy response be worsening this terrible problem?

Economists have analyzed prohibition, both alcohol in the 1920s and illegal drugs more recently.  We evaluate prohibition, or any other government policy, by comparing the world with and without the policy in question.  This necessarily involves a state of the world which does not exist.  We will never see the toll opioids would have taken in 2018 if we had significantly different policies in place.  We must construct an alternative.

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Rules govern the construction of alternatives to produce meaningful comparisons. One key is allowing only the policy to vary, not other factors, so differences can be attributed to alternative policy.  For example, prohibition does not automatically stop people from taking a substance.  Some potential users will be deterred because of illegality, but others won’t, as we saw with alcohol in the 1920s.

Economic analysis distinguishes harm from the substance itself and those due to prohibition.  Drug violence, for example, is almost entirely due to prohibition.  Dealers’ cash and drugs are vulnerable to theft, and these thefts will not be reported to the police.  Dealers will use violence to protect, steal or retrieve drugs and money. Walgreens and CVS do not have gun battles to control the OxyContin market.

Prescription painkillers provide a distinctive twist to the opioid crisis.  Introduction of opioid painkillers in the 1990s opened new options for millions of American pain sufferers.  Prescription drugs occupy a middle ground in prohibition, legal under government-approved conditions and illegal otherwise.

Perhaps the major controversy for policy and lawsuits brought by dozens of states and cities against drug companies is the addictiveness of opioid painkillers. Studies in leading medical journals show that perhaps one or two percent of patients using the drugs as prescribed become dependent.  Many of the Americans addicted to painkillers obtained them on the black market or through a bogus prescription.

In 2010, the Food and Drug Administration reformulated OxyContin to make the pills harder to crush and make into more potent opioids.  Other restrictions on prescribing followed, and pill mills have been shut down.  In Alabama, opioid prescriptions declined 17 percent between 2013 and 2015.  Yet the crisis has become much deadlier since 2010, with heroin- and fentanyl-related deaths increasing by factors of five and six respectively, with only a slight decline in prescription-related deaths. (Overdose victims often used more than one narcotic, so deaths are described only as related to a drug.)

Heroin, especially when laced with fentanyl, is far deadlier than prescription opioids.  It is tragic when people fall into substance abuse, which often happens after traumatic life events.  Rehab is often not effective until people decide to change their lives.  Unfortunately, public policy may only be able to limit the harm during a dark period in people’s lives, and ensure the availability of help when requested.  Forcing people to turn to heroin by restricting access to painkillers increases harm.

Restricting access to prescription opioids is costly.  Many people can no longer successfully manage their chronic pain, with tragic consequences.  In some documented cases, patients have committed suicide after being denied painkillers.  Any policy limiting access for people who do not “need” painkillers will deny some patients in pain needed help because pain is subjective; no doctor or nurse can know if it is tolerable.  And a strong argument exists that American adults should be able to decide how to treat their pain without the government’s approval.  Libertarian psychiatrist Thomas Szasz argued that free people have a right to drugs.

The concentration of the opioid deaths in regions with dwindling manufacturing and mining jobs suggests a significant economic element to the crisis. And this, to me, is the crisis’ most disturbing element.  America today boasts tremendous prosperity and opportunity.  Given the high overall quality of life today, why is the economy seemingly leading so many Americans to addiction?

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

9 hours ago

Alabama Rep. Mike Rogers says Mueller probe should be ended by ‘Jefferson Beauregard Sessions’

The numbers do not lie: America is clearly starting to turn on the Special Counsel investigation by Robert Mueller. The IG report on the FBI cast more doubt on some of the players involved and the non-stop media coverage has Americans growing weary. U.S. Representative Mike Rogers (R-AL) told WVNN and Yellowhammer News that this investigation needs to stop now:

“I want it stopped now. I called for that about two weeks ago,” Rogers said. “We’ve passed the one year mark, we have spent $25 million dollars. This town leaks like a sieve on anything and particularly with this group of folks if they had anything it would of been leaked out months ago. Even if they have something, they need to tell us, it has been a year and $25 million dollars. I am a recovering attorney, I know exactly how lawyers work, these people are going to keep running the clock as long as we are willing to keep writing checks every month and paying them.”

Why this matters:

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Congressional Republicans who were inclined to “let this play out” are now openly calling for this to end. They are sighting the lack of results, the length of the investigation, the costs, and even the cloud it is casting over the country.

When asked who should be the one to end the investigation Rogers did not miss a beat, he put that task on one of Alabama’s favorite sons “Jefferson Beauregard Sessions.”

Listen to the interview here:

@TheDaleJackson is a contributing writer to Yellowhammer News and hosts a conservative talk show from 7-11 am weekdays on WVNN

Why Mike Kemp’s withdrawal from BCA is highly significant

As reported earlier today, BCA Progress PAC Chairman Mike Kemp has resigned his position and withdrawn his membership from the group. Kemp was also set for installation as Chairman of BCA later this year.

The Yellowhammer Multimedia Executive Board has obtained a copy of Kemp’s letter of resignation to BCA Chairman Perry Hand. The letter is dated June 20, 2018.

Based upon Kemp’s position in the organization and the reasons he states for his withdrawal, his leaving BCA is a highly significant development in this ongoing saga.

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Kemp served as Progress PAC Chairman and was next in line for the BCA chairmanship.

The funds in Progress PAC, the BCA’s campaign finance apparatus, typically swell above $2 million during any given state election cycle. As this year’s Progress PAC chairman during a busy state election cycle, Kemp was right in the middle of choosing on whom those dollars got spent. Overseeing the distribution of that kind of money brings with it a tremendous amount of power and influence.

Kemp was also set to take over as the next chairman at BCA. The list of people who have held that position reads like a who’s who in the Alabama business community the last 30 plus years. Kemp was set to join an elite group of business leaders.

No one gives all this up lightly.

And so one can imagine that it took grave concerns about the organization’s direction and actions for him to forego the opportunities that lay in front of him.

Kemp’s stated reasons for withdrawal reveal that deeper problems may exist within BCA.

One passage, in particular, jumps out in Kemp’s letter:

“We must also demonstrate unwavering integrity in communicating with and managing the resources of our membership, to whom we are ultimately accountable. This is particularly true in a time of crisis, like the one before us. I am disappointed that the BCA leadership’s actions to date have failed to meet these standards, and as such, are antithetical to my views in all respects.”

Without elaborating in more detail, Kemp clearly identifies internal communications and financial management as contributing factors to his withdrawal. The organization recorded annual expenses of $4.7 million, according to IRS documents filed in 2016. With so many large members having left already, BCA will likely encounter an even greater budget shortfall. Time will reveal the severity of these shortfalls given that any proposal to dip into organizational reserves requires adoption by the full 132 member board. Additionally, according to multiple sources, a full financial audit of the organization is being pursued.

Attempts at communication within BCA were poor. We have been told repeatedly by current members of the Executive Committee that no one was updated with any regularity. The details surrounding transition were murky. Members feel as if they are being kept at arms-length.

Kemp was a trusted mediator.

Kemp worked diligently to find a solution to the problems that have contributed to this crisis. Other members trusted Kemp based upon his prudent and measured approach. He was making a genuine, good-faith effort to preserve the mission of the organization and improve our state’s economy.

The fact that he has withdrawn completely from BCA would indicate that the group’s leadership has strayed too far from its mission and the problems are beyond repair.

The Yellowhammer Multimedia Executive Board is comprised of the owners of the company.

11 hours ago

Birmingham doesn’t make the cut for 2020 DNC Convention

Houston Mayor Sylvester Turner says Houston, Milwaukee and the Miami area are the finalists to host the 2020 Democratic National Convention.

The mayor says Denver also made the party’s short list but has withdrawn its bid.

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A Denver city spokeswoman, Amber Miller, tells the Houston Chronicle that scheduling conflicts forced Denver to bow out.

Turner, a Democrat, told City Council members Wednesday the trimmed field makes Houston’s chances for hosting Democrats “exponentially better.”

The city last hosted a Democratic National Convention in 1928. Republicans gathered in Houston in 1992.

Toyota Center, home to pro basketball’s Houston Rockets, would be the main convention site.

Atlanta, New York City, San Francisco and Birmingham, Alabama, also were seeking the convention.

(Associated Press, copyright 2018)

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