Republicans overrule Democrats to pass $129M tax hike in Alabama House committee

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September 9, 2015

Republicans on the Alabama House General Fund Budget Committee on Wednesday approved a package of tax increases, over the objections of four of the five Democrats on the panel.

In total, House Republicans, led by General Fund Budget Chairman Steve Clouse (R-Ozark), approved $129 million in tax increases targeting a variety of groups and individuals.

The tax increases are as follows, listed in order from largest to smallest:

— Increase cigarette tax to 67.5 cents per pack ($66 million)
— Double the maximum business privilege tax to $30,000 ($22 million)
— Increase car title fee from $15 to $28 ($19 million)
— Increase tax on car rentals from 1.5 percent to 2 percent ($6 million)
— Increase taxes on nursing homes by $400 per bed ($8 million for Medicaid)
— Increase taxes on pharmacies by adding a new 15-cent tax per prescription ($8 million for Medicaid)
— Create “porn tax” on adult magazines, movie rentals and strip clubs (unknown)

Democrats said they were for raising taxes, too, but would prefer a broad based tax increase on property.

Committee passage was a small but important first hurdle the tax package needed to clear. It also signals a change in momentum for tax hike advocates, including Rep. Clouse and House Speaker Mike Hubbard (R-Auburn).

Conservatives narrowly defeated the cigarette tax in committee during the previous session, but have endured intense lobbying from their leadership in recent weeks.

GOP leaders may still need to cobble together the support of at least some Democrats to get the package through the full House, as a group of conservative lawmakers continue to voice their opposition to raising taxes.

House leadership’s budget plan expects $70 million in tax revenue to be moved from the Education Budget to the General Fund, although that has not yet been approved. The Education Budget Committee also agreed to a one-time transfer of $50 million from the Education Budget’s surplus to the General Fund.

Rep. Clouse said all of the revenue measures will allow legislators to level-fund the court system, as well as the departments of Human Resources, Mental Health and Public Health. Other agencies would receive cuts between 1.5 percent and 8 percent.

The General Fund Budget is expected to come before the full House for a vote on Thursday.