MONTGOMERY, Ala. — “We’re going to be raising revenue,” Alabama Gov. Robert Bentley said late last week. “Our goal is to raise revenue. We have to raise some revenue.”
The governor and legislative leaders have in recent weeks been laboring over what to do about an estimated $260 million hole in the state’s General Fund Budget.
In recent years, the state has relied on one-time fixes in the form of cash from the federal government or loans from various rainy day funds to prop up the state’s operations. In the mean time, Republicans have cut over $1 billion a year from the budgets.
Legislative leaders say they hope to do more.
“There’s a lot that needs to be done before you talk about raising taxes on working families,” State Sen. Arthur Orr (R-Decatur) told the Decatur Daily. Orr Chairs the General Fund Budget Committee in the Senate, making him a leading player in the search for a longterm budget solution.
At the top of the list of priorities for Republicans in the Legislature is more consolidation and streamlining of state government agencies.
“I’m not going to support any tax increase,” Senate President Pro Tem Del Marsh (R-Anniston) said earlier this year. “I look at this as a further opportunity to right-size government.”
Marsh has led an effort to reduce the size of state government through attrition. The state’s workforce has been slashed by 11 percent since 2011. Marsh believes there may be ways to cut it by 9 percent more.
Bentley praises the combined efforts of the Administration and Legislature to scale back the size of the state bureaucracy.
“For the last four years, we have really worked hard to streamline government,” he said in a recent radio interview. “We have made it more efficient. We have saved $1.2 billion annually… and we have actually cut the size of government by twelve-and-a-half percent. There’s no state in the country that has cut their government… like we have. And no one has saved that amount of money — percentage-wise — of their budget.”
But while most legislative leaders have shown an intense aversion to raising taxes, Gov. Bentley — who once signed a pledge to Alabama voters promising he would never raise their taxes — has tossed aside his campaign rhetoric and openly pushed for tax hikes since winning re-election.
Most notably, Bentley floated the idea of revoking Alabamians’ ability to deduct the amount they pay in federal income taxes from their state income taxes, as well as eliminating the deduction for FICA payments — the 7.65 percent from employees’ paychecks that goes toward Social Security and Medicare.
That idea was met with a firm “no” from House Speaker Mike Hubbard, who said that eliminating the federal income tax deduction “would basically require individuals to pay state taxes on their federal taxes, which is money they never even received.”
House Majority Leader Micky Hammon (R-Decatur) also said he would be “standing firm” against any tax hike proposals.
Lawmakers are particular concerned about being asked to raise taxes in 2015 after having just declared 2014 the “Year of Taxpayer Relief.”
With bills such as the Small Business Tax Relief Act, the Business Tax Streamlining Act, the Tax Elimination Act and the Taxpayers’ Bill of Rights, 67 percent of the bills on the 2014 Alabama House agenda were either a tax credit, a tax cut or an attempt to otherwise ease the tax burden on individuals and small businesses.
Republican’s opposition to tax hikes was most evident after a recent speech Bentley delivered during the legislature’s new member orientation.
Bentley urged legislators to follow his lead, noting that he would not have to face re-election again. “Don’t cower away from the difficult things we’ve got to face,” he said.
Lawmakers expressed optimism that the moment to find a longterm solution to the state’s budget woes may have finally come, but were dismayed at the prospect of raising taxes because they, unlike Bentley, will have to face the voters again in four years.
“I think there’s an appetite to do something bold and even some excitement about what’s going to be proposed,” one Republican operative told Yellowhammer. “But a lot of the members (of the Legislature) don’t think raising taxes is bold. They think it’s political suicide and compromising their principles.”
The governor says he will begin talking more specifically about his proposal in January. The Legislature will convene for the 2015 session in March.
1. GOP lawmaker says if Bentley wants to be ‘courageous,’ he should lead massive budget reform
2. Norquist: There’s no ‘wiggle room’ in Bentley’s pledge not to raise taxes
3. Bentley concedes eliminating deductions is a tax hike, discusses asking Obama for Medicaid waiver
4. Alabama Rep: Abolish state income tax, move to consumption tax — ‘It’s the only tax illegals pay’
5. Americans for Tax Reform hits Bentley for trying to ‘raise taxes on Alabama families’
6. Sims: Bentley’s claim that eliminating deductions isn’t a tax hike is ‘absurd’
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— Cliff Sims (@Cliff_Sims) December 3, 2014