Gov. Robert Bentley recently proposed a plan to increase certain state taxes as a way to shore up a $700 million shortfall in the general fund budget, but some local legislators feel more can be done to cut state spending before steps are taken to raise revenue.
Bentley’s plan would inject $541 million into state coffers by increasing taxes in some areas and closing tax loopholes. The plan targets eight taxes in all, according to a statement from Bentley’s press office, including an increase of 4 percent on the tax paid for automobile sales and an increase to $1.25 per pack on the cigarette and tobacco tax.
Those two moves together would increase state revenue by $405 million, according to the statement. The plan would also increase the automobile rental tax to 4 percent, and would remove certain tax credits related to corporate income tax, financial institution excise tax, insurance premium tax, public utilities license tax and individual income tax.
“We have spent the last four years making government operate more efficiently and effectively, saving the taxpayers over $1.2 billion annually,” Bentley said in the statement. “As we begin the 2015 legislative session, one of the most serious issues we face is the funding of our state’s general fund. We have debts that must be repaid and we must help our two largest agencies — Medicaid and corrections — with funding increases.
“I am presenting a plan that will increase revenue in the general fund and make taxes more fair and equitable for everyone,” he added.
Additionally, Bentley plans to remove earmarks from another $187 million to make up the rest of the shortfall.
The general fund supports most non-education related functions of state government. According to the statement, a temporary fix for the budget concerns in the past has been one-time revenue, but that revenue is no longer available.
As the second week of the legislature continues, Bentley’s tax plan will be one of the more hotly debated topics and could take the entire session or more to resolve.
Sen. Trip Pittman, of Fairhope, agrees the Alabama Department of Corrections needs additional funding, but said he’s against raising taxes.
“I think it’ll be hard to pass without doing all we can to save money,” Pittman said of the tax plan.
He admitted it doesn’t seem like there is enough to cut and that some new revenue would have to be raised. This year, unlike in previous years, Pittman said the legislature can not look to cut the corrections budget because “corrections needs more money, not less.”
Additional revenue is needed in corrections for more parole officers and diversion programs, Pittman said.
He added that Medicaid will increase by $100 million this year. Like other state lawmakers, Pittman is against the expansion of Medicaid through the Affordable Care Act, calling it “unsustainable,” even though it would mean additional federal money for the program for a limited time.
“At the end of the day somebody ultimately has to pay for it,” Pittman said. “There’s no free lunch.”
Sen. Bill Hightower of Mobile said he has asked for more detailed information on the magnitude of the state’s problem. He said there seems to be a debate over how bad the problem really is.
Hightower said he has not seen Bentley’s plan in bill form, but added that he would like to see a tax decrease instead of an increase, an accomplishment that can be reached by better budgeting.
“If you don’t have the money, you need to cut spending,” he said.
Although he advocated cuts to other areas, he admitted that if problems within The Department of Corrections aren’t solved and the federal government has to intervene, it would end up costing the state more money.
Hightower said the state should do more to help former inmates find jobs in order to help cut down on recidivism. For instance, he said, the state could remove restrictions on felons’ drivers’ licenses to start.
Additionally, work should be done to identify at-risk youths before they become part of the prison system. More could also be done for mental health care in the state, he said.
Chris Pringle, who has officially started his second stint as a State Representative for Mobile County, said a tax increase would be a hard sale. He blamed the cost of Medicaid, which he said has tripled since when he left office last in 2002. Pringle said he too opposes expansion through the ACA because the “money cuts off after a while.”
“Everybody would love to get money to help people, he said. “How will you pay for it when the federal subsidy goes away and there’s no taking it back?”
State Rep. David Sessions of Mobile said he doesn’t know how Bentley chose the taxes he’s proposing, but he’s not crazy about them.
“The people that are being taxed keep getting hammered,” Sessions said. “I think there’s some more cutting to do. I think we can grow the economy a little bit.”
Phone calls last week to the local legislative office of Sen. Vivian Figures and Rep. James Buskey went unreturned as of press time. A call to Rep. Napoleon Bracy was also not returned by press time.