Here at the shiny new Lagniappe HQ on Government Street, we’ve been blessed with visits from a few of the folks running for governor this year. They’ve been from both political parties and stopped by to talk with us about their ideas, should they be fortunate enough to win over the hearts and minds of Alabama voters.
And while their plans vary, one bell is rung repeatedly on both sides of the political divide: the state needs more money.
Yeah, that’s nothing new. Alabama’s a poor state featuring the nation’s lowest property taxes. We lean as heavily on sales taxes as any state in this great country and are constantly at the mercy of the fluctuations inherent in such a revenue stream. To wit: When people decide not to buy things, the government runs out of money.
I’m a pretty big a fan of fiscal responsibility and frugal government spending and certainly don’t like giving government more of my money than I must, but over the years it’s become pretty obvious this state constantly runs on the fumes produced when two pennies are rubbed together. The one thing we hear over and over again from the people elected to run our state, cities and counties is that money is as rare as a Nick Saban smile.
And that’s to be expected, to a degree. Politicians don’t typically go around saying, “Well, folks, we’ve got so much of your money sitting in the bank right now we’re thinking of dumping half of it into bitcoin to really maximize profits!” There’s always something in need of more money, but in Alabama it’s hard to look at the schools, infrastructure and comparatively low tax burden and not wonder if our situation might be just a bit more dire than those of some of our brother and sister states.
We’ve hitched our wagon to the sales tax star and that’s always been a rather fickle relationship. But it becomes even more difficult in these times when online shopping is placing more and more pressure on brick-and-mortar businesses, and consequently the sales tax streams coming into cities, counties and the state.
Just to give you an example of where things are, Alabama cities are currently fighting an effort at the state level to make changes in the Simplified Sellers Use Tax (SSUT) that municipal leaders call a Montgomery “money grab” and have decried as a statewide municipal budget-crusher. In a nutshell the bill, sponsored by local state Sen. Trip Pittman, would allow Amazon.com to continue participating in the SSUT despite its purchase of Whole Foods. As it has operated, the SSUT gathers an 8 percent voluntary sales tax from online retailers with no brick-and-mortar stores in the state.
While the law would allow Amazon to continue doing what it’s already doing, the fear is that others — Wal-Mart in particular — could claim their online entities are actually separate from their physical stores and attempt to save a couple of percentage points of sales tax by moving into the SSUT. The problem there, cities say, is that essentially will gravitate money from individual municipal coffers to the gaping maw known as the state’s general fund.
Confusing, I know. The point I’m trying to make is that money is so hard to come by in this state that should this law change actually do what cities fear it will, giant holes will be knocked in municipal budgets statewide. Mobile Mayor Sandy Stimpson’s office estimates a loss of $10 million to $13 million annually should other businesses actually be able to use the law change to move into the SSUT.
So here’s the irony of that situation for John Q. Taxpayer in Mobile. JQT might be personally excited if some of his favorite online shopping sites suddenly were charging him 8 cents on the buck instead of 10, but at the same time he may still be longing for that magical day when “da’ penny” comes back off the city’s sales tax. But there’s zero chance of that ever happening if a $13 million hole is blasted in the city budget by an SSUT change.
The SSUT battle is just a symptom of the overall issue. As online shopping becomes more and more prevalent, municipal and county tax collections diminish. Meanwhile the state already has more holes in the boat than it can plug.
Alabama looks to sophisticated manufacturing in general as the wave of the future, even at a time when the future may well have “Domo Arigato Mr. Roboto” as its theme song. Reading just about any serious consideration of where the U.S. economy’s future challenges lie is nerve-wracking, to say the least. Many experts foresee humans becoming obsolete in manufacturing, retail, transportation and other fields as robots and other technological advances become more sophisticated. Even if the eggheads are only half right, that could mean a lot of people out of work.
The only way to be ready for those challenges is to retool our educational system, which leads back to addressing Alabama’s constantly empty pockets.
One of the most obvious solutions is scrapping the world’s longest and most patched-together constitution and resetting state and local budgets with property tax as a more important part of the equation. But the average Alabama voter still would rather kiss Hillary Clinton on the lips than consider increasing property taxes, regardless of the fact that the people who benefit most from the current situation typically hold vast tracts of land.
So what then?
Get ready for a statewide lottery and even possibly the expansion of casino gambling to be major subjects in the upcoming gubernatorial election. Of course the lottery was shot down before, but that was nearly 20 years ago and certainly none of the other proposed fixes have really moved the needle much since then.
Sure, the same old objections will be trotted out — lotteries prey upon the poor, and the Bible says gambling is a sin. But I’m not sure continuing to rely upon regressive sales taxes that clearly take a bigger percentage of the poor’s money rather than the rich’s is any kind of moral victory. And there are few places in this state more than an hour’s ride from a casino as it is, so why have Alabama citizens take their money to go sin in some other state?
Creating a lottery and expanding gaming isn’t a total fix for this state’s problems, but it would certainly bring in enough money to at least have a realistic chance of addressing the bigger issues looming on the horizon.