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Alumni Newsletter of Jacksonville State University Special Edition 2003
What Will Happen toJSU if the Tax Plan Fails?
Paid for by the Alumni Association
Why You Should Vote
Yes on September 9th
Accountability
Campaign for
Alabama
Frequently Asked
Questions
An Overview
Facts at a Glance
Sample Letter
Resources on Web
Tax Reform and
Accountability Plan
Summary of Package
Elaine Witt
Inside this Issue
VOTE YES September 9th
Every Alabamian willshare the consequences ifvoters turn down the taxreform and accountabilityplan during the September9th referendum. Howeversome of the hardest-hit citi-zens will be college studentsand their parents. They willface sharply increased tuitionon top of the latest round oftuition increases required tofill the gap following morestate cutbacks.
At JSU, where tuition was raised $150 per semester in April2003, bringing the cost of one academic year to an all-time high of$3,540, the best estimates show that tuition could easily soar an-other ten percent if the governor’s tax plan does not pass.
More than ten percent of JSU's approximately 9,000 studentsare working adults who go to school part time. Further increasesmight lead some of these adults — who have families to providefor — to delay their education, make deeper cuts in their familybudget to afford rising tuition, or go deeper in debt to fund a col-lege degree.
Possible tuition increases are just the tip of the iceberg.Other problems JSU students and employees would face, shouldvoters reject the governor’s tax plan, include:• LARGER CLASSES AND FEWER CLASS OFFERINGS.
Budget cutbacks would force JSU to leave many faculty posi-tions unfilled. Retiring or moving faculty would create job open-ings that the university could not afford to fill. Students whoneed a particular course to graduate might find that sectionsare filled, leaving them no alternative but to stay another se-mester or longer before being able to take that course andgraduate. A related problem is the loss of faculty to out-of-stateuniversities that pay higher salaries. JSU and other state universi-ties will not be able to compete on salaries for professors in high-demand fields. The bottom line: students would suffer by havingto wait in line for a smaller number of available classes.• LOSS OF UNIVERSITY AID FOR STUDENT WORKERS.
Most of JSU’s full-time students depend upon campus jobs topay a portion of their college expenses. Students who do notqualify for jobs funded by federal assistance are presently hiredwith University Aid money, which means JSU pays the wages di-rectly. Cutbacks would eliminate or reduce University Aidjobs, leaving students with no choice but to seek part-time em-ployment in the local market, which is already glutted with un-employed adults seeking work of any type. In many cases, a part-time University aid position is the deciding factor in whether astudent can afford college.
• SCHOLARSHIPS WOULD BE CURTAILED.As is the case with all universities, JSU funds many scholar-
ships. The curtailment or elimination of Leadership Scholar-ships and many others will affect hundreds of graduating highschool seniors and currently-enrolled upperclassmen.• STUDENT HOUSING WOULD SUFFER.
Housing approximately a third of JSU’s student population isa labor-intensive and expensive service. The costs of maintainingdormitories and paying utilities are enormous.JSU might have to consider outsourcing student housing.• ACCREDITATION WORK WOULD BE JEOPARDIZED.
If the tax reform package is rejected, JSU might not have thefunds to pay for costly additional books, periodicals and othermaterials needed by the Houston Cole Library to fulfill a South-ern Association of Colleges and Schools (SACS) reaccreditationstandard. In addition, expensive technology and computer up-grades required by SACS might not be possible.• COMMUNITY OUTREACH / ECONOMICDEVELOPMENT MIGHT BE RESTRICTED.
JSU would have to cut back on hundreds of free or low-cost community outreach programs — everything from basicskills workshops, seminars and professional development pro-grams to tutoring and refresher classes for public school children.Economic development programs, such as those provided by theCenter for Economic Development that provide counseling tosmall business owners and consultants to community planners,would face cutbacks.• ATHLETIC AND MUSIC SCHOLARSHIPS WOULD BETHREATENED.
Athletic and music programs are a major part of a collegeexperience. Both programs aid in recruiting students and boostcommunity support. JSU would have no choice but to decreasethe number of scholarships available for student recruitment andwould have to consider possibly eliminating some programs.
No one knows for sure how deep the cuts would go at JSU tomake up the difference between what it really takes to run theUniversity and what the state can afford to allocate without taxreform.• LAYOFFS? ELIMINATION OF ENTIRE PROGRAMS?IN A DRASTIC SITUATION, EVERYTHING MUST BECONSIDERED.
Unless Alabama voters approve the governor’s tax reformpackage on September 9th, there is a chance that JacksonvilleState University as you know it today may have a future lessthan what we have built.
The contents of this publication will provide you witheverything you need to know — including additional resourceson the Internet — to reach an informed decision. I hope youwill join me in voting in favor of the tax reform packageon September 9th.
Bill Meehan, JSU President
This reform plan provides a once in a lifetimeopportunity. We cannot let this program fall short
of the votes that are necessary for passage.Therefore, we are asking every university
student, employee, and alum to make sure theycan answer the simple question, “Am I doingall I can to help change Alabama and resolve
our state’s funding crisis?” Make sure youhave no regrets on September 10th,
take action today!
Dr. David Bronner, CEO of theState Retirement System, hassome strong words in favor of theproposed tax reform package.
QUESTION: What do you think ofthe tax reform plan?BRONNER: Number one, nothing iseasy in Alabama, much less taxes. Ithink the governor has to convincenot only the legislature but thecitizens of this state that they shouldinvest in themselves.
We have a situation where wereally are at the crossroads. Wehave worn out all the Band-Aidsand bandages, so you either haveto make a decision to invest inyourself for the future or you canhave mediocrity and stay at thebottom.
The governor’s job will bedifficult, but I don’t think it will beimpossible. He has got a couple ofgreat things going for him. Numberone, he is a Republican who hasnever voted for a tax in his life. So, ifthe average person in Alabama can’tunderstand that he’s saying we needsome extra revenue then those peopleare beyond help anyway.
Low StateTaxes
are Good,but the
Lowest inAmerica is
Dumb
The second thing is thatprobably 66 to 70 percent of thepeople either are not affected [bythe tax plan] or come out ahead.So, if those people cannot understandthat for an improved Alabama, then,again, we deserve to be where we areat the bottom.
I think the governor is 100 percentright that you can’t live on the cheapforever. You simply cannot have the
Why You Should Vote YES on September 9th
lowest taxes in America in order tobe competitive with the other 49states.QUESTION: Times are bad forstate governments everywhere, butare some states handling the pooreconomy better than others? Whichstate would you say is a good rolemodel for Alabama?BRONNER: Most states are a goodrole model for Alabama. You can’tbe in the bottom two or three statesconsistently in everything if youdon’t have a whole bunch of rolemodels.
Other states have problems rightnow, but they also have — and havechosen — the opportunity that Gov.Riley is going to give the citizens ofAlabama, and that is a chance tocorrect some of the problems.QUESTION: In your opinion, whyhave governors had such a hard timecorrecting the budget problem inAlabama?BRONNER: Most people inAlabama have what I call theChicken Little syndrome. They haveheard for so many decades that thesky is falling, and they don’t doanything about it, and lo and beholdthe government somehow still existsand the sun still rises the next day.
The problem is that all the neatlittle methodologies that have beenused for the last two or three decadeswere Band-Aid approaches thatcreated more problems than theysolved.
I think for the first time in thehistory of the state, at least in thethirty plus years I’ve known thisstate, the people will be given anopportunity to do somethingmeaningful that will correct theirperception. Sometimes they had acorrect perception of governmentbeing bad and corrupt, but there arestill good people in government whodo care and want to providenecessary public services. You wantto support those people and youwant to support things like publiceducation because that will simplymake everybody’s life better.
It’s not like some people aresaying, that the politicians, whenthey want more money, always say,‘Oh, the poor children.’ Well, the
children are poor in this state. I cantake you all the way back to 1901and I can show you that we havetraditionally under-funded educationin this state compared not only tothe whole country but to thesoutheast.
— Dr. David Bronner
Education is the key to gettinggood jobs whether they be withMercedes, Hyundai, Honda,Boeing, or any other goodcompany in the state. Education isthe key to the improvement ofquality in the state.
“
”
Tell yourTell yourFriends and Family to
on September 9th
How did we get here?A $675 million gap in Alabama’sbudget this year alone has beengenerated because of financialmismanagement, bad budget policy,reliance on one-time revenue sources,and accumulation of debt. Combinedwith the rising costs of state servicesand the sluggish economy, Alabama isfacing its worst fiscal crisis since theDepression.
How bad is it?Without this package, critical stateservices must be cut:• 6,000 seniors forced out of
nursing homes, 800,000 meals forthe elderly eliminated
• 450,000 of our citizens would loseaccess to healthcare
• Over 25 school systems would beforced into bankruptcy
• 5,280 prisoners released andState Troopers cut by a 1/3
Have we done everything we can?Alabama has saved over $230 millionby banning pass through pork, cuttinghis staff by 30%, revoking and selling600 state cars, freezing merit raisesfor state employees, and reformingthe Medicaid Drug Program.
What can we do? Three choices:• Do nothing and let the axe fall.• Apply another band aid and find
ourselves here again next year.• Support the tax reform package:
Reform government, education,and revenue for a better Alabama.
What is the plan?There are two guiding principlesfor tax policy: keep taxes low, andmake taxes fair. Alabama has a lowtax burden and that’s a good thing.Low taxes make Alabama a greatplace to live and they attract business.If the referendum passes, we will stillbe in the bottom six in the country intax burden per individual. Our
of Alabama farms have less than 2000acres, so the family farm is protectedunder current use.• Seniors will remain exempt from the
state property tax on their home.
What guarantees accountability?• Create Sound Fiscal Policy in School
Systems. There have been someproblems with mismanagement offunds in our school systems aroundthe state. Currently, superintendentsand custodians of funds in our schoolsystems are not held to the mostrigorous standards of fiscal manage-ment. Just as CEOs are held respon-sible for creating sound fiscal policy,all superintendents and custodians offunds will be accountable for soundfiscal management and will berequired to pass a finance examina-tion. They will be required to reportrevenues and expenditures, tomaintain an inventory, to show bankstatements, in other words, to makesure that money is being spent wiselyand not wasted, on a monthly basis.For the first time, there will becriminal sanctions for deliberateaccounting fraud.
• Control Rising Costs. We will get ahandle on rising costs in state healthinsurance by increasing state em-ployee and teacher contributions tobe in line with southeastern stan-dards. Anytime a state employee getsa raise, he will also have to pay abigger share of his health insurance.
• Ban Pass Through Pork. We willpermanently ban pass through pork,the practice of the legislature movingmoney around without telling uswhere the money’s going, and makeit a punishable crime.
• Alabama Excellence Initiative Fund.All new revenues from the packagewill be appropriated from theAlabama Excellence Initiative Fund.Money from this fund must be re-appropriated every year so that it canbe used for the programs that most
property taxes will be well below thesoutheastern average and we will havelower property taxes than any state thatborders us. And that’s fair and reasonable.
How is revenue generated andfairness maintained?The referendum is centered aroundchanges in income and property taxes.
Income Tax:Income Tax:Income Tax:Income Tax:Income Tax:
67% of Alabamians will pay the sameor lower state income taxes than theydo now because the first $19,500 ofincome for a family of four becomestax exempt. The plan eliminates thefederal income tax deduction, whilemortgage interest, charitable contribu-tions, and medical expenses will remaintax deductible. All defined benefitpension income (teachers, governmentemployees, etc) will continue to beexempt, and for the first time, the first$40,000 of defined contribution pensionincome (IRA, 401k) will becomeexempt.For example:• A married couple with 2 children
and $20,000 of income will receivea tax cut of approximately $400
• An Alabama family of 4 making$40,000 annually will save about$150.
• A family of 4 making $74,000 willpay approximately $326 more.
• Business effective taxes will beraised from 4.2% to 6%.
Property Tax:Property Tax:Property Tax:Property Tax:Property Tax:Property taxes on the average home($80,000), currently about $23 a month,will increase by roughly $7 a month. A$100,000 home, currently about $30 amonth, will increase by approximately$11 a month. On farmland, the stateaverage is approximately $1.25 an acre;that will increase to $2.50 an acre onaverage. You may hear that we are notmaintaining “current use”. That is nottrue. Current use is being maintainedbut it will be capped at 2000 acres. 95%
need it and so that appropriationswill be clear and identifiable.
• We will increase the number ofyears new state employees have towork before they can draw fullbenefits from the retirementsystem.
• By changing tenure laws, we willmake it easier to fire incompetentteachers.
How does this help education?The referendum invests in ourchildren’s education so that theycan compete for better jobs andhave the opportunity to stay inAlabama. The referendum pays foran adequate education in the basicsso we can compete with our sistersouthern states.• College Scholarships. It gives
students incentive to excel and itgives our talented studentsreason to stay in Alabama byproviding college scholarships tothe best students at every school.
• Incentives for Teachers. To ensurethat Alabama students can getbetter jobs in today’s economy, wewill give incentives to teacherswho teach underserved subjectssuch as math and science.
• Alabama Reading Initiative. In 6years, Alabama will have the besttest scores in the country in themost important skill—Reading.
Summary
This reform represents a soundinvestment in Alabama’s future—not a distant future, but a futurewe can all share. Alabama can be astate where our children get theskills to compete, where they getgood jobs, and where they have theopportunity to live and raise afamily. Alabama’s tax system willbe fair and taxes will continue to beamong the lowest in the country.We will not throw money away oninefficiency. We will reformAlabama government by demand-ing sound fiscal management in ourschools, controlling rising costs,and firing incompetent staff. Wewill create a world class educationsystem. We will provide funding forthe Alabama Reading Initiativethat will give us the best readingscores in the country in 6 years,and for college scholarships for thestudents who excel in high schooland continue to excel in college.
Why does the state needmore money?
• Alabama is in the worstfiscal crisis since the GreatDepression.
• State indebtedness hasdoubled in less than 4 years,one time revenue has beenused to pay recurring expen-ditures, federal courts havemandated costly improve-ments in state prisons &mental health and explodinghealth care costs for teach-ers, state employees &Medicaid recipients havesubstantially outgrownrevenues. The current reces-sion has hit Alabama’sunstable system and willforce across the board drasticbudget cuts without in-creased revenue.
The deficit is only $675million. Why does this pro-posal raise more?
• Simply “filling the hole”means raising $675 millionto address only this year’scrisis. It won’t address anyof our long term problems-but will ensure that Alabamastays at the top of the “badlists” like infant mortalityand illiteracy.
• Making Alabama trulycompetitive for higherpaying jobs requires strategi-cally investing in education.“Fillin g the hole” without
and requires teachers andstate employees to startpaying a portion of theirhealth insurance costs.
• New revenue will be setaside in a new fund and usedfor targeted investments likethe Alabama Reading Initia-tive and college scholarships,not pork barrel projects.
Won’t this plan hurt oursenior citizens?
• No. Seniors (over 65) willpay no state property tax ontheir homes.
• Under the proposal, Alabamawill have the best pensionexemptions in the country forsenior citizens. Definedbenefit plans will be totallyexempt from income taxwhile 401k, IRA and all otherpension plans will be exemptup to $40,000. No other stateprotects it seniors’ pensionsas strongly as the proposal.
• Social Security income istax exempt under theproposal.
• If we don’t pass the proposal,mandated cuts would forceover 6,000 seniors out ofnursing homes, 450,000Medicaid recipients wouldlose access to health care andover 60 senior centers wouldbe closed resulting in 800,000fewer meals for seniors.
Q making improvements keepsAlabama permanently at thebottom of the economicladder.
• Alabama has moved fromcrisis to crisis for years. Wehave responded with Band-Aid solutions and every timewe have found that ourproblems were delayed, butnot solved. If we “fill thehole” again, we will findourselves back in thissituation next year.
Can’t we get out of this crisisby cutting waste and ineffi-ciency in government?
• No. Over $230 million hasalready been cut from state
government by reducing thenumber of state employees,selling off state cars, freezingpay raises & getting rid ofpass through pork spending.
• Unfortunately cuts are notenough. Additional revenueis required to fund basicstate services and supportany improvements ineducation.
• So much of state revenue iscurrently earmarked forspecific purposes that moneycan’t be redirected as needed.
Why send more money toMontgomery to be wasted orspent on pork projects?
• Alabamians have rightlybeen cynical in the past aboutwaste and abuse of taxpayerdollars. For the first time, theproposal includes majoraccountability reforms thatrequire financial safeguardsfor local school systems,bans pass through porkprojects, reforms tenure plansto make it easier to get rid ofbad teachers & administrators,
Q
Q
Q
Q
AdjustedGross Income
HEAD OF HOUSEHOLD, 1 DEPENDENT CHILD
State Federal NetHEAD OF HOUSEHOLD, 2 DEPENDENT CHILDREN
State Federal NetHEAD OF HOUSEHOLD, 3 DEPENDENT CHILDREN
State Federal NetSINGLE
State Federal Net
How the tax plan would affect citizens
AdjustedGross Income
MARRIED JOINT, 1 DEPENDENT CHILD
State Federal NetMARRIED JOINT, 2 DEPENDENT CHILDREN
State Federal NetMARRIED JOINT, 3 DEPENDENT CHILDREN
State Federal NetMARRIED JOINT, NO DEPENDENT CHILDREN
State Federal Net
Source: Public Affairs Research Council of Alabama
$10,300 -$95 $0 -$95 -$263 $0 -$263 -$248 $0 -$248 -$233 $0 -$233
$20,000 $52 $0 $52 -$248 $0 -$248 -$348 $0 -$348 -$447 $0 -$447
$30,000 $222 -$10 $212 -$47 -$100 -$147 -$206 -$200 -$406 -$306 $0 -$306
$40,000 $379 -$92 $287 $126 -$113 $13 -$32 -$200 -$232 -$191 -$300 -$491
$50,000 $628 -$304 $324 $372 -$128 $244 $213 -$216 -$3 $54 -$304 -$250
$75,000 $1,098 -$859 $239 $883 -$635 $248 $708 -$639 $69 $533 -$644 -$111
$100,000 $1,670 -$1,500 $170 $1,344 -$1,139 $205 $1,204 -$1,040 $164 $1,021 -$1,782 -$761
$150,000 $3,112 -$2,824 $288 $2,449 -$2,343 $106 $2,250 -$2,216 $34 $2,051 -$2,089 -$38
$200,000 $4,514 -$4,387 $127 $4,078 -$3,929 $149 $3,946 -$3,838 $108 $3,813 -$3,747 $66
$300,000 $7,792 -$7,204 $588 $7,599 $6,929 $670 $7,614 -$6,934 $680 $7,629 -$6,939 $690
$10,300 -$12 $0 -$12 -$80 $0 -$80 -$179 $0 -$179 -$232 $0 -$232
$20,000 $40 -$100 -$60 -$6 $0 -$6 $0 $0 $0 $0 $0 $0
$30,000 $50 -$138 -$88 -$105 -$192 -$297 -$223 $0 -$223 -$322 $0 -$322
$40,000 $182 -$138 $44 $23 -$222 -$199 -$136 -$319 -$455 -$266 $0 -$266
$50,000 $532 -$115 $417 $373 -$203 $170 $215 -$291 -$76 $56 -$379 -$323
$75,000 $924 -$1,084 -$160 $760 -$881 -$121 $601 -$573 $28 $442 -$423 $19
$100,000 $1,410 -$1,703 -$293 $1,235 -$1,701 -$466 $1,060 -$1,699 -$639 $885 -$1,697 -$812
$150,000 $2,163 -$2,771 -$608 $1,946 -$2,622 -$676 $1,735 -$2,471 -$736 $1,526 -$2,324 -$798
$200,000 $3,506 -$4,067 -$561 $3,329 -$3,953 $624 $3,153 -$3,838 -$685 $2,976 -$3,724 -$748
$300,000 $6,866 -$7,236 -$370 $6,833 -$7,210 -$377 $6,801 -$7184 -$383 $6,769 -$7,157 -$388
JSU graphic by Stacy Wood
If you still have questions
about how the Accountability and
Tax Reform Plan will affect you or
want to help in spreading the
word about this unique
opportunity in Alabama history,
please contact the Campaign for
Alabama at 334-263-6544334-263-6544334-263-6544334-263-6544334-263-6544 or
visit us on the web at
www.campaignforalabama.com.www.campaignforalabama.com.www.campaignforalabama.com.www.campaignforalabama.com.www.campaignforalabama.com.
Still Have Questions????Questions????Questions????Questions????Questions????
$7.00 a month more on an$80,000 home when the taxis fully implemented.
• A business owner with a$1,000,000 property whocurrently pays $800 permonth will pay an average of$250 more per month at fullphase in.
• The average tax per acre forfarmers and timber ownerswill increase from $1.25 peracre to about $2.25 an acreusing current use valuation.Over 95% of Alabama’sfarmers and timberlandowners will pay an averageof $1.00 more per acre.
• Alabama’s property taxeswill still be lower than all ofour surrounding states andstill less than half of thenational average.
What are some of the educa-tion investments proposed inthe package?
• All new education spendingflows directly into the class-room:
• Alabama Reading Initiative-ARI has been a nationalmodel for reading programs,yet we haven’t implementedit in all Alabama schools
because of our funding crisis.
• Alabama Distance LearningProgram - By utilizingtechnology, this programwould allow students any-where in Alabama to takecourses that may not beoffered in their schools likeforeign languages or ad-vanced chemistry, physics,etc.
• College Scholarship Pro-gram- A merit based schol-arship plan that wouldprovide college tuition forstudents who achieveacademic excellence. Re-quirements for eligibilityinclude: 3.0 GPA, ACT scoreof 20 or higher, completionof 18.5 core units.
• Math & Science Initiative –Like the Alabama ReadingInitiative, this program has aproven record of success inimproving student achieve-ment. The proposal wouldexpand this initiative tobenefit more of our students.
• Textbooks, Libraries, andTechnology – A new struc-ture would be implementedto provide adequate funds forstudent instructional resources.
The Christian Coalition andother groups have come outagainst higher taxes and saidthat we should be betterstewards instead of raisingtaxes. Is there a faith-basedargument for reform?
• If we follow the Bible’steaching to help “the least ofthese” (Matthew 25:45), wemust address our regressivetax structure, which placesthe highest tax burden on thepoor of any state whilehaving the lowest overalltaxes in the country. Thebook of Micah also calls thebeliever to “do justice, and tolove kindness, and walkhumbly with your God”(Micah 6:8). The call forjustice means that peopleof faith are obliged to seekproper treatment of thepoor and most vulnerable.
If the tax reform and accountability plan are accepted by the legislature andthen approved in this fall’s referendum by the voters, then:
Top 10 Reasons To Reform
Q
Some people’s taxes areraised while others get taxcuts. Isn’t the proposalunfair?
• Our current tax system is outof balance. Alabama placesthe highest tax burden on thepoor of any state whilehaving the lowest overalltaxes in the country.
• The plan equalizes the taxburden so that everyone ispaying their fair share.
Why not just cut spendinginstead of raising taxes?
• To balance the state’sbudget without morerevenue, over 25 schoolsystems would be forcedinto bankruptcy, 6,000seniors would be forced fromnursing homes, prisonswould be closed and over5,000 convicted criminalswould be released. Statetrooper patrols would be cutby 1/3 and over 450,000Medicaid recipients wouldlose access to health care.
Aren’t most people going topay higher property taxes?
• The average homeowner inAlabama who currently pays$22.58 per month will pay
Q
7. Every school would be outfitted
with distance learning capabilities
so that students could study any
course they desired.
8. Outstanding teachers would be
compensated for their extra ef-
forts, while teachers failing to
teach would be fairly and expedi-
ently dismissed.
9. Alabama would abolish the im-
moral practice of taxing poor
families who only earn less than
$20,000 annually.
10. About 65 percent of Alabamians
wouldn’t pay any additional taxes,
and many would even see a tax
cut.
1. Alabama will have the highest
reading test scores in the nation
within six years.
2. Every Alabamian graduating high
school with the necessary aca-
demic record will be given a col-
lege scholarship.
3. The Alabama Reading Initiative
a model of innovation and suc-
cess — would be fully-funded.
4. The Alabama Math and Science
Initiative would be expanded.
5. The tenure system for teachers
and administrators would finally
be reformed.
6. Local schools would have greater
control over their budgets, and
strict financial accountability
would be enforced.
Believers in the words anddeeds of Christ and theprophets will insist thatAlabama’s government notbalance its books on thebacks of the poor.
Does the proposal do any-thing that will actually helpthe average Alabamian?
• The average Alabamafamily will pay lower taxes,have a better educationsystem for their childrenand have the opportunityfor higher paying jobs sothat more of our children canstay in Alabama.
If we’re facing such tougheconomic times, why add newprograms like the collegescholarship plan?
• Education in Alabama will betransformed if students andfamilies know that with hardwork and achievement,children can have an opportu-nity that might have other-wise been impossible- acollege education.
• The college scholarship planwill help produce a bettereducated work force soAlabama can attract higherpaying jobs and betteraddress the challenges ofeconomic uncertainty.
Q
Q
Q
Q
Q
Where We Are Now• The State of Alabama is in the
worst fiscal crisis since theDepression
• In the past we have refused toconfront the problems of ourState in a fundamental and compre-hensive manner
• We are facing a $675 millionshortfall that will result in dev-astating cuts in essential Stateservices if nothing is done
• The plan is committed to protect-ing our seniors, creating higherpaying jobs, and making Alabamaa leader in education
State of Alabama is Cutting Wasteand Abuse• Cuts have already saved taxpayers
over $230 million, including…– Executive Order to ban pass
through pork by executiveagencies
– Reduced State personnel costsby 5%
– Cut his own staff by 30%– Reformed State vehicle and
travel policies– Recalled and sold over 500
state motor pool vehicles– Froze merit raises for State
employees– Legislation proposed to reform
the Medicaid drug program• He will continue to find ways to
save money• Many of these savings cannot be
realized immediately• Because of excessive earmarking,
much of this needed money can-not be redirected to the properfunds
• The problems cannot be solvedthrough cuts alone
Consequences of Doing Nothing• Slash services by $675 million
and compound Alabama’s currentproblems
• 60 Senior Service Centers wouldbe closed, eliminating 800,000meals for the elderly
• Thousands of teachers would belaid off
• 50,000 child support cases wouldbe affected, causing a loss of$50,000,000 in annual child sup-port payments
• State Trooper routine patrol and re-sponse manpower would be reducedby 1/3
• State of Alabama has the courageto deal with the problem
State of Alabama’s Conditions forReform
• Any tax proposal must also in-clude significant accountabilityreforms – “no accountability, nonew taxes”
• Any tax proposal must be fair toall Alabamians
• Alabama’s tax burden must remainequal to or below that of our sistersouthern states
Alabama’s Plan• Comprehensive accountability and
tax reform– Mandates significant account-
ability reform– Raises the necessary revenue to
fundamentally change Alabama• Makes Alabama’s tax system fair –
reduces the unfair burden onAlabama’s poorest citizens
• Ensures that tax dollars are spentresponsibly and strong account-ability measures are in place
• Provides full funding for innova-tive programs such as collegescholarships and the AlabamaReading Initiative
Accountability Reform: Overview• Do not earmark any new tax
revenues• Increase the contribution of
teachers and State employees forhealth insurance for a purposenot specified in the annual bud-get act
• Makes an agency director whoparticipates in a prohibitedpass-through appropriation sub-ject to criminal penalty
• Requires reports to the Gover-nor of any directive by a legisla-tor to make a prohibited pass-through appropriation
Education Reform: Overview• Provides incentive pay for teach-
ers to serve in difficult geographicand subject matter areas
• Reforms tenure for teachers andschool employees
• Eliminates tenure for instructionalsupervisors
• Establishes strict accountabilitystandards for fiscal management oflocal school systems
• Reforms the Foundation Programto allow more flexibility at the lo-cal level
Education Reform: Incentive Pay• Provides for one-time payments to
teachers who agree to teach inunderserved areas of the State orin subject matter areas which arehard to staff
• Provides scholarships to stu-dents who agree to be certifiedin underserved subject matter,or who agree to teach inunderserved areas
Education Reform: Tenure and Fair Dismissal• Binding arbitration for teachers
and public school employees whohave tenure– Shortens the hearing process
• Under current law for terminationsof teachers, there is a long hearingbefore the local school board, thenan appeal to the tenure commis-sion, then review by circuit andappellate courts
• The process would be streamlinedto a short hearing before the localschool board, then an appeal to afederal arbitrator, then review byappellate courts only in limited cir-cumstances– Shifts the financial burden from
local school boards to the State– Institutes identical procedures
for teachers and other publicschool employees, unlike currentlaw
Education Reform: Ending Tenure for Supervisors• Requires that assistant principals,
financial officers, and instructionalsupervisors hired after July 1,2004 will be hired under contracts,like all principals hired since July1, 2000
• Allows principals, assistant princi-pals, financial officers, and in-structional supervisors who havetenure to relinquish it voluntarilyin return for $5000
Education Reform: FiscalManagement• Requires the State Department
of Education to monitor the fi-nancial performance of schoolsystems, and requires school sys-tems to share financial informationwith the State Department of Edu-cation
• Requires training of local superin-tendents in the subject of finance
• Requires each local school systemto hire a Chief School FinancialOfficer to monitor receipts andpayments and to make certain re-ports to the local board and to theState Department of Education
• Provides for the State to purchasenew accounting software for localschool systems with monitoring bythe State Department of Education
• Requires annual financial audits ofall local school systems
• Strengthens the financial takeoverpowers of the State Superintendentof Education
Education Reform: Local Flexibility• Increases the minimum number of
school days to reach the nationalaverage of 180 days
• Allows local school systemsgreater flexibility in the alloca-tion of resources to serve the bestinterests of the students
Education Reform: Classroom InvestmentEducation Reform:
College Scholarships• Provides merit-based scholarships
to Alabama students• Applies to attendance at any public
college, university, junior collegeor technical college in the State ofAlabama
• Eligibility is based on residencyand academic achievement
in all of our neighboring states• Places a cap of 2,000 acres that
can be classified as current useproperty
• All land in excess of 2,000 acreswill be appraised at fair marketvalue
• Over 95% of landowners have lessthan 2,000 acres and will be pro-tected under current use
• Georgia has a cap of 2,000 acres,Tennessee has a cap of 1,500 acres
Tax Reform: Property TaxCurrent Use• New Exemptions• Provides for a farmstead of 200
acres or $150,000 of improvements– The average Alabama farm is 189
acres– Approximately 70% of farms in
Alabama are 200 acres or lessand will pay little or noincrease under this proposal
• Property taxes on farmers andtimber owners will still be lowerin Alabama than in everysurrounding state
Tax Reform: Property TaxLocal Ad Valorem Taxes• Increases the business class assess-
ment ratio from 20% to 22%• Caps utility property at current
payments until assessment at 22%would be greater
• Phases in changes over 4 years• Upon implementation, produces
$410 million in State and $70million in local revenues
• Current use property bears lessthan 5% of the increase, orapproximately $25 million
• Overall, property taxes increase byapproximately 30%– The owner of a $100,000 house
will pay an extra $11 per month– The owner of an average 200-
acre farm will pay less than $5more per month
• Property taxes in Alabama willremain significantly lower thanevery neighboring state, and willbe barely half the nationalaverage (per capita)
Tax Reform: Corporate IncomeTax
Tax Reform: Sales Taxes• Increases sales tax rate on cars
from 2% to 2.5%– Average auto sales taxes will
still be below the regionalaverage
– Raises $47 million• Increases the lease tax rate on cars
from 1.5% to 3%– Raises $20 million
• Includes repair and installationservices in the sales tax base
– Simplifies record keeping on in-stallations, since the service pro-vider is already collecting salestax on the property which isinstalled
– Florida, Mississippi, andTennessee already tax thesetypes of services
– Estimated to raise $45 million• Adds lubricating oil to the sales
tax base– Currently subject to a different
tax at a lower rate– Raises $6 million
• Sales tax changes will produce ap-proximately $65 million for localgovernments
Tax Reform: Sales Taxes• Increases the sales tax rate on
packs of cigarettes from $0.165 to$0.31 per pack– Does not affect county or local
taxes– Currently, Alabama has one of
the lowest state tax rates oncigarettes in the country
– In 2002, 21 states increasedcigarette taxes, and many othersare currently consideringincreases
– Georgia recently raised cigarettetaxes by $0.25 to $0.37 per pack
– Raises $50 million
Tax Reform: Insurance Premiums• Levels the playing field for in-
surance companies, particularlyin the property and casualtysectors
• Eliminates the examination expensecredit– This credit is unique to Alabama
among Southeastern states– The examination is needed for
re-certification by the Depart-ment of Insurance, so the costshould be a cost of doingbusiness
• Reduces two credits unique toAlabama– Reduces the business privilege
tax credit from 60% to 30% oftaxes paid
– Limits the home office andreal estate investment credits,thereby reducing the competi-tive disadvantage that mostcompanies face
• Brings domestic property and ca-sualty carriers to the 2% regionalaverage
• Raises $5 million
Tax Reform: Other• Mortgage and Deed Recording Fees
– Increases deed recording feesfrom 1 mill to 2 mills
– Increases mortgage fees from1.5 mills to 3 mills
– Raises $45 million
Tax Reform: OverviewTax Reform: Personal Income Tax• Fairness
– Raises the filing threshold fora family of 4 from $4,600 to$20,000
– $17,000 level next year, phasedin to reach $20,000 in 3 years
– Indexes exemption and standarddeduction levels to the federallevels
• Deductions– Eliminates the federal income
tax deduction– Allows deductions for mort-
gage interest, charitable con-tributions, and medical ex-penses
– Income tax returns will besimplified by using federal ba-sis for adjusted gross income
– All income from defined benefitpension plans will continue to beexempt
– The first $40,000 of pension in-come from defined contributionplans will be exempt for the firsttime
• Rate Structure– 5% rate on all income below
$75,000 for individuals($83,000 after exemptions) and$150,000 for married couples($170,000 after exemptions)
– 6% rate on income above$75,000 and $150,000
• 67% of those filing returns willpay the same or less in incometaxes
• Raises approximately $375 millionper year at full phase-in
Tax Reform: Personal Income TaxTax Reform: Property TaxState Ad Valorem Taxes• Assesses all property at 100% of
market value or current use valuefor the State portion of the tax
• Reduces the tax rate on the Stateportion of the tax from 6.5 mills to3.5 mills
• Increases the homestead exemp-tion from $40,000 to $50,000 ofappraised value
• Exempts Alabamians over age 65from all state taxes on theirhomestead
Tax Reform: Property TaxCurrent Use• Current Use is firmly maintained• Increases current use values by
22%, phased in over four years• An acre of farm land will have a
maximum value of $650, and anacre of timber land will have amaximum value of $715
• Maximum current use values peracre for farm land exceed $1,000
• Utility Taxes– Eliminates the utility license tax,
which is only paid by some utili-ties in the State
– Raises the gross receipts tax(which is paid by all utilities)from 4% to 5.75% to compen-sate for eliminating the licensetax
Tax Reform: Conclusion• State of Alabama’s plan achieves
fairness while remaining belowthe regional average in total taxburden– Alabama’s total tax burden per
capita will be 45th in the nationunder this proposal
– As a percentage of income,Alabama’s total tax burden willstill be below Southeastern andnational averages
• This package allows Alabama tofully fund the programs necessaryto provide our children with aworld-class education and stillhave the lowest property taxes ofany surrounding state
Failure Is Not An Option• If we take no action:
– Corrections Department: al-ready severely underfunded,would be forced to release thou-sands of prisoners and lay offhundreds of employees
– As many as 25 of our poorestschool systems could go bank-rupt, affecting 100,000 students
– Drug coverage for 11,000 men-tally ill Alabama citizens willalmost certainly be lost
– Medicaid budget slashed in2005, jeopardizing 450,000 Ala-bamians (10% of the State’spopulation)
Tax Revenue as % of Personal Income (2001)
10% or more
9.0% - 9.9%
8.0% - 8.9%
7.0% - 7.9%
6.0% - 6.9%
5.0% - 5.9%
4.0% - 4.9%
Source: Governing.com
$3,000 or more
$2,500 - $2,999
$2,000 - $2,499
$1,500 - $1,999
Less than $1,500
State Tax Revenue per capita (2001)
Source: Governing.com
Alabama
Florida
Georgia
Kentucky
Lousiana
Mississippi
North Carolina
South Carolina
Tennessee
Virginia
3 2 14
Adequacy of Revenue
Fairness to Taxpayers
Management of System
Comparing the Southern States
Source: Governing.com
Individual income tax
Sales tax
Selective sales tax
Corporate income tax
Property tax
Other
Portion of total state and local revenuescollected by state (2000): 58.6%
33.0%26.7%
24.9%
2.9%
2.7%9.8%
Alabama tax collection by source (2001)
Source: Governing.com
4 = Excellent1 = Poor4 = Excellent1 = Poor4 = Excellent1 = Poor
4 = Excellent 1 = Poor
Listed below are majorAlabama newspapers:
Alexander City OutlookAttention: Letters to the EditorBox 999Alexander City, AL 35011Fax: [email protected]
Andalusia Star-NewsAttention: Letters to the EditorDrawer 430Andalusia, AL 36420Fax: [email protected]
Anniston StarAttention: Letters to the EditorBox 189Anniston, AL 36202Fax: [email protected]
Athens News-CourierAttention: Letters to the EditorBox 670Athens, AL 35612Fax: [email protected]
Birmingham NewsAttention: Letters to the EditorBox 2553Birmingham, AL 35202Fax: [email protected]
Birmingham Post-HeraldAttention: Letters to the EditorBox 2553Birmingham, AL 35202Fax: [email protected]
To: EditorFrom:Subject: "Vote Yes” for the Tax Reform and Accountability PlanDate: (Insert Date)
I am asking Alabama voters to "Vote Yes” on September 9. The university experience hastaught me __________________ (insert a personal statement about what you study) I havelearned through my experiences to _______________________ (insert a phraseshowing that you appreciate your opportunities and that good results usuallyfollow an investment of resources.)
It is with the hope that we will all focus on responsibility that I am writingto ask every Alabama voter to "Vote Yes.”
_________________ (Insert an example of how the money will be used to helpimprove Alabama.)
By "Voting Yes” the people of Alabama can make the right choice for the future.
Points to Consider Making in a Letter to Editor – Select Only One per Letter
• Reform and fund our education system to provide the quality necessary tocompete with our sister southern states.
• Enhanced Reading, Writing and Math Skills will help change the state.
• Fewer young people suffering from poor medical care systems.
• Better highways, more technology support for schools, and increased economicdevelopment investments.
• Create a merit-based scholarship for tuition for college students.
• Increase funding in math, science, technology, and reading initiatives.
• Increase funding in education to create the opportunity for lower tuition,more specialized programs, and a more extensive learning field for students.
Sample Letter to Editor
GO VOTE “YES” ON SEPTEMBER 9th
NOTE: Voter registration must be complete prior to August 30th.
If you believe in the plan to reform and fully-fund Alabama’s public services and institutions, then be-come an advocate by writing a letter to your local newspaper or calling a talk radioprogram. Together, the citizens of our beloved state can lay the foundation for greatness. Followingis a sample letter to the editor along with a list of major newspapers in the state.
Please send a letter to the editor in support of the tax reform plan.
Clanton AdvertiserAttention: Letters to the EditorDrawer 1379Clanton, AL 35046Fax: [email protected]
Cullman TimesAttention: Letters to the Editor300 4th Ave. SECullman, AL 35055Fax: [email protected]
Decatur DailyAttention: Letters to the EditorBox 2213Decatur, AL 35609Fax: [email protected]
Dothan EagleAttention: Letters to the EditorBox 1968Dothan, AL 36302Fax: [email protected]
Enterprise LedgerAttention: Letters to the EditorBox 311130Enterprise, AL 36331Fax: [email protected]
Florence Times DailyAttention: Letters to the EditorBox 797Florence, AL 35631Fax: [email protected]
Fort Payne Times-JournalAttention: Letters to the EditorBox 680349Fort Payne, AL 35968-0349Fax: 256- [email protected]
Gadsden TimesAttention: Letters to the EditorBox 188Gadsden, AL 35999Fax: [email protected]
Huntsville TimesAttention: Letters to the EditorBox 1487, West StationHuntsville, AL 35807Fax: [email protected]
Jasper Daily Mountain EagleAttention: Letters to the EditorBox 1469Jasper, AL 35502-1469Fax: [email protected]
Lanett Valley Times-NewsAttention: Letters to the EditorBox 850Lanett, AL 36863Fax: 334- [email protected]
Mobile RegisterAttention: Letters to the EditorBox 2488Mobile, AL 36652Fax: 251- [email protected]
Montgomery AdvertiserAttention: Letters to the EditorBox 1000Montgomery, AL 36101-1000Fax: [email protected]
Opelika-Auburn NewsAttention: Letters to the Editor3505 Pepperell Pkwy.Opelika, AL 36801Fax: [email protected]
Scottsboro Daily SentinelAttention: Letters to the EditorBox 220Scottsboro, AL 35768Fax: [email protected]
Selma Times-JournalAttention: Letters to the EditorBox 611Selma, AL 36701Fax: [email protected]
Talladega Daily HomeAttention: Letters to the EditorBox 977Talladega, AL 35161Fax: [email protected]
RESOURCES ON THE WEB
You can find further information about Alabama’s proposed taxreform package on the Internet:
Governor Bob Riley’s Home Page. The section “Laying TheFoundation for Greatness” explains Gov. Riley’s tax plan in detail.http://www.governor.state.al.us/
The Campaign for Alabama web site explains and supports Gov.Riley’s plan. The site talks about turning dreams and hopes for thefuture into reality. The vision is focused on fundamentallychanging Alabama, including state government and the state’seducation system, while keeping the best parts of ourcommunities safe and secure.http://campaignforalabama.com
The Alabama Partnership for Progress is a non-partisan, broadlydiverse, grassroots coalition of organizations and individuals fromacross Alabama who have come together with a commoncommitment to help build a better Alabama by working forpassage of the Education Excellence and GovernmentAccountability plan that will go before Alabama voters in a publicreferendum on September 9th.http://www.abetteralabama.org
Additional Facts About Alabama’s Financial Problemshttp://www.governing.com/gpp/2003/gp3glanc.htmhttp://www.governing.com/gpp/2003/gp3al.htm
GOVERNOR’S PRESS OFFICEGOVERNOR’S PRESS OFFICEGOVERNOR’S PRESS OFFICEGOVERNOR’S PRESS OFFICEGOVERNOR’S PRESS OFFICE
State Capitol - Suite NB-06Montgomery, Alabama 36130(334) 242-7150For more contact information,visit Governor Bob Riley’s WebSite: http://http://http://http://http://www.governor.state.al.us/www.governor.state.al.us/www.governor.state.al.us/www.governor.state.al.us/www.governor.state.al.us/
Troy MessengerAttention: Letters to the EditorBox 727Troy, AL 36081Fax: 334- [email protected]
Tuscaloosa NewsAttention: Letters to the EditorBox 20587Tuscaloosa, AL 35402Fax: [email protected]
Individual income tax:The plan: End state individual incometax deductions for payment of federalincome taxes and Social Security andMedicare taxes; raise the top incometax rate from 5 percent to 6 percent forindividuals with a taxable income of$75,000 or more a year and joint filerswith taxable incomes of $150,000 ayear or more; raise the annual incomelevel at which people start paying taxesfrom $4,600 for a family of four to$20,000.Revenue: About $400 million a year.Property tax:The plan: For purposes of state por-tion, tax all property at 100 percent ofits value; lower state property tax ratefrom 6.5 mills to 3.5 mills; increasehomestead exemption on the full valueof property from $40,000 to $50,000;adjust current-use law to give less of atax break. Changes phased in over fouryears.Revenue: About $400 million a year.Corporate income tax:The plan: Erase the deduction for fed-eral income taxes paid.Revenue: About $60 million a year.
Banks:The plan: End the sales-tax deductionbanks get, but lower the maximum stateprivilege tax a bank could pay from $3million to $15,000 a year, the same asmost companies.Cigarettes:The plan: Raise the state cigarette taxfrom 16.5 cents to 31 cents per pack.Revenue: About $50 million a year.Labor and services:The plan: Impose the state 4 percentsales tax on labor charges for repair andinstallation services.Revenue: $30 to $40 million a year.
systems appoint and remove custodiansof funds, to “ensure competency.”More school days:The plan: Gradually increase the num-ber of days students attend publicschools, from 175 to 180 days perschool year.Superintendents’ flexibility:The plan: Give local superintendentsmore flexibility in deciding how tospend state education dollars.Teaching teachers:The plan: Fully fund programs de-signed to teach teachers how to instructtheir students better in reading, mathand science.College scholarships:The plan: Start a college scholarshipprogram for Alabama high schoolgraduates based on academic standing,perhaps class rank. Family income not afactor.Alabama Excellence Initiative Fund:The plan: Put all money raised byRiley’s package in a separate AlabamaExcellence Initiative Fund that he andlawmakers could spend wherever theythought needs were greatest.Pass-through pork:The plan: Ban pass-through pork, away that lawmakers reserve state moneyfor their favored projects without thespending showing up in state budgets.
Vehicle sales:The plan: Raise the state sales tax oncars and other motor vehicles from 2percent to 2.5 percent.Revenue: About $48 million a year.Vehicle leases:The plan: Raise the state tax on vehicleleases from 1.5 percent to 3 percent.Revenue: About $20 million a year.Deeds and mortgages:The plan: Double state filing fees ondeeds and mortgages. The deed tax isroughly 0.1 percent of a property’svalue, or 1 mill; the tax on a mortgage isroughly 1.5 mills.Revenue: About $50 million a year.Stocks and bonds:The plan: Impose a 1-mill tax onstocks, bonds and other wealth on paper;retirement and college accounts exempt;first $200,000 in such wealth in a jointaccount exempt. Maximum tax of$5,000 a year.Revenue: $50 to $60 million a year.Insurance companies:The plan: Raise taxes on insurancecompanies by reducing credits for busi-ness privilege taxes paid and credits forowning lots of Alabama property.Utilities:The plan: Adjust utility taxes.Revenue: Won’t raise more money.Employee, teacher health insurance:The plan: Make employees of publicschools and state agencies pay more forhealth insurance; premiums graduallyrise to average paid by public employ-ees in Southeastern states.Retiree health insurance:The plan: Reduce state health insurancecontributions for public employees whoretire with less than 25 years’ service.Teacher incentives:The plan: Pay more to teachers of mathand science or those willing to move toschools that have a hard time attractingteachers. College scholarships providedto students able and willing to fill thoseneeds upon graduation.Teacher tenure:The plan: Streamline the job protectionof tenure for teachers and support work-ers to require people appealing their fir-ings to use arbitration as a final steprather than the courts.Performance-based contracts:The plan: Switch from tenure to perfor-mance-based contracts for new schooladministrators, supervisors and financialpersonnel.Testing superintendents:The plan: Require the state school su-perintendent to educate and test localschool superintendents on fiscal man-agement.Custodians of funds:The plan: Change the way local school
Tax Reform and Accountability Plan Rainy day, general fund:The plan: Create a rainy day fund of$72 million for the General Fund, whichcould be tapped to prevent across-the-board spending cuts caused by lower-than-expected tax collections. Themoney would be taken from the $2.2billion Alabama Trust Fund createdfrom royalties paid by companies thatpump natural gas from the Gulf ofMexico. Any money withdrawn, plusinterest, would automatically be repaidto the rainy day fund from the GeneralFund over five years.Rainy day, education fund:The plan: Change rules for the $248million rainy day fund for education torequire that any money withdrawn, plusinterest, would be repaid to the rainyday fund from the Education Trust Fundover five years.Statewide referendum:The plan: Link all the above proposalsin one package that voters in early Sep-tember could accept or reject in a state-wide referendum.Same per-pupil spending:The plan: Guarantee Alabama willspend as much per student next year forteachers and support workers as it didthis year, whether or not taxes are raised.This bill will travel separately from thelinked package and could be passed intolaw as soon as the end of the month.Source: Revenue estimates by stateFinance Director Drayton Nabers andlobbyists.
Farm Land*If you pay High Local Taxes (local millage rate = 35 mills)
Acres Total current tax Tax increase next year Total increase by 200750 $74 $4 $17100 $154 $8 $31200 $338 $9 $37300 $522 $58 $231500 $890 $155 $6201000 $1,809 $398 $1,593
If you pay Average Local Taxes (local millage rate = 25 mills)Acres Total current tax Tax increase next year Total increase by 200750 $53 $3 $12100 $111 $5 $22200 $251 $4 $17300 $390 $51 $202500 $669 $143 $5721000 $1,367 $374 $1,495
If you pay Low Local Taxes (local millage rate = 15 mills)Acres Total current tax Tax increase next year Total increase by 200750 $32 $2 $7100 $68 $3 $12200 $163 -$1 -$2300 $258 $43 $173500 $449 $131 $5231000 $925 $349 $1,398
*These calculations assume the owner lives on the land
Residential PropertyIf you pay High Local Taxes (local millage rate = 50 mills)
Value Total current tax Tax increase next year Total increase by 2007$50,000 $207 -$1.63 -$6.50$80,000 $376 $19.75 $79$100,000 $489 $34 $136$125,000 $630 $51.81 $207.25$150,000 $772 $69.63 $278.50$250,000 $1,337 $140.88 $563.50$500,000 $2,749 $319 $1,276$1,000,000 $5,574 $675.25 $2,701
Value Total current tax Tax increase next year Total increase by 2007$50,000 $147 -$1.63 -$6.50$80,000 $271 $19.75 $79$100,000 $354 $34 $136$125,000 $458 $51.81 $207.25$150,000 $562 $69.63 $278.50$250,000 $977 $140.88 $563.50$500,000 $2,014 $319 $1,276$1,000,000 $4,089 $675.25 $2,701
If you pay Average Local Taxes (local millage rate = 35 mills)
Value Total current tax Tax increase next year Total increase by 2007$50,000 $87 -$1.63 -$6.50$80,000 $166 $19.75 $79$100,000 $219 $34 $136$125,000 $285 $51.81 $207.25$150,000 $352 $69.63 $278.50$250,000 $617 $140.88 $563.50$500,000 $1,279 $319 $1,276$1,000,000 $2,604 $675.25 $2,701
If you pay Low Local Taxes (local millage rate = 20 mills)
Commercial PropertyIf you pay High Local Taxes (local millage rate = 50 mills)
Value Total current tax Tax increase next year Total increase by 2007$50,000 $565 $40 $160$100,000 $1,130 $80 $320$200,000 $2,260 $160 $640$500,000 $5,650 $400 $1,600$1,000,000 $11,300 $800 $3,200$2,000,000 $22,600 $1,600 $6,400$5,000,000 $56,500 $4,000 $16,000
Value Total current tax Tax increase next year Total increase by 2007$50,000 $415 $36 $145$100,000 $830 $73 $290$200,000 $1,660 $145 $580$500,000 $4,150 $363 $1,450$1,000,000 $8,300 $725 $2,900$2,000,000 $16,600 $1,450 $5,800$5,000,000 $41,500 $3,625 $14,500
If you pay Average Local Taxes (local millage rate = 35 mills)
Value Total current tax Tax increase next year Total increase by 2007$50,000 $265 $33 $130$100,000 $530 $65 $260$200,000 $1,060 $130 $520$500,000 $2,650 $325 $1,300$1,000,000 $5,300 $650 $2,600$2,000,000 $10,600 $1,300 $5,200$5,000,000 $26,500 $3,250 $13,000
If you pay Low Local Taxes (local millage rate = 20 mills)
Below is a detailed summary of thefundamental reformation of state gov-ernment. The proposals will be as-sembled into one package that voterscould accept or reject in a September 9statewide referendum.Accountability Reform Expansion ofthe Alabama Reading InitiativeThe nationally recognized AlabamaReading Initiative will be fully fundedin grades K - 6. This includes fundingfor a reading specialist at every ARIschool.Expansion of the Alabama Math,Science and Technology InitiativeCurrently, in North Alabama, the SDE ispiloting the AMSTI, which providesteachers and students with intensivetraining in these key subject areas. Fund-ing will be provided to take this initiativeto scale.College Scholarship PlanThe plan will provide scholarships toAlabama colleges and universities to allstudents meeting criteria related to classrank, ACT score, and grade point aver-age. Such an incentive should improvestudent performance at the K - 12 leveland increase opportunities for studentswho might not have the funds to pursuehigher education.Incentive Pay for EducatorsMath, science and special educa-tion teachers would be given a$5000 bonus for agreeing to teachin hard-to-staff schools, includingrural and high-poverty urbanschools. Further, the state wouldlaunch a scholarship program to“grow its own” pool of qualifiededucators. Scholarships would beawarded in return for commit-ments to teach in hard-to-recruitareas. These scholarships would beavailable to promising high schoolstudents, college sophomores whoare entering a teacher preparationprogram at an Alabama college of edu-cation, and current educators pursuingadvanced degrees in those subject areas.Empowering PrincipalsIn an effort to elevate the position ofprincipal to the professional position itdeserves, current tenured principals willreceive a bonus to give up tenure for aperformance-based contract. Changes inthe salary funding formula will beginincreasing principal pay to the South-eastern average by Fiscal Year 2005. Toencourage principals and teachers towork together as a team to boost studentachievement, incentives will be offeredto schools that meet or exceed academicperformance standards.
Tenure IssuesNew administrators, supervisors, princi-pals, assistant principals, and financialmanagers will be hired on performance-based contracts and will not be eligiblefor tenure. Currently, the process for dis-missal of tenured employees is lengthyand costly. The proposed system will bestreamlined, fair, affordable and effec-tive by abolishing the Alabama TenureCommission and using arbitration inteacher dismissals.Changes in PEEHIP(the health insurance program for teach-ers and state employees) - In order tocontrol rising costs of health insurance,active employees will see an increase intheir contribution level from a fixed pay-ment to a percentage of cost. Contribu-tion levels will increase incrementally inyears when teachers and state employeesreceive a pay raise until levels reach theregional average. Co-pays will increaseto save $25 million annually.Fiscal ManagementNew laws will require all local schoolboards to hire a financial manager with
Summary of TaxReform Package
demonstrated knowledge and skills andwill require continuing education forthese financial managers. An improvedfinancial data system in the SDE willhave the ability to “red flag” any prob-lems long before they reach crisis lev-els, and financial audits will be requiredof all public school systems.Flexibility• More spending decisions will be made
at the local level to address needs ofindividual schools. There will be asubstantial increase in money allo-cated to professional development forthe Alabama Reading Initiative and toexpand the Math, Science, and Tech-nology Initiative.
• New revenue generated by the taxplan will not be earmarked. Instead, itwill be divided between the GeneralFund and the Education Trust Fundbased on budget projections and need.
• Removal of non-education-relateditems from the Education Trust Fundwill be addressed in a September ses-sion devoted to budget issues.
• Automatic repayment of withdrawalsfrom the rainy-day fund.
• Line-item budgeting to bring “sun-shine” to every item appropriated inthe budgets.
• “Pass through” pork, where legislatorshide their special projects in the budgetsof state departments, will be prohibited.
Tax Reform• Raising the annual income at which
people start paying state income taxesfrom $4,600 for a family of four to$17,000 this year and to $20,000 overthe next three years;
• Increasing the homestead exemptionfrom $40,000 to $50,000. A home-owner living in a $100,000 homewould pay approximately $132 moreper year in property taxes.
• Ending the state income tax deductionfor federal taxes paid;
• Raising the state income tax rate from5 percent to 6 percent for individualincomes over $75,000 and family in-comes over $150,000. Under this newplan, a family of four earning $75,000will pay almost $200 less in state in-come taxes.
• Reducing the state property tax ratefrom 6.5 mills to 3.5 mills, but assess-ing property at 100 percent of its mar-ket value or current use value;
Adjustments in the following taxes:Personal income tax, corporate incometax, sales tax on autos, cigarette taxes,taxes on services, taxes on banks,taxes on insurance companies, taxeson utilities, and taxes on deeds andmortgages.
Cynics say thatAlabamianswon’t fundeducation theway it should befunded as longas the yellowbuses pick upthe kids and thestadiums are fullon Friday andSaturday. We don’tagree. Webelieve the
people of this state, whether they havechildren or not, feel strongly abouteducation and, when given the opportu-nity, they will reject policies of the pastand vote to give Alabama youngstersthe education they deserve.
In September we will find out whois right.
Recently State Superintendent EdRichardson told the state’s 128 schoolsuperintendents that if voters reject taxplan and the legislators can’t pass abudget, he will close the schools. Thebuses won’t run and the stadiums willbe empty.
Some called it a scare tactic, butmaybe Alabamians need to be a littlefrightened. If, on September 9th, votersreject the package, legislators willimmediately be called into specialsession and they will have 3 weeks tofind a way to cover a $675 millionshortfall. That won’t be easy, but thesuperintendent added, “if we don’t havea budget . . . the only thing at that pointI can do is order the schools to close.”
And what if a budget is passed, butit is insufficient to meet the shortfall?Then the cuts will come. And thegovernor has already said that extracur-ricular activities will be among the firstthings to disappear. So the buses willrun, but sports, band, cheerleading, andall those other aspects of school lifethat keep kids involved and thecommunity entertained will have to go.
The impact on academic andextracurricular programs at JSU will beprofound. Without high school bandprograms, the Marching Southernerswill lose that flow of talent that hasmade ours one of the premier musicprograms in the region. Without highschool athletics, sports at JSU willdecline and maybe even wither away.
A Fall Without Football: or Much of Anything Else And because these cuts will also fallon colleges, we will not be able tooffer opportunities to outstandingstudent athletes and musicians whoseabilities shine despite the handicapsplaced on them by underfundedprograms.
It is not a pleasant scenario but itis a realistic one.
In September Alabamians will bevoting on a tax reform package thatwill provide money to address ourgrowing deficit and will put us onsound footing for the future. If thatplan does not pass, the whole thingwill be dumped onto the legislature,which will either have to find themoney to meet the shortfall or acceptthe cuts that will have to make. Wewould hope the legislature wouldmove quickly to meet the crisis, butunder the circumstances that will bedifficult.
And if there is no budget byOctober 1, the beginning of the newfiscal year, school and the season willbe over and everyone will be thepoorer for it.
Superintendent Richardson wasright to tell us this. Alabamians needto know what is at stake.
Source: Anniston Star editorial, June 20,2003. Reprinted with permission.
I was born in Alabama and I’velived here for 40 years off and on —almost all my life. In that time, Gov.Bob Riley’s tax and accountabilityplan is the closest I’ve ever seen to acomprehensive solution to the prob-lems that have held our state back— factors, as Riley recently put it, thathave made us “first in things that arebad and last in things that are good.”
I know that many Alabamians — bysome accounts a majority — are atthis moment inclined to vote againstRiley’s $1.2 billion plan, which willbe decided in a September 9th referen-dum. After a lifetime of witnessingcorruption and inefficiency in Mont-gomery, I understand your skepticismif you are in that category.
But I believe the failure of this planwould be a lost opportunity of tragic
Tax Plan Approval a Votefor the Future
proportion. If you’re against it, I re-spectfully ask that you learn moreabout it and reconsider. Here are someof the reasons:
First, despite what you may haveheard, the Riley plan is not a give-away to teacher lobbyist PaulHubbert. Yes, the Alabama EducationAssociation won some concessions —mainly a guarantee that teachers won’tbe laid off except in cases of decliningenrollment. As concessions go, onethat keeps teacher-pupil ratios at theircurrent level is not such a nasty one.In return, the AEA agreed to tenure-law changes that could save schooldistricts millions of dollars. If the planis approved, school systems will beallowed to dismiss unneeded adminis-trators, also known as dead wood. Andit will be easier for school principals to
fire incompetent or lazy teachers, evenif they have tenure.
I don’t care what the nay-sayerscall it, this is real education reform,at the level where it’s needed most.A lot of Alabamians, myself included,would pay higher property taxes underthe Riley plan, but the pain will beshared. Small farms — those under200 acres — may see a small increasein their county or local property taxes,but they will be exempted completelyfrom state property taxes. Alabamaresidents older than age 64 will see noincrease in taxes on their primary resi-dences, period.
Under Alabama’s “current use” pro-vision, owners of large tracts of tim-berland will have a tax increase, butthey’ll still pay lower ad valorem taxesthan if they owned similar property inTennessee or Georgia. Many of theselarge tracts are owned by out-of-statecorporations whose principals don’twant their taxes to increase at all. Theylike owning land in Alabama, the statethat asks virtually nothing of them forthe privilege of doing business here. Andthey have little reason to care about ourschools, our governmental infrastructureor our general quality of life.
Alabama schools need the stablefunding the Riley plan offers, andthey also need the extra accountabil-ity measures. Money is as importantas the ability to fire lousy personnel,and the Riley plan offers both. Riley’spledge to fully fund the highly suc-cessful Alabama Reading Initiativeand expand the Alabama Math andScience Initiative has the potential todramatically improve graduation ratesof Alabama youngsters.
Some Alabamians who have aban-doned public schools think they aren’taffected by what happens in them, butthey’re wrong. Poor schools lead to apoor work force and a pooreconomy, leading to a poor tax basewhich leads to poor schools. This vi-cious cycle can and should bestopped.
Alabama’s current tax law isamong the most regressive in the na-tion, meaning that low-income Ala-bamians pay taxes on a higher per-centage of what they earn than poorresidents of other states. The Rileyplan, by raising the threshold atwhich Alabamians begin paying in-come tax, begins to correct this un-fairness. But it is in no way a give-away to poor Alabamians, who will besubject to increased sales taxes on au-tomobiles and services, and who, likeall Alabamians, remain subject to veryhigh sales taxes on everything theybuy, including food and prescriptions.
Some critics say that any new taxesraised under the Riley plan will bewasted or stolen by legislators, lobby-ists and various state officials andhangers-on. It’s true that much of offi-cial Montgomery lives on perks, cor-ruption and political back-scratching.It’s been going on, to the detriment ofus all, for a long time. But in sixmonths in office, Riley has actuallycut state spending by $230 million.
His proposal will cut state spendingin some revolutionary ways, such asrequiring teachers and state employeesto pay a fixed percentage of theirhealth insurance costs. The planwould ban pass-through pork, re-quiring that the Legislature stateclearly where it’s spending state taxdollars.
To say that we can’t raise taxes tocover our basic needs because some ofit might be lost or stolen is the self-defeating logic of a people who neverhad enough of anything and don’tthink they deserve it.
“The message of Gov. Bob Riley’splan is that Alabamians deserve tobe fed and that if we put our heartsand minds to it, we can dramaticallyreduce waste and corruption. That
ought to be enough.”
It is like a homemaker cooking fourportions of dinner for a family of sixbecause some of it might be wasted.Or a starving man refraining from eat-ing, out of fear that a crumb might fallto the ground and be lost.
Waste and corruption are a fact oflife in government in Alabama andelsewhere. We must root them outwhere we can, but if we aren’t com-pletely successful that doesn’t meangovernment is not worth having.
The message of Gov. Bob Riley’splan is that Alabamians deserve to befed and that if we put our hearts andminds to it, we can dramatically re-duce waste and corruption. That oughtto be enough.
To vote for this plan is to say, as apeople, that we don’t think we be-long at the bottom of every list. It is,in touchy-feely terms, an affirmationof our own worth, and it’s long over-due.
by Elaine WittBirmingham Post-HeraldUsed with permission from theBirmingham Post-Herald
Elaine Witt’s column runs Tuesday,Thursday and Saturday in theBirmingham Post-Herald.
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State Taxes per Capita2000-2001Per Pupil Expenditure
If Alabama were to come just to the average, this would
mean an additional $1,038 per student and $738,778,000
more for the ETF.
Kentucky $2,464 $7,516
Texas $2,456 $6,979
Idaho $2,428 $6,029
Lousiana $2,409 $6,461
Arkansas $2,382 $5,966
W. Virginia $2,368 $8,440
S. Carolina $2,333 $6,644
Oklahoma $2,313 $6,787
Montana $2,312 $7,058
S. Dakota $2,255 $6,102
Mississippi $2,198 $5,624
Tennessee $2,142 $6,029
ALABAMA $2,007 $5,512
Average $2,313 $6,550
Source: Retirement Systems of Alabama
We Must Invest for Success
For more decades than anyonewould dare to imagine, Alabam-ians nibbled at, ignored, and hidfrom our state’s financial prob-lems.
Alabama has serious account-ability and financial problemsthat must be addressed. I remem-ber a senior citizen telling me inthe 1970’s that he would supportmore funding for education if thestudents were all “A” students.Give me a break! That is like theindividual who will only supportgovernment funding if there is nocorruption. There will always becorruption. That is why we electnew people. Until we are all littleangels, we must have police,courts, and prisons! — Dr. David Bronner
On September 9th, Alabamianswill choose to forever change Ala-bama for the better by voting forGovernor Riley’s tax package. Or,they will vote against it and con-tinue to forget about real account-ability in government and improv-ing Alabama.
Governor Riley’s tax proposalwill improve life for 65% of Ala-bamians (individuals earning lessthan $75,000, or a couple makingless than $150,000) because theywill pay the same or lower taxesand benefit from a better educa-tional and economic environment!Yes, 35% of us will pay more, aswell we should.
Lots of words will fly over thecoming days. Unfortunately, thosewho have taken advantage ofAlabama’s tax laws in the pastwill be the loudest.
Words Will Fly Over the Coming Days
