---

By Phillip Rawls
The Associated Press
2/03/03 5:34PM

MONTGOMERY, Ala. (AP) -- A national study released Monday ranked Alabama's tax system among the nation's three worst, which provided motivation for civic leaders who have been calling for changes for years.

   "The Way We Tax" study published by Governing magazine found that Alabama's sales taxes are "abnormally high" and property taxes are "badly skewed in favor of agriculture and rural property owners."

   The magazine found one word to sum up Alabama's tax laws: "ludicrous."

   The criticism was no surprise to groups that have long called for major changes in Alabama's tax structure.

   "Our system is not fair, and it's not balanced. Until you correct those problems, we are never going to rank well," said Jim Williams, executive director of the Alabama Public Affairs Research Council.

   Williams said interest in changing the tax structure has grown because of a financial crisis in state government, and the Governing magazine study will help achieve change.

   "People are beginning to recognize that we can't continue like we have," Williams said Monday.

   Marty Sullivan, spokeswoman for the Business Council of Alabama, said the group has been calling for comprehensive tax reform since its founding in 1985 and the magazine's study "is another affirmation of its necessity."

   David Azbell, press secretary for Gov. Bob Riley, said the study "echoes in many ways the sentiments Governor Riley has expressed over the last 18 months."

   Governing magazine's studies have been a spark plug for change in Alabama. In 1999, the magazine gave state government a "D" for its management practices. Then-Gov. Don Siegelman turned the low grade into a battle cry and, in a follow-up study two years later, Alabama was one of the six most improved states, increasing to a C-.

   Siegelman was traveling Monday and unavailable for comment on the latest study, spokesman Mike Kanarick said.

   Not everyone agreed with the magazine's new study.

   Mike Kilgore, executive director of the Alabama Farmers Federation, noted that other studies have painted a different picture of Alabama. For instance, a 2001 study by Jacksonville State University's Center for Economic Development found that Alabama rated above the Southeastern and national average on the proportion of personal income that is allocated for state and local taxes (24.5 percent in Alabama, compared to 24.3 percent nationally and regionally).

   Kilgore said he's concerned that some of the people calling for sweeping tax changes really want to take away the public's ability to vote on tax increases.

   The Governing magazine study assigned up to 12 stars to state tax systems based on the adequacy of revenue, fairness to taxpayers, and management of the tax system.

   Alabama got four stars: one for adequacy, one for fairness and two for management.

   Tennessee tied Alabama with four stars. Only one state did worse: Nevada with three stars.

   Delaware topped the study with 11 stars.

   Governing magazine looked for tax systems that had a balance between property taxes, sales taxes and income taxes. It also looked for tax systems that appeared fair across the board, without a lot of unusual exemptions, and that were fairly administered by state tax collection agencies.

   Michele Mariani, senior special projects reporter for Governing magazine, said Alabama's reliance on state and local sales taxes is unusually high. "Some folks are paying 11 percent on groceries. That seems excessively high," she said.

   On the other hand, Alabama's per-capita property tax liability is the lowest in the country, she said.
Changing Alabama's tax structure won't be easy, she said, because so much of Alabama's tax law is built into the constitution, and many of the taxes are earmarked for specific functions of governments. In addition, Alabamians have a strong belief that if government gets more money, it will be misspent, she said.

   "At the state government level, Alabama's hands are tied in a number of ways. I don't envy the people who have to sit down and untangle it," she said.

   The governor's spokesman said Riley agrees with the assessment and that is why he has set an immediate goal of restoring taxpayer confidence in state government.

   The one part of Alabama's tax system that got praise in the report was the state Revenue Department. Governing magazine said the department "performs reasonably well considering the ludicrous law it is asked to enforce."

Return to: Constitutional Reform ~ In the News
Return to: Editorial Index