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Taxation, constitution reform crucial |
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Albert P. Brewer February 9, 2003 Last month, Gov. Bob Riley was inaugurated as Alabama's 55th governor. Amid the gala atmosphere of the inauguration festivities, a somber note was present because of the financial crisis confronting our state today. In a story in a recent edition of The Birmingham News, reporter Kim Chandler wrote, "Alabama's next governor will be confronted with the most dire financial situation that state government has faced in decades." The media and veteran state government observers concede that additional revenue will be necessary and in significant amounts. David Bronner, chief of the Retirement Systems of Alabama, has been quoted as saying that at least $170 million in new taxes will be necessary to maintain the General Fund at its present spending level in 2004. The state superintendent of education has suggested that more than $1 billion is needed for public education. The most conservative estimates suggest the need for an additional $500 million in 2004, and more in subsequent years. I don't believe any governor has faced so many problems since B.M. Miller became governor in 1931 during the depths of the Great Depression. Our state was heavily in debt then, moreso than now. But there were not so many state programs then, and perhaps not so great a need for new revenues as we have today. The Medicaid program will need $100 million in new money just to maintain services at the present level. The problems in our prison system are well known. They read like tragic comedy. Our state prisons are so overcrowded that corrections officials have refused to take all the state prisoners from the counties, with the result that county jails are severely overcrowded; the counties are suing to make the state take the prisoners; the state responds that it doesn't have places for the prisoners; a circuit judge has levied a substantial fine against the state prison system and held the director of prisons in contempt of court; a federal court has ordered reform at the overcrowded women's prison at Wetumpka; there are too few corrections officers, creating dangerous and inflammatory conditions in the state prisons and in the overcrowded jails; and we are all at risk. Our children's programs are deficient. Lack of human resource workers has placed at-risk children in danger; foster care parents are inadequately compensated; health care for children is a continuing crisis. And we could go on with mental health problems, transportation needs where mass transit has never been seriously considered, the compelling need for more state troopers, and the funding requirements of the court system. Proration of the appropriations for education, both in K through 12 and in higher education, has created a crisis with significant negative implications for the education of students and the economic development of our state. We should observe that there have been many positive developments in the past decade. Industrial recruitment has been a resounding success. Student test scores have improved remarkably. The Alabama Reading Initiative has received national acclaim. The University of Alabama at Birmingham continues to be a crown jewel in higher education. And the governor can build on these positives. It is obvious to any fair-minded person that fundamental to a solution is the need for adequate funding. It will require a full measure of courage and resolve to attack these issues. Debts over assets: In 1931, Gov. Miller assumed the leadership of a state whose debts far exceeded its assets, whose sources of revenue had been depleted by the Depression, and whose prospects for recovery were dim. Many schoolteachers were being paid with scrip that merchants were reluctant to accept in payment of goods because of the state's precarious financial condition. Miller first had a study made of state government by the Brookings Institution, which defined the fiscal needs of the state and recommended a reorganization of state government. In response to these fiscal needs, Miller advocated a state income tax over the objections of those who wanted a sales tax. The Legislature was hostile to his recommendations and bitterly opposed his efforts. Finally, he was able to get through the Legislature a constitutional amendment authorizing a state income tax, but the Alabama Supreme Court held that the amendment was flawed and could not be submitted to the people. He tried again the following year, and the Legislature rejected his second proposal. Undeterred, he called another special session of the Legislature, and this time was finally able to get the Legislature to submit the constitutional amendment authorizing an income tax and also including a balanced-budget provision so that the state could not spend more in any one year than the funds available for that year. But he didn't stop there he campaigned aggressively across the state for the ratification of his amendment, urging the fairness of an income tax that, in those Depression years, would only affect people who were making money. He was successful, and I don't know where our state would be today without the income tax, which is the result of his leadership and courage as our governor. There are two primary areas which must be addressed. First, tax reform. Most people concede that our tax system is fundamentally flawed, that it is regressive, that it is inadequate, and that it is unfair. It will be impossible for the next governor to generate the necessary revenues from existing tax sources. The constitutional constraints on legislative authority to raise revenue are so stringent that tax reform must precede funding initiatives. Indeed, a great deal of the preparatory work has been done with the report of the Commission on Fiscal Policy and Tax Reform chaired by former Chief Justice C.C. "Bo" Torbert in 1990 and the Governor's Task Force on Education and Tax Reform chaired by Tom Carruthers in 1991. It would probably take no more than 60 days to update those reports and develop a tax reform plan that would assure fairness, adequacy, dependability and flexibility hallmarks of a sound tax system. In decades past, governors and legislatures have dealt with revenue shortages for the short term. They have accelerated tax collections from one fiscal year to another; they have used accounting gimmicks to reflect paper gains; they have used interfund transfers and other fiscal tricks to avoid the prospect of new taxes. Time has run out. A decade or more of financial gamesmanship is about to end. The Band-Aids, Scotch tape and bailing wire can't hold government funding together any longer. Now it's time to pay the piper. And we need to do the job right. Eighty million dollars of the tobacco settlement proceeds were transferred to Medicaid to pay current obligations. One-time money simply can't be used for current operating expenses. A few days ago, a prison official suggested funding for a 400-inmate new prison, citing 1,000 state prisoners in county jails. For too long, half measures have been used to buy time instead of solving the problems. Constitution: Second, constitutional reform. Tax reform is impossible without constitutional reform. You are aware of the rigid and confusing provisions of our antiquated constitution. Filled with constraints and prohibitions, our constitution is an obstacle to dealing with the immediate problems we face. The problems are clear. The media have made the case for the compelling needs. The people understand these needs and expect our leaders to develop programs to make state government work. The alternative is simply unacceptable. Albert P. Brewer was governor of Alabama from 1968 to 1971. This is taken from his Jan. 30 speech in Birmingham at the annual meeting of the Public Affairs Research Council of Alabama. 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Citizens for Constitutional Reform Foundation, Inc. P.O. Box 34 Montgomery, Alabama 36101-0034 E-mail: accr@constitutionalreform.org |
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