Call it what you like: tapped out, busted, broke.

   It translates to this: Schools with leaky roofs and no lab equipment, highways where motorists can speed without fear of seeing a state trooper, a public health department where the nurses clean the toilets and the director sweeps the parking lot.

    Alabama has stumbled from one financial crisis to another throughout the 20th century, and its people have suffered for it.

    Historians and other experts say the reason the state never has enough money is a constitution that shelters its resources from taxation more than any state in the country.
   
   This 99-year-old constitution with its regressive tax structure, critics say, breeds poor schools, poor public health and a high poverty rate.

    “If there were no such thing as a crisis in funding, why would the governor want to open the Alabama Trust Fund and the Heritage Trust Fund and spend the money?” asked Ira Harvey, a professor at the University of Alabama at Birmingham. The trust funds hold oil and gas windfalls that were set aside by the Legislature.

   Here in the Huntsville area, with one of the highest per-capita income levels in the Southeast, there have been several startling examples of local governments and school systems suffering for lack of cash:

• Oct. 12: Madison County voters reject a 9-mill property tax increase. The defeat means thousands of students will continue to attend school in portable classrooms, at least for the next few years.

• April 6: Huntsville leaders, desperate to make up for recent shortfalls in sales tax collections, approve tax-increment financing to get a new shopping center built.

   This public-private partnership means the city spends public tax dollars - yours and mine - to build something for private business in hopes of getting more tax dollars down the road.

• May 4: Huntsville’s school board votes to lay off 64 teachers and teaching aides. Another 64 teachers and principals will be offered early retirement.

   Superintendent Gene Thompson said there’s no choice: The school system spends more money than it takes in.

Tax breaks for some

Public institutions in Alabama are starving for money because state and local tax collections are lower than in any other state when adjsted for population. There are two reasons for this, according to a recent study by the Public Affairs Research Council of Alabama. First, Alabama has fewer resources to tax than other states. The Research Council defines these resources as the combined ability of people and businesses to pay taxes.

   By this measure, Alabama’s tax base in 1996 was $22,000 per capita. That ranked Alabama 45th among the states, 20 percent below the national average.

   Second, the effective tax rate Alabama applies to those limited resources is also low. The effective tax rate is determined by how much state and local governments collect as a percentage of the taxable resources. The effective tax rate for Alabama is 8.1 percent, or 43rd among the states.

   One reason Alabama has fewer taxable resources than other states is that so many of its people are poor.

   The other reason: Many available resources are taken off the table at tax time.

   Other resources are taxed at such a low rate that they provide a trickle to a local government revenue stream that needs a river. Take the concept called “current use,” which has been enshrined in the constitution since 1978.

   Millions of acres in Alabama are assessed for taxes at a rate much lower than the land’s market value. This “current use” valuation was designed to protect farmers and other rural landowners from escalating land values caused by creeping urbanization.

   But advocates of tax reform point to current use as just another tax break for special interests that further weakens an already anemic tax base. Current use assessments cost local governments tens of millions of dollars each year.

   Take Madison County.

   There are 276,837 acres in the county that are now taxed under current use, according to the tax assessor’s office. That land’s market value is appraised by the assessor’s office at about $476 million. But under current use, the land is valued at $122 million. To get the actual amount in taxes due on the land, you first multiply by 10 percent, then apply the millage. If the millage for rural Madison County - the lowest millage in the county - is applied, the difference is staggering.

   Under the current use taxation, the land generates $408,736 a year.

   That same land, using the tax assessor’s appraised value, would generate $1,594,151, a difference of about $1.2 million. And the difference would be even greater for that portion of the land in the Huntsville and Madison City limits, where the millage is higher.

Power of ALFA

   Current use was put into the constitution through the power of the Alabama Farm Bureau, or ALFA, according to Wayne Flynt, an Auburn history professor who has written on the need for constitution and tax reform.

   In 1978, the Farm Bureau joined forces with Gov. George Wallace to pass six pieces of legislation that came to be known as the “lid bill.”

   It lowered the assessment ratio on most property to 10 percent of the appraised value and set a cap on how much tax could be collected overall.

   The lid bill included a current use provision, but it also cut in half taxes paid by huge timber, agribusiness and corporate land owners in the first year.

   The current use provision shields those lands against increases brought by re-evaluations today.

   Wallace and the Farm Bureau told voters the lid bill would save homeowners tax money, and it was approved as an amendment to the constitution in a statewide referendum.
Flynt said he finds it incongruous for a conservative organization like ALFA to back a practice that goes against free market principles.

   “Traditional capitalism says a piece of property should be valued at what it’s worth,” Flynt said.

   For instance, if somebody owns 40 acres of pine trees next to Madison Square Mall, the land would be taxed under current use for timber, which is about $1 an acre.

   “Capitalism would argue that piece of property is worth millions of dollars because it’s located next to a major mall,” Flynt said. But ALFA spokesman Paul Till contends that current use valuation is needed to protect rapidly vanishing farm and timberland.

   If farm land were taxed at commercial values, Till said, farmers would have to sell out because the land doesn’t make enough profit. “You can’t grow cotton, you can’t farm if you have to pay taxes on property if it’s valued at $20,000 or $30,000 an acre,” Till said. “If that farmer had to pay taxes at, say, a shopping center rate, there is no way he can keep that land in agriculture.”

   Even Harvey, the UAB professor who has been a member of a number of tax reform efforts, said there is some merit to the “little old granny” argument for current use taxation.

   “Let’s suppose your little old granny owned the land for years,” Harvey said. “Granddaddy’s dead and buried there, and she’s eeking out a living. She’s living next to a big mall.

   “Should she be taxed at $5,000 an acre?”

   “You tend to side with Granny on that one.”

Two states, two systems

   But Flynt finds that kind of argument for current use specious when applied to large agribusiness and timberland. The reason the timber industry moved south, he said, is because there is a year-around growing season here with a lot of rainfall.

   Low taxes have nothing to do with it, and if they were raised, the timber industry would still be here, he said.

   For example, Flynt said, timberland in Cleburne County in east Alabama is taxed at $1 an acre. Right across the state line in Haralson County, Ga., timberland is taxed at $4 an acre.
   
   “The difference in taxes generates millions of dollars,” Flynt said. “But the forest industry hasn’t left Haralson County.” Flynt said Haralson county schools have four times the amount of revenue available to Cleburne County schools, allowing the Georgia county’s schools to have extras like early childhood programs and language laboratories.

    “They have incredible physical facilities in Haralson County, and very inadequate facilities in Cleburne County,” Flynt said. Harvey estimates the cost of current use at around $30 million annually, but he admits that’s just a ballpark figure.

   “It’s not a bonanza,” he said. “If we close this loophole, we really have not solved the funding crisis in Alabama.” Flynt agrees with Harvey that ending current use will not solve Alabama’s perpetual money crisis. Property taxes as a whole are too low in the state, they say. Alabama’s property tax burden is a little over one-third of the U.S. average and lower than any state except Delaware, according to a recent study by the Public Affairs Research Council of Alabama.

   At the same time, Alabama relies heavily on sales taxes, which hit the poor the hardest. And, while a number of Southern states with high sales taxes give income tax exemptions to balance the burden on the poor, Alabama does not.

   “I do not think it’s fair to just bash timber companies, or to just bash forest products companies,” Flynt said. “The truth is every Alabamian who owns property is paying way lower than any other state in the Union is paying.”