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By Dana Beyerle November 25, 2001 The lid bill and the current use law, two constitutional amendments Alabama voters approved in 1978 and 1982, govern the taxation of rural land, including the state timber industry. And the taxes on timberland and farms are low, compared to some other states. (Supporters of the current system say yes, but Alabama’s sales tax is high and so is its income tax.) The aversion to taxes on farm and timberland goes back to the 1875 constitution, written after the Republican Reconstruction period ended and a benign neglect of the state took effect in Congress and national political circles. Wayne Flynt, a history professor at Auburn University, said the 1875 constitution limited property taxes because the people who wrote it believed blacks and their white Republican allies had been too generous in providing state services - supported by too many taxes - following the end of the Civil War. Also, some Reconstruction Republicans used tax revenues to encourage business and industry in Alabama during the 19th century. "There was a fair amount of opposition to industry in the 1870s and 1880s and a lot of 19th century resistance to industrialization and the thought that the state ought to subsidize it," Flynt said. That resistance was written into the constitution. The framers of the 1901 and current constitution kept the lid, or cap, on taxes. "To some degree it’s a race thing that recognizes that poor blacks had tried to provide more social services than most white Alabamians wanted and didn’t want the taxes to fund them," Flynt said. "It capped taxes that could be used for infrastructure development, and it doesn’t provide the kind of money for a good education system and a skilled workforce," he said. The 1901 constitution is still around, as well as the mindset that kept land taxes low, particularly on land that grows timber. The timber industry, including commercial and private landowners, retains about 85 percent of the land in the state, according to a 1998 report, but timberland accounts for only about 17 percent of the state’s assessed value for taxation. Private, non-industrial landowners own about 70 percent, paper mills 10 percent and the government about 5 percent. The federal government makes payments in lieu of taxes in counties where there are national forests. In 2000, the harvest was 1.13 billion cubic feet producing $877.7 million. Property taxes on timber are low in Alabama compared to other states - as little as 95 cents an acre per year here, but up to $4 in Georgia. Under a new assessment system, taxes on timberland range from 95 cents per acre for nonproductive timberland, $1.19 per acre for poor timberland, $1.67 per acre for average timberland and $2.19 per acre for good timberland. Georgia, Florida and Tennessee have no severance tax that has to be paid when trees are cut, but in Alabama the tax produced $6.2 million last year. So why is timber the proverbial whipping boy when questions arise about the constitution and timber taxes? Flynt said historically, many farmers relied on timber for their income but were paid only when the crop was cut and did not want to pay taxes when they had no cash between cuttings, which could be as long as 20 to 30 years. Timber interests Taxes were low because of the constitution and have been kept low by continued lobbying of the Alabama Forestry Association and the Alabama Farmers Federation, Flynt said. "They argue most of their members are small farmers, wood-lot owners who don’t realize revenue every year," he said. John McMillan, executive director of the Alabama Forestry Association, said Alabama’s per acre tax looks low but is actually in the ballpark with other states when the acreage assessment and severance tax are added in. "The acreage assessment is 10 cents per acre for fire protection and the severance tax is a tax on timber when it’s cut, and both those go to the forestry commission," McMillan said. "We get criticized for that." He said property tax rates vary in counties but with current use, most landowners pay between $1 and $2 an acre on timberland. Current use means a taxpayer can elect to pay taxes on how the property is currently used - a home is used as a home and is taxed at one rate, a farm is classified like a home, and so is timberland but only if it’s actually used as timberland. Constitutional change The Alabama Farmers Federation opposes changing the constitution if it removes the rights of its members, who include tree farmers and managers, to vote on tax increases. Mike Kilgore, ALFA’s executive director, said the rural property owner lobby is concerned with classification that keeps farm property assessed at 10 percent, the same as homes, and current use. "Agriculture land is based on its current use and not its highest and speculative use as part of the lid bill," Kilgore said. "The issue of controversy is the big timber companies. But the overwhelming majority is owned by non-industrial, private landowners." Of 22 million acres in timber, 50 percent is owned by "people like my dad who owns 500 acres or less," he said. ALFA supports changing the constitution a few articles at a time by the Legislature, not a convention. "Our concern with a convention is basically how would it be done, who would do it, who would be at the table rewriting it," Kilgore said. He said farmers wouldn’t be able to be at the table during a convention because "it’s very difficult for them to leave their farms because when they leave, you’re taking one of the laborers." He also said he believes that gambling interests want to change the prohibition against gambling, and others want to remove tax laws from the constitution and put it in the hands of legislators. Kilgore said he is concerned with home rule, which gives power to local governments. "We’re for home rule where people have to vote on it," he said. "We don’t think it ought to be done by people sitting in courthouses." He said he believe groups want constitutional reform to reform taxes, "which means changing the tax structure and possibly means tax increases on people." Reach Dana Beyerle at dana.beyerle@tuscaloosanews.com. Return to: Newspaper Series |
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| Alabama Citizens for
Constitutional Reform Foundation, Inc. P.O. Box 34 Montgomery, Alabama 36101-0034 E-mail: accr@constitutionalreform.org |
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