We’ll have to tax somethingPublished 12:00am Wednesday, April 10, 2013
The 2013 legislative session is heading into the homestretch. Balancing the State General Fund Budget will again be the paramount problem this year as they put the final pieces of the puzzle together. It is apparent that there is not enough revenue to meet the basic needs of state government.
The governor and the legislature have adamantly declared that they will oppose any new tax increase measures. It is obvious to even the most casual and cursory observer that this cavalier ostrich approach cannot prevail forever. If the state survives until after the 2014 election, when the governor and legislature will not have to run on a no new tax pledge, what new revenue sources will be on the table?
First on most lists is an increase in the cigarette tax. A $1 per pack increase would raise an estimated $230 million per year. That is not an insignificant amount of money. In fact, it far exceeds the amount of money that legislators took from the Alabama Oil and Gas Royalty Heritage Fund to balance this year’s budget.
The cigarette tax would be a logical tradeoff to offset the increasing cost of Medicaid.
Without a doubt smoking is a major contributor to the costs of these programs. According to a study released in 2010, the annual direct cost to Alabama’s economy caused by smoking is more than $1.5 billion. That is staggering. This same study revealed that the average smoker spends more than $1,800 per year on cigarettes. The most devastating fact discovered by the report was that cigarette smoking leads to more than 10,000 deaths a year in Alabama.
The second obvious source of revenue would be a state lottery. This would require a statewide referendum. It failed when first proposed a decade or so ago. However, it would more than likely be approved by Alabama voters today, especially if it were a clear and simple proposal.
However, we have probably missed the boat when it comes to reaping the kind of revenue other states receive. Every state surrounding us has already implemented a lottery. Georgia, Florida and Tennessee get a lot of our gamblers’ money via their lotteries. Mississippi gets even more Alabama dollars with their casinos. Nevertheless, we could receive $300 to $500 million. That is nothing to sneeze at given our budget problems.
If the legislature does not like the idea of giving you a chance to vote on a lottery, then there are creative ways to get at the Indian casino money if legislators are serious about cleaning up gambling. You could put a pretty high toll on the state highways and roads leading to the Indian bingo parlors. You could also simply raise the amount of income tax on any money won by any gambler in Alabama to 50 percent. The state would automatically get half of any money won at the Indian gambling monopolies.
The soft drink industry is a sitting duck for yielding tax revenue for the state. They have made a decision to cut back their state lobbying efforts anticipating that they will be vulnerable to state legislators for new revenue as well as the targets for trial lawyers. They suspect that they may be the new tobacco lawsuit paradise. Therefore, they reduced their lobbyist expenses in favor of new boutique public relations offices. The soft drink industry is a politically toothless tiger. They have no PAC, no significant lobbyist and no muscle. They are vulnerable to attack from money hungry legislators.
In addition to the soft drink industry, the tobacco industry is probably expecting an attack. Big tobacco has cut back on their big name Montgomery lobbyists and they now give a paltry $500 campaign contribution to the legislative campaigns. The soft drink and liquor companies do not even give that much. In the old days that kind of arrogance and lack of power would have invited a tax increase even if the state did not need the money.
The Republican legislature is able to run roughshod over the state employees and teachers because they are a defeated foe. The once vaunted AEA and ASEA traditionally supported Democratic legislators. They have been banished to the hinterlands the same way the Huns destroyed their vanquished victims.
However, vindictiveness will subside and the Republican leadership will come to the conclusion that they cannot continue to balance the state budgets on the backs of teachers and state employees.