Now’s time to talk taxes with legislators

Published 1:59 am Saturday, September 26, 2015


It’s only been a few days since Gov. Bentley signed the General Fund budget for fiscal year 2016 into law. We don’t yet know what the fallout, if any, will be from the cuts, taxes, and transfers that were made to make up the revenue shortfall. What we can identify at this juncture are at least three key themes of this nearly seven-month-long debate that shape the way the state spends your money.

Bifurcated Brawl

Particularly throughout the two special sessions, much ado was made about the Education Trust Fund’s health versus the General Fund’s maladies. Transferring the state’s use tax revenues from the Education Trust Fund to the General Fund, first proposed at the end of the regular session, ended up being a key piece of the final solution–although the exact amount was haggled over until the very last days of the session. The resolve of General Fund agency heads to receive level funding was matched only by the state’s education entities’ tenacious defense. The infighting among the two factions, at times, led many newly elected legislators to question why the state has two budgets in the first place.

As the public and private squabbling dragged on, it was hard to miss the irony that Alabama is one of the only states in the Union where members of one budget committee would be pitted against their counterparts in the other. Alabama’s bifurcated, two-sided budget system leads many to adopt a one-sided mentality. Looking at the services our government provides and determining how to fund the growing list of “top priorities” at an appropriate level is the responsibility of all legislators–not just those assigned to the budget committee with the problem.


Federal Fixation

Federal matching dollars were mentioned countless times during the budget debate. Whether in the context of Medicaid, public health, or education, cuts to these and other programs were forbidden by those who warned that Alabama would lose federal dollars in the process. A recent report comparing states’ dependence on the federal government listed Alabama as the fourth most reliant state on federal funds, behind New Mexico, Kentucky, and Mississippi. In Montgomery, far too often, federal dollars are viewed as free money and provide another alternative to restraint and reform.

A vast disconnect exists between the duties owed to state versus federal taxpayers (though they are the same group). The two provider tax increases that passed in the second special session are further evidence of this–a strategic maneuver to get more federal dollars through the door at “no cost” to state taxpayers. The free market American Enterprise Institute has called provider tax funding schemes “a distortionary but legal means by which a state can artificially inflate medical costs to extract additional Medicaid funding from the federal government.”

This chronic reliance on federal money is problematic, of course, given that Congress has a harder time passing budgets than the Alabama Legislature–and a government that’s $18 trillion in debt is a risky funding source to count on. With all of this uncertainty, Alabama lawmakers would be wise to wean the state off of these dollars, rather than grow this dependency to the detriment of our state sovereignty.


Echo Chambers

It is widely understood that when lawmakers arrive in Montgomery, they leave their constituents behind and are greeted by a bevy of lobbyists and state-agency representatives working tirelessly and aggressively for or against particular matters. This year, legislators were also subjected to not-so-veiled threats from the governor and, at times, painful arm-twisting by their leadership. All the while, those who wanted to raise taxes claimed that they were not hearing any opposition from their constituents. Those who wanted to slash government said their position had largely been met with silence at home. Still, seemingly exaggerated polling data was cited when convenient to show that “most Alabamians” support this or that. (Apparently, somewhere in the state, Alabamians were begging for their taxes to be raised.)

Maybe the theme most important for the general public to understand is that there are people speaking on your behalf that you may or may not agree with. All politicians are susceptible to follow the loudest voice, even when it conflicts with their instincts. If we sit back and let a few voices dominate important statewide debates in the name of “popular opinion,” we should not be surprised to find that the end result is not what we wanted. Montgomery is not Washington, D.C.–legislators are accessible and they expect to hear from you.

Now is the time to talk to them about their decision-making over the past seven months and what you hope to see them accomplish over the next three years. Pushing for serious reforms to contain our state spending might be a good place to start, lest the taxman returneth.

Katherine Robertson is vice president for the Alabama Policy Institute.