Dialog, UA Faculty and Staff News

Advisory

Riley's Tax-Accountability Package Supports Education

Gov. Bob Riley is offering Alabama citizens an opportunity on Sept. 9 to meet a financial crisis, to support education, and to support other government services by approving his proposed tax and accountability package. The package was ratified by the Alabama Legislature in its recent Special Session. The University of Alabama supports Riley's package and encourages faculty and staff to vote in favor of the package.

Riley's plan addresses reform in three major areas: Accountability, education and tax revenue.

If accepted, Riley's plan will launch Alabama toward a new direction. Because the increased revenue the package will bring to the state will be a long term solution, not a short-term fix, the state can move toward excellence in education, increased economic development, and away from being in last place in lists that matter-like its support of public education.

The Situation

Alabama is facing an unprecedented financial crisis. The state is in serious debt and is paying this year alone $110 million on that debt. There is a nearly $700 million shortfall in revenue that pays back debt and maintains basic state functions, including support of public education from kindergarten through graduate school.

For example, the state has been spending one-time monies that haven't been paid back and are no longer available. That impacts the University and its ability to provide even minimum raises to employees. Last year's meager raises were made possible by borrowed money. If this package passes on Sept. 9, the University will be able to look at the possibility of giving raises later in the year.

Raising State Revenue for Basic Needs

Tax money that supports basic needs in Alabama have heretofore been spread around unfairly, with the poor paying more than their share and the wealthy and big timber businesses paying too little. The system has not raised enough money to live on.

A recent national study by Governing magazine (www.governing.com) entitled "The Way We Tax" found that Alabama's property taxes are "badly skewed in favor of agriculture and rural property owners." The article called the state's tax laws "ludicrous."

Riley's tax reform prong will impact income taxes and property taxes. Sales taxes will remain about the same. According to a study done by the Public Affairs Research Council of Alabama (PARCA), the vast majority -- almost 70 percent of Alabama residents -- will see a reduced net income tax burden with Riley's plan. PARCA (on the Web at http://parca.samford.edu) is a nonprofit, nonpartisan corporation that exists to collect, synthesize, and report information on issues of public interest affecting state and local government policy in Alabama.

To research how the Riley plan will affect your income taxes, go to the PARCA Web site, click on "State Taxes, Finances & Debt, then on "Analysis of Tax and Accountability Package," and finally on the sixth bullet, "How Will the Plan Affect You?"

Property Taxes

Historically, Alabamians have shunned paying property taxes, even though property taxes usually rank as the lowest in the nation. Alabama's low property tax rate has been the primary culprit in having too little funding for public education. Riley's plan would increase property taxes over a four-year period. Taxes on an average home ($80,000) will increase $7 a month by 2007.

Endorsements, Misinformation, and the Bottom Line

Alabamians will decide in about two months whether to invest in Alabama's future, which is not free, or to stay behind and face even more drastic cuts in essential services, including education. Organizations that have endorsed Riley's package include PARCA; the Business Council of Alabama and the Campaign for Alabama (www.bcatoday.org); the Higher Education Partnership, including the University Presidents' Council, consisting of the presidents and chancellors of Alabama's public four-year universities (www.higheredpartners.org); many Alabama Chambers of Commerce; the Alabama Education Association, and many others.

The organizations and Web sites listed above will aid in distinguishing good information from misinformation. University of Alabama employees are in no violation of any state ethics guidelines or laws in supporting and speaking out in favor of Riley's tax reform and accountability package.