Must See TV- RSA’s Bronner Encourages State Employees to become more “Hostile”

bronnerYellowHammer News reported yesterday that RSA chief David Bronner concedes that nearly $1 billion in taxpayer funding is keeping the Alabama pension system afloat.  See the article by mashing here.

 

The article also references a video of Bronner addressing the Alabama State Employees Association on September 24, 2015.  Part I of his speech can be found here and Part II is here

At the 8:18 minute mark in Part II, Bronner advocates for the State Employees union to become “stronger, tougher, meaner…more hostile” in their advocacy efforts in convincing state legislators and the governor to expand government.

As you will note from watching the videos, Bronner’s presentation included advocating for higher state taxes and expansion of Medicaid under ObamaCare.  He also takes an off-color shot at Donald Trump and attacks a state legislative pension reform committee, the Koch Brothers, Troy University and the Alabama Policy Institute.

According to the Birmingham Business Journal in an April 8, 2015 article “Top of the List:  Alabama’s highest-paid state employees,” Bronner is the highest paid state employee at $572,097.  Nine of the top 25 paid state employees are employed by RSA.  The article can be found here.

Meanwhile, Alabama’s pension system is only 65.9% funded (and that’s using RSA’s own numbers) with a total unfunded liability of $15.2 billion.  This is after the taxpayers have contributed nearly 12% of the entire discretionary budget, nearly $1 billion, in FY16 appropriations.

 

 

Increased Fuel Taxes in the Pipeline Heading Your Way

The public spectacle of mass hysteria during the recent 2015 Regular Session and two special sessions has been well documented. The media, state employees and state agencies (especially Medicaid and its providers) effectively convinced legislative officials that the “sky was falling.”

As has been pointed out previously, the sky is not falling. But more on that at a later date.

gastaxQuietly, behind the scenes, an even more disturbing plot has been hatched to raise revenues by increasing fuel taxes.

Representative Mac McCutcheon (R-Huntsville) introduced legislation in the first special session (HB50) and the second special session (HB28) that would dramatically increase the fuel tax.

Currently, Alabama citizens pay $0.19/gallon of state tax on gasoline and diesel, regardless of the underlying fuel cost. McCutcheon’s legislation would immediately raise that by $0.05/gallon and then raise it $0.02/gallon per year until the rate of tax equals 15% of the “current year price.”

The U.S. Energy Information Administration’s “U.S. Regular Gasoline Prices” for the Gulf Coast Region on 9/28/15 was $2.015/gallon. Diesel for the same time period was $2.323/gallon. The 15% “cap” proposed in the McCutcheon legislation would be $0.30/gallon for gasoline and $0.35/gallon for diesel in addition to the existing $0.19/gallon.

Had McCutcheon’s legislation passed (and assuming gas/diesel prices remained constant), the 2015 taxes on gasoline would be $0.26/gallon ($0.19 existing + $0.05 immediate increase + $0.02 annual increase) or a whopping increase of 37%. Additionally (again assuming gas/diesel prices remain constant), the tax would increase $0.02/gallon per year…each year…until the total reached $0.49/gallon (an estimated 11 years of automatic increases) or a total increase of 160%!  And that’s assuming that the “current year price” does not escalate over time.

Wow!

The McCutcheon legislation actually was approved by the House Transportation Utilities and Infrastructure committee on September 14, 2015, which positioned it for possible consideration before the full House of Representatives. Given their willingness to raise revenue to continue to grow the size of state government, it’s somewhat surprising the House did not pass the bill.

The House TU&I Committee that voted the bill out is composed of Chairman Lynn Greer (R-Rogersville), Vice Chairman Joe Faust (R- Fairhope), George Bandy (D- Opelika), Will Ainsworth (R- Guntersville), Napoleon Bracy (D- Prichard), Barbara Drummond (D- Mobile), Victor Gaston (R- Mobile), Dexter Grimsley (D- Newville), Nathaniel Ledbetter (R- Rainsville), Phillip Pettus (R- Killen), Chris Sells (R- Greenville), Kyle South (R- Fayette) and Margie Wilcox (R- Mobile). A committee composed of 13 members, 9 of which are Republicans…voted to increase fuel taxes by 37% in 2015 alone!

When asked about the vote, Will Ainsworth said “I was upstairs (in the Senate) working with (Senate ProTem) Del (Marsh) on another matter when the committee met.  I would have voted no, but I certainly wasn’t there to vote yes.  I understand that it was a voice vote.”

Do we need to increase fuel taxes? Let’s look at that.

Currently the gasoline tax revenue is shared between the state (45%) and the counties and municipalities (55%) and the diesel tax goes almost entirely to the state.  In FY14, gasoline taxes generated $399 million and diesel taxes generated almost $144 million. The state uses its funds to match federal funds (ahem…that is taxpayer funds as well) and as a result, the State DOT had a total budget in FY14 of $1.45 billion.

Meanwhile, the counties and municipalities got about $200 million of the taxes collected. By the time you distribute this among 67 counties (one-half equally and the other half by population), not much trickles down to rural counties. And of that, it’s in the county’s discretion to spend it on replacing/repairing bridges, resurfacing roads, paving dirt roads, etc.

Enacting McCutcheon’s legislation would have increased gasoline taxes by $150 million and diesel taxes by $72.8 million, or a total of $222.8 million, in 2015 alone, with only $35-$40 million of that amount available to the counties and municipalities.

Even if all the allocated amounts to the counties were used to replace/repair bridges, it wouldn’t even begin to address the problem.

gastax2The graph above (produced by the American Petroleum Institute in 2012) would indicate that Alabama’s existing total tax rate (federal, state and local combined) is situated fairly normally for a southern state.

Fuel cost is one of the most critical expense items for logging operations (which includes transporting to the mills).  But, loggers also need well maintained rural roads and bridges…which costs money and most rural counties don’t have enough.

So do we need to raise fuel taxes?  Maybe, at some point….but, before we agree to that, we need to see more funding going to the counties. A good start would be to allocate the existing diesel tax in a similar fashion to that of the gasoline tax.

In the short term….one thing is for sure. McCutcheon’s bill (or one similar) will be back in the 2016 Regular Session. The Alabama Forestry Association will be formulating a position on this legislation and you are welcome to provide your input.

Stay tuned….

**Updated 10/6/15 to reflect the Ainsworth comments regarding the committee’s voice vote.