AFA Legislative Update Week 9

tax dollarsThe Alabama Legislature re-convened on Tuesday, May 5th for its 9th week of work for the 2015 Legislative Regular Session. Meeting on Tuesday and Thursday, the Legislature has now used up 20 of its allotted 30 legislative days. The House has introduced 646 bills and the Senate has introduced 467 bills. The Legislature plans to re-convene Tuesday, May 12th and is supposed to work a normal two day week.

Budget finance hysteria appears to have become the order of the day for the legislature.

The Tax & Spend Republicans in control of the House of Representatives have gone nuts. This week they released their plan to address the budget “shortfall,” which includes tax increases, enacting cost savings and pursuing a “compact” to give the Poarch Creek Indians exclusive control over gambling in the state.

The House leadership issued a “continuing” special order calendar which takes effect next Tuesday, May 12th. The calendar contains 12 bills, nine of which are tax increases.

Here are nine tax increase bills that are to be considered which will raise an estimated $145 million per year:

(1) HB572 (Todd) raising the tax on cigarettes by 25 cents a pack, $60 million.
(2) HB568 (Weaver) assessing fees on federally qualified health care centers, $3.5 million.
(3) HB581 (Beech) revising the business privilege tax, $39 million.
(4) HB240 (Johnson, K) repeals exemption from income tax withholdings, $12 million.
(5) HB593 (Johnson, K.) removing exemption on out of state residents that purchase cars in Alabama, $1 million.
(6) HB578 (Sells) increasing fees for issuing vehicle titles, $14 million.
(7) HB267 (Clouse) raising the tax on car rentals from 1.5% to 2%, $6 million
(8) HB587 (Collins) removes excise tax and applies sales tax to lubricating oil, $8.2 million.
(9) HB595 (Faulkner) requires owners of coin-operated amusement machines to pay a business license tax in lieu of sales taxes, $1 million.

Three other bills on the agenda address “streamlining” state government:

(1) HB584 (Holmes) consolidating properties owned by the Alabama Historical Commission into the Department of Conservation and placing its administrative duties in the Department of Archives & History, $1.1 million
(2) SB76 (Marsh) abolishes the 12 member Building Commission and transfers its duties to the Division of Construction Management within the Department of Finance. Also creates the Divisions of Facilities Management, Leasing Management and Energy Management, no material savings.
(3) HB257 (Knight) creates a new 12 member Permanent Joint Legislative Committee on Oversight and Accountability to provide continuous oversight of all state government operations, no material savings.

So this is what things have come to?

$145 million in tax increases and $1.1 million in reduced government spending.


Is it really easier for them to increase taxes than it is to actually cut the size of government?

Ironically, on Thursday, while the Senate was locked down in a filibuster that was designed to keep from getting to a bill that would remove the state from retail alcohol sales (estimated to save $15 million per year), the House Ways & Means Education Committee was ramming through a bill to increase the tax on lubricating oil (estimated to raise $8.2 million per year).

Regardless of what the leadership in the House of Representatives does, it appears that the Senate may take a more thoughtful and deliberate route.

orrRight now, the only material attempt in the Senate to address the budget question has been the legitimate efforts by Senator Arthur Orr to address meaningful government spending reform.

But that effort is meeting significant opposition….from both sides of the aisle.

Of course, there is also Senator Marsh’s proposal to authorize gambling at dog tracks, enter a “compact” with the Poarch Creek Indians and to institute a lottery. Though originally believed to have significant support, there are indications that this measure may not be on the fast-track.

Other than that, there is no defined plan to yet emerge in the Senate.

Here is the cold, hard, simple truth.  The state expects to collect approximately $1.6 billion in current revenues for FY16.  Perhaps a solution (that is not being considered) is to live within our means and pass a general fund appropriation bill that only spends what we have.

Stay tuned…..

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