Alabama Considers Several Tax Increase Plans

May 14, 2015

Several tax plans have been floated this legislative session in Alabama to address the state’s FY 2016 budget shortfall that could be up to $290 million.

The first tax proposal was announced by Governor Robert Bentley in late February—it’s a mixed bag that increases seven different tax types. The second plan, floated in early May by Senate President Pro Tempore Del Marsh, proposes a constitutional amendment allowing casinos to open in the state, in addition to creating a state lottery. Finally, House Republicans released a tax plan (also in early May) that would have increased various taxes and fees and transfer funds from the state’s Education Trust Fund.

The table below breaks down the big details of each of the plans (click to enlarge):

Below are some additional resources for each plan (all of which are sources for the information in the above table):

There’s not a lot of overlap between the proposals. Both the Governor’s plan and the House plan would increase sales taxes (by adding a few purchase types to the base or increasing rates on certain types of transactions) and cigarettes taxes (by increasing rates)—but the similarities end there. The graphic below shows the relative size of each tax plan, in addition to each plan’s tax type breakdown (click to enlarge). As you can see, the three are quite different in content.

And where do these plans stand now? The House proposal has effectively been pulled—instead, House Ways and Means General Fund Committee members passed a budget that eliminated the tax and fee increases. According to NewsOK.com:

The House Ways and Means General Fund Committee approved the stripped-down budget Thursday morning, with deep cuts to state agencies after lawmakers were unable to reach an agreement on tax bills to fill a fiscal shortfall.

Chairman Steve Clouse said the cuts would cause dramatic reductions in services. However, he said it is the reality without new revenue.

Clouse said the House GOP proposal fell apart after Republican senators sent a message that they wouldn't support the tax bills.

"I spoke with the speaker yesterday and let the speaker know that in the Senate there was not wide support — very little support— for tax increases on the people," Senate President Pro Tem Del Marsh, R-Anniston, said.

Marsh is pushing lottery and casino legislation as an alternative, but those funds would not be available for the next fiscal year.

According to Yellowhammer News:

… Senate leadership is refusing to consider tax hike proposals from the Governor and the House, leaning instead toward government streamlining measures and/or passing a lottery and gambling expansion package.

By stripping tax increases out of the budget, Rep. Clouse said it is up to the Senate to come up with a revenue solution for the budget shortfall.

“With Gov. Bentley’s tax package generating little support and not a dime of guaranteed proceeds from any of the various gambling plans being floated,” he said, “much work remains to be done on the General Fund budget before the end of the legislative session.”

Gov. Bentley has said he will veto any budget that does not include significant increases in government revenue.

We’ll follow the issue as the legislative session continues. More on Alabama here. Follow Liz on Twitter @elizabeth_malm.


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