Anniston Star.com
Insight
The False Campaign ... Opponents conducting misleading campaign to scare and confuse
By Caroline Novak
Special to The Star
07-27-2003
On Sept. 9 the people of Alabama will have an historic opportunity to chart a new course for this state. Before us is a comprehensive plan that will enhance academic achievement, bring balance to an inequitable tax system and increase controls over how taxpayer dollars are spent. All of this while keeping Alabama’s taxes among the lowest in the nation. That’s the good news. The bad news is that opponents of the plan, unable to attack the Plan for Progress on its merits, have launched a premeditated strategy designed to misinform and confuse the voting public. At the risk of giving their distortions further ink, it’s time to set the record straight. The stakes are simply too high to allow unfounded and irresponsible assertions to go unanswered. Faced with a momentous decision, the people of Alabama deserve the facts.
Following is a list of false claims Alabamians have either already been told or will be told before they vote in September.
Opponents are saying: “Property taxes will go up 300% or more.”
The truth is: State taxes represent a very small percentage of our property tax bill. Property taxes will increase 6 percent to 7 percent per year during the first year. At full phase-in, beginning the fifth year, the overall property tax increase will be approximately 25-30 percent depending on where one lives.
Homes: For example, property taxes on a $100,000 home will increase by less than $12 per month — and that won’t be until the fifth year after the governor’s plan passes. In addition, The Plan for Progress increases Alabama’s homestead exemption from $40,000 to $50,000, so many Alabama families will actually receive a property tax cut.
Farms: For the first time ever, family farmers will be able to take a farmstead exemption of 200 acres or $150,000 in improvements. Seventy percent of Alabama’s family farms are small enough to qualify for a full exemption under this plan, and many farmers will actually receive a property tax cut. Even after the plan passes in September, Alabama’s property taxes will remain lower than the Southeastern average and half the national average.
Opponents are saying: “The plan places an unfair increase on working families.”
The truth is: Working families are the greatest beneficiaries of The Plan for Progress because the first $20,000 of their earnings will now be exempt from taxes, up from the current level of $4,600. Child exemptions will increase from $300 to more than $2,000. Sixty-seven percent of wage earners in Alabama will pay the same or less in state income taxes, and when federal tax changes are taken into account, 85 percent of Alabamians will pay less in combined property and income taxes than they pay now.
Opponents are saying: “The plan hurts senior citizens.”
The truth is: Under The Plan for Progress, seniors over 65 will pay no state property tax on their homes and social security income is tax exempt. In addition, seniors with money in defined contribution plans, like 401(k)s and IRAs will be able to exempt the first $40,000 of income they withdraw. Few other states protect their seniors’ pensions more strongly. The plan also raises the income threshold at which Alabamians will begin paying taxes from $4,600 to $20,000, which will benefit working families and seniors living on fixed incomes.
Opponents are saying: “The plan eliminates “current use.”
The truth is: More than 98 percent of Alabama farms are smaller than 2,000 acres and will be protected under the current use cap that is included in The Plan for Progress. Large landowners owning more than 2,000 acres of farmland or timber will see their taxes increase, but only to an amount that is in line with Southeastern average.
Opponents are saying: “Utilities are getting property tax cuts, while homeowners and farmers are paying more.”
The truth is: There is not one single case where any utility will pay lower property taxes than it does now. To the contrary, every utility will pay more in taxes, while many homeowners and family farmers will get a property tax cut.
Opponents are saying: “The plan raises more
than double what we need to balance the budget, and many estimate it will raise up to $2 billion.”The truth is: There is a documented shortfall of $675 million in next year’s budget in the Education Trust Fund and General Fund alone. The Plan for Progress will raise $650 million for the state in the first year, which will still require increased efficiencies in the budget just to keep services at current levels. Revenues will increase incrementally each year to reach $1.2 billion in the fifth year. No credible estimates have refuted these projections, which are supported by both the Legislative Fiscal Office and the Alabama Department of Revenue.
Opponents are saying: “The plan doesn’t take into account the $230 million the governor says he has saved since taking office.”
The truth is: The $675 million deficit does take into account the cost savings the governor has realized. The shortfall would be significantly higher had the governor not already cut spending so dramatically.
Opponents are saying: “The plan doesn’t take into account the $270 million the federal government is sending back to Alabama.”
The truth is: The impact of the $270 million coming back to Alabama from Washington is reduced by half because the federal government has allowed for faster depreciation rates for corporate income taxes. Also, this is one-time money, and, as Alabama has learned from past mistakes, it would be short-sighted to fund essential services with one-time money when long-term solutions are needed.
Opponents are saying: “There is not enough accountability built into the plan and only a token effort at earmarking.”
The truth is: The Plan for Progress represents the strongest accountability measures undertaken in Alabama history. For the first time, there will be criminal sanctions for pass-through pork. The Tenure Commission will be eliminated and replaced with a process that makes it easier to fire ineffective teachers and incompetent school employees. Tenure for school administrators will also be eliminated.
Opponents are saying: “The governor campaigned on prior-year budgeting. Why isn’t that part of the plan?”
The truth is: Gov. Riley remains committed to prior-year budgeting; but it can not be implemented while new revenues are being phased in. Once these tax reforms take effect, the governor will be in a position to address this issue.
Opponents are saying: “Our tax dollars won’t be protected from wasteful spending.”
The truth is: All tax dollars generated by The Plan for Progress will go into the new Alabama Excellence Initiative Fund. By law, none of this money can be earmarked and funds must be re-appropriated each year to ensure the money is used where it is most needed and that its distribution is clear and identifiable. Most notably, Gov. Riley has, through Executive Order, named a Citizens Oversight Task Force, made up of business leaders and financial experts from across the state, who will monitor the AEIF and report expenditures every month. As a result, the governor and lawmakers will be required to explain the use of your tax dollars on a regular basis.
Opponents are saying: “This plan will cost thousands of Alabama jobs and millions in disposable income.”
The truth is: Some Alabama economists have called into question the out-of-state report on which this claim is based, noting among other things that the Massachusetts report draws conclusions based upon flawed assumptions not reflective of the Alabama economy. The Plan for Progress will create tens of thousands of jobs by strategically investing in human capital. There is a direct relationship between the quality of a state’s education system and the strength of its economy.
The key to economic success is developing a highly skilled workforce to attract higher paying jobs and industries. Other states that have invested in education, even those with low per capita incomes at the time, such as North Carolina and Texas, have seen dramatic increases in personal income, industrial recruitment, and educational achievement. That’s why business and economic development groups like the Business Council of Alabama, the Alabama Realtors Association, the Alabama Retail Association, the Chamber of Commerce Association of Alabama, local chambers of commerce across Alabama and many other groups who are committed to improving Alabama’s economic competitiveness support this initiative.
Come Sept. 9, we will all have the opportunity to take a stand — the result of our actions will determine the direction of our state for generations to come. That’s why it’s important to take the time to study the plan, sift through the rhetoric and draw a conclusion based on the facts.
Caroline Novak is chairman of the Alabama Partnership for Progress.
