TRUTH OR FICTION

 

 

Myth:           Alabama doesn’t need the money.

 

Reality:      Alabama’s public services – schools, prisons, mental health, Medicaid and child welfare, to name a few – have been operating on bare bones budgets for years. Some services, like prisons, have been so drastically under funded that dangerous conditions are being created. In some cases, the courts have stepped in and ordered the state to live up to its financial obligations.

 

For schools, three consecutive years of state funding cuts have taken a serious toll. Courses have been eliminated, teachers have been laid off, students have been given fewer opportunities to take the advanced courses they need for college, and some extracurricular programs have been eliminated. On July 1, the governor announced the state’s Education Trust Fund, which provides two-thirds of the funding for local school systems, has a $185 million shortfall this year. Fortunately, the state has a “rainy day fund” that can be used this year to make up the shortfall. But this crisis will leave only $60 million in the fund to offset any future deficits. In addition, years of state funding cuts have forced local school systems to live on their reserves. By Sept. 30, approximately 31 systems will have virtually emptied those reserves.

 

 

Myth:           Amendment 1 doesn’t provide accountability.

 

Reality:      The plan provides significant accountability. It:

§         Bans pass-through pork spending, which legislators have used to hide funding to pet projects.

§         Gives the state school superintendent additional authority and tools to monitor and take over the finances of poorly performing school systems.

§         Sets higher standards of training for superintendents and school finance officials.

§         Requires superintendents to provide school boards the monthly financial reports necessary to monitor their schools’ financial condition.

§         Puts school employees in upper-level management positions on contracts, making it easier to dismiss those who do not perform adequately.

§         Changes the tenure law to shorten the lengthy and expensive appeals process that often deters school boards from firing poorly performing employees. It also changes the fair dismissal law, creating a much fairer and easier process for firing support workers.

 

 

Myth:           Amendment 1 will tax small farmers out of business.

 

Reality:      The plan does raise property taxes, but it includes safeguards to minimize the impact on Alabama’s small farmers. For example, farmers pay an average state property tax of $1.25 an acre, and that will increase to $2.50 an acre on average. But, the current use law will continue, giving farmers a tax break on up to 2,000 acres of land. Since 95 percent of Alabama farms have fewer than 2,000 acres, almost all family farms will be protected.

 

                        In addition, Amendment 1 creates a farmstead exemption that gives farmers a tax break on up to 200 acres.

 

 

Myth:           Amendment 1 will unfairly tax Alabama citizens.

 

Reality:      Alabama’s current tax system itself is unfair. It places an extraordinarily high burden on the state’s poorest citizens, requiring, for example, a family of four to pay income taxes if they have just $4,600 in income. Amendment 1 raises that threshold over several years to $19,500. In addition, a study by the non-partisan Public Affairs Research Council of Alabama found that the proposed state income tax changes will lower taxes for low- and moderate-income taxpayers, who are hurt the most by the state’s reliance on sales taxes, and that the income tax changes are “family friendly.”

 

                        Nor are the taxes proposed significantly higher. For example, the average homeowner in Alabama, who currently pays $22.58 per month, will pay $7 a month more on an $80,000 home when the tax is fully implemented.

 

                        Even with the tax increases proposed in Amendment 1, Alabama’s property taxes will still be lower than all of the surrounding states and less than half of the national average. In addition, for many taxpayers, the new federal tax cut will be much larger than the increase in state tax payments, according to the PARCA study.

 

 

Myth:           Amendment 1 will hurt senior citizens living on fixed income.

 

Reality:      No other state protects its seniors’ retirement income as strongly as Amendment 1. Alabama will have one of the best pension exemptions in the country for senior citizens because, unlike most states, it will exempt up to $40,000 in income from 401(k), IRA and other such pension plans. Plus, residents over 65 will continue to pay no state property tax on their homes.

 

 

Alabama Association of School Boards - www.theaasb.org