Alabama GOP Governor, Christian Coalition Support Billion-Dollar Tax Increase

By Christine Hall | July 7, 2008 | 8:21 PM EDT

( - Alabama's Republican governor, the president of the Christian Coalition of America and a handful of business groups are spearheading an effort to raise a net $1.2 billion per year in tax revenue.

Farmers, small businesses and anti-tax groups at the state and national levels are warning of dire consequences for the state's economy, for taxpayers and for long-standing GOP unity against tax increases.

"Montgomery has plenty of money to do the essential business of government, and there is no need for them to raise taxes even higher," said John Berthoud, president of the Washington, D.C.-based National Taxpayers Union (NTU).

Even though state spending has been growing at a nearly 6 percent rate over the past five years, the Riley tax increase would boost the state's $16 billion budget by nearly 10 percent.

"It's going to have some pretty devastating impacts on the economy," Berthoud added. He pointed to studies showing states that passed tax hikes a decade ago had "much lower" economic growth thereafter.

Paul Prososki, state government affairs manager for Americans for Tax Reform, said conservatives are "pretty puzzled" by the decision of Christian Coalition President Roberta Combs to endorse the tax hike package. Combs labeled the plan a "bold and courageous initiative" and urged Alabama voters to "seize this transforming moment.''

Combs' decision reportedly surprised the Alabama Christian Coalition, which is opposing the measure.

The national Christian Coalition, which did not return calls seeking comment, "has kind of been in decline for the past few years," Prososki charged.

But fiscal conservatives are foremost peeved at first-term Alabama Gov. Bob Riley who, as a member of Congress, signed a pledge not to increase taxes.

Prososki believes that Gov. Riley cleverly earned support from big business interests and Bible belt conservatives by constructing the tax package to, respectively, dole out corporate welfare and "talk about social justice."

"There's only one other governor who even comes close" to the "bad example" set by Riley, Prososki said. That's Nevada Gov. Kenny Guinn, another Republican supporting tax increases.

"These two people threaten the unity of the entire anti-tax coalition," said Prososki. "Gov. Riley and his people have tried to split the social conservative movement."

The complicated Riley tax package relies on tax decreases for some constituencies, coupled with big tax increases for others. The package includes tax increases on income, sales, services, property, corporate profits, insurance premiums, mortgages and deeds, and cigarettes.

But a long list of state groups - education spending interests and the state chambers of commerce - want the tax increases.

"Our chamber has historically been in favor of comprehensive tax reform, not piecemeal tax initiatives which single out one business over another," explained Anna Buckalew, spokesperson for the Montgomery Chamber of Commerce.

"This is the first revenue package we have seen that addresses the state's critical issues in education funding shortfalls, infrastructure development and building the kind of quality of life that we advocate is essential for economic development," said Buckalew.

The tax increases "will be a net job creator," Buckalew said, giving the state a better public and higher education system.

But without the tax hike, Buckalew said, the legislature will have to go back into session to solve the state's $625 million shortfall.

Fiscal conservatives contend that the state hasn't done enough to trim the bureaucracy and refinance state debt. But Buckalew disagrees, saying the state is having the most trouble funding education, teacher health insurance costs and the prison system.

Riley himself has warned that Medicaid prescription drugs, nursing homes and state troopers will also face cuts without new tax revenue.

"Go tell someone in a nursing home: 'I'm sorry we have budget problems; go find other arrangements,' '' Riley told Alabama's Times Daily.

"What's happened is over years of...trying to make ends meet with no new revenue streams and not sufficient revenue, the state has leveraged everything it's been able to up to this point, and we're just at a crisis point right now," Buckalew said.

The Alabama Retail Association is also supporting the tax increase package. Association President Charles McDonald said it's a plan that places most burden on wealthy taxpayers but doesn't single out any one industry to bear the brunt of the higher taxes.

"We want a broad-based, across-the-board, share-the-pain tax package," said McDonald. "And I don't believe you could put one together that met that criteria better than the one that Gov. Riley came with.

"It's always been this organization's position that this state was not meeting its potential because we didn't have sufficient funds to provide the essential government services," said McDonald.

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