Alabamians’ Taxing Life With Riley

When Bob Riley won election as Alabama’s governor last fall, he toted the kind of anti-tax credentials that made him a darling of conservatives and of the state’s powerful farming and timber industries.

But less than a year later, Riley, a Republican and former congressman, has turned Alabama politics upside down with a controversial proposal that would overhaul the state’s tax system and bring in $1.2 billion more -- the biggest increase in Alabama history.

Appalled at the prospect of higher taxes, Riley’s erstwhile allies have abandoned him in droves. Anti-tax groups are calling for his head. The state’s Republican Party voted to oppose the measure, which goes before voters today. Farming and timber groups that once backed Riley have poured money into an intensive advertising campaign to defeat his self-described reform and accountability plan.

The governor’s best hope for closing a budget shortfall that he estimates at $675 million rests with some unlikely rescuers: rank-and-file Democrats, blacks and the state’s powerful teachers union.

“The whole thing’s bizarre,” said Marty Connors, the GOP state chairman.

The measure -- which calls for revamping property and business taxes, as well as restructuring an income-tax structure that is the nation’s most regressive -- has been attacked in a barrage of television and radio commercials. Opponents have zeroed in on some of the package’s more obscure provisions, such as a tax on car repairs that they say will place an inordinate burden on the poor.

And polls give the plan’s sponsors little reason for optimism. Recent surveys have shown that as many as 58% of likely voters oppose it.

Support has remained scant even among lower-income voters who would be among the biggest beneficiaries -- a sign, experts said, of the level of skepticism that residents feel toward their leaders when it comes to taxes.

“Alabamians are very cynical about politics and politicians,” said David J. Lanoue, chairman of the political science department at the University of Alabama. “Alabama politicians have given them a lot to be cynical about.”

Riley spent Monday barnstorming the state in a push to turn sentiment around. He told a handful of supporters at Huntsville International Airport that the number of undecided voters had grown. “The undecided bloc has mushroomed,” he said, in remarks reported by the Huntsville Times. “Their decision will be made tonight.” The matter must go before the voters because it would amend the state Constitution.

Riley has said the plan is an effort to address the state’s worst fiscal crisis since the Depression. When he offered up the plan in May, Riley said that he already had found $230 million to cut from the budget but that that would not be enough.

More broadly than closing the budget gap, Riley said, his reform plan would work to raise Alabama’s dismal national rankings in areas such as education. The state, the argument goes, must raise more revenue and provide better services if it is to compete in a modern economy.

Eager to improve the education of the state’s future workers, business groups and some of Alabama’s biggest companies have joined unionists in backing the Riley campaign. “You can’t compete when other states are building up their educational systems and you’re cutting yours,” said Bill Smith, spokesman for the Partnership for Progress, a coalition of more than 100 organizations that favor the measure.

Riley, an evangelical Christian, has attracted notice by relying on moral arguments to justify restructuring the tax system to lighten the burden on the poor and force big landowners to pay their fair share.

Alabamians begin paying state taxes with household incomes of just $4,600 -- the lowest level in the country. Under Riley’s proposal, that threshold would go up immediately to $17,500, sparing the poorest earners from having to pay a few hundred dollars in state income taxes.

That provision has won plaudits from advocates for the poor, who say that reform is long overdue. The poorest fifth of Alabamians pay 10.6% of their earnings in state and local taxes, while the richest 1% pays 3.8%, said Kimble Forrister, state coordinator of Alabama Arise, a Montgomery-based advocacy group made up of churches and community organizations.

“It’s a big tax cut for most low-income families,” Forrister said. “We are trying to hammer home the message that for most families, the income-tax benefits will outweigh the increases in some of the small taxes.”

The unexpected role reversal -- a conservative Republican taxing the wealthy, in part to benefit the poor -- has invited comparisons to President Nixon and his opening of diplomatic relations with Communist China.

But foes of the tax measure see nothing statesmanlike about it. They say Riley double-crossed them by running as an anti-tax conservative in the Ronald Reagan mold and then proposing a massive tax hike.

“The people that voted for him feel betrayed. There was no question when he campaigned that he led people to believe he would not raise our taxes,” said Bob Gambacurta, spokesman for the Tax Accountability Coalition, which is opposing the measure. “Somewhere between Washington and Montgomery, he lost his conservative compass. He’s really done a 180.”

National tax groups have jumped into the fray by issuing scathing attacks on Riley, who was once a trusted friend. Americans for Tax Reform has sent daily updates on the referendum to political leaders around the country as a word of warning to Republicans during a year when several GOP governors have proposed raising taxes to answer budget shortfalls.

“We want all governors to learn from Riley’s error,” said Grover Norquist, president of Americans for Tax Reform, based in Washington, D.C. “Riley is the poster child for failed governance, and he’ll be our poster child for quite some time.”

Riley’s critics in Alabama say he overstated the budget shortfall and, in any case, they point out that the increase he is seeking is nearly twice the stated gap.

Farmers and those who own big parcels of woodlands said the package would strip away a provision that allows agricultural land to be taxed at a rate well below market value. Proponents said that those with up to 2,000 acres -- a category that includes most farms in the state -- would still avoid market-value taxation, although they would pay more than they currently do. Average state and local taxes on agricultural land are $1.25 an acre, a figure that would double under the plan.

What happens if the referendum fails is anyone’s guess.

Backers have raised the specter of deep cuts in spending on schools, prisons and mental health. Opponents say Riley and state lawmakers will simply have to find savings, since other money-makers -- such as a statewide lottery -- have proved unpopular in Alabama.

Riley’s own political future remains equally uncertain. With three years left in his term, most agree that he has plenty of time to rebuild ties with fellow conservatives. But it may not be easy.

“There’s no question the guy’s got guts. But I think he’s taken some very bad political advice,” said Connors, the GOP chairman. “He’s going to have to spend some time mending fences with his own base.”