TAX REFORM: WHAT'S BEING DONE TO SOLVE THE PROBLEM IN ALABAMA?
By Edgar Gentle

Change was the theme of the 2002 elections. Every politician seeking a vote wanted to change the way the state conducted business, funded education, and ran the state government. We are encouraged that the voters seemed to respond to the calls for a change, and we are pleased to report that a number of groups have emerged to lend a helping hand in this effort.

While seasoned veterans of the tax reform wars such as AEA and The Public Affairs Research Council of Alabama (PARCA) continue to provide leadership in these areas, brand new groups such as the Campaign for Alabama and the Citizens Commitment have emerged as ready, willing and able to put a shoulder to the wheel.

We have discussed the woeful state of Alabama's tax system and its adverse effect on the education budget over the last several weeks, but we need to express our cautious optimism that significant restructuring of the failing tax system is highly possible within the next few months.

Let's look at some of the groups and the ideas being developed.

. It was formed in the fall of 2002, right after the general election, by members of the Alabama business community to push for comprehensive reform to find sustainable revenue to fund the essential services of state government. With this being said, the Campaign for Alabama also pledged to build a "higher level of confidence in governmental spending." Though this means budget cuts, cautious optimism may be warranted.

The Campaign for Alabama enlisted Bill O'Connor Jr. as its manager and Sid McAnnally as its assistant manger and director of policy development. Bill O'Connor is an established leader in this state, having run the Business Council of Alabama (BCA) for half a decade.

While our most recent and vivid memory of his effectiveness in this state is his valiant and successful defense of the BCA membership during Governor Siegelman's December 2001 special session addressing our corporate tax system, we have to realize Mr. O'Connor's keen awareness of the funding problems from his long tenure with the University of Alabama. Also be aware that Alabama Arise, an advocacy group for the poor, is a member of the Campaign for Alabama.

Sid McAnnally is an attorney from Decatur with an impressive pedigree in the area of reform as well. Sid previously served as Governor Jim Folsom's Policy Director, and he has pushed for reform through service on many different organizations including his service to the Alabama Citizens for Constitutional Reform. McAnnally is charged with shaping policy for this group, and he has shown an interest in all options. McAnnally also understands the constitutional problems surrounding tax reform, and this knowledge will add tremendously to the effort.

The businesses backing the campaign include some of the state's largest employers, and they should have a vested interest in the education of their future workforce. This group includes Bellsouth, Energen, Protective Life, Royal Cup, SouthTrust and Vulcan Materials. Thus far, the campaign seems to be considering every option available to stabilize our revenue sources and is not interested in any measures that will diminish teachers' salaries. This open-mindedness toward the problems at hand must be encouraged, and I applaud the campaign for keeping everything on the table.

O'Connor, the manager of the Campaign for Alabama, was quoted when he assumed the post as saying, "Alabama's future is tied directly to the quality of education in the state." He is right on target. Although the campaign has not produced any definitive policy proposals to date, and miscued initially by suggesting that residential property tax increases may make up the tax shortfall, it is refreshing to note this group's willingness to discuss the need for change. The campaign also understands that we cannot dig our way out of this hole with budget cuts.

The campaign has not shied away from discussion of changes to the ad valorem tax system or the income tax system. The group realizes these changes will take constitutional amendments and votes by the people, but the Campaign for Alabama's willingness to keep these revenue sources in discussion is important. This group seems to understand that everyone owning property will feel the bite of property tax.

I sincerely hope that the Campaign for Alabama will stand firm in opposing the push of certain segments to target the ad valorem burden only on the backs of the residential homeowner. The path of least resistance will be to unfairly allow the large landowners again to wiggle out from paying their share.

The Campaign for Alabama has also expressed an interest in reforming the state income tax to a system that is less oppressive to the working poor. When raising the threshold on payment of personal income tax from $4,600 for a family of four, we have to make up the lost revenue. The idea developed by some, and not rejected by the Campaign for Alabama, is to eliminate the state income tax deduction for federal income tax. We need to watch this measure closely to make sure that the same rule applies to corporate as well as individual income tax. The necessary referendum ballot should clearly describe the changes we are making.

Finally, the Campaign for Alabama apparently recognizes the need for home rule. If we can simply get the decisions regarding local school systems into the hands of the people living with the local school systems, Alabama will be in the home stretch of the race for excellence. Everyone should welcome the Campaign for Alabama into the discussion, and we must avail ourselves of their resources as we work to finally overhaul the car's engine instead of fixing the flats.
BCA Admits Need for Change
According to its Web site, the Business Council of Alabama represents nearly 5,000 businesses and industries across the state, and its has committed itself to tax reform. A poll of BCA's members shows tax reform be the utmost concern for the 2003 legislative session. As it has been said over and over, these members represent the largest consumer of the products of our state's educational system, so they should be concerned about the quality of the ingredients.

One of the measures supported by the BCA whose time has definitely come is the streamlined sales tax initiative, which would allow sales tax on Internet sales, and requires congressional and state approval. As I pointed out in a previous article, we as a nation lose $19 billion a year in sales tax revenue on Internet sales. The BCA's support of this system is most welcome, and its influence in Washington will hopefully prove helpful when Congress votes on this initiative.

History has taught us, however, to scrutinize carefully any "tax reforms" advocated by BCA. Recently, at a Birmingham tax forum meeting, BCA counsel presented some tax "reforms" that would largely be tax reductions for big business.

The BCA supports another "reform" measure on its Web site, that is a singularly bad idea. There has been a move afoot for some time to create a separate tax court headed by a judge with specific training in tax matters, instead of having the state's tax judges serve at the pleasure of the revenue commissioner under present law. I dismiss this idea as folly because of the possible pitfalls. Those persons "trained in tax matters" to fill this department would for the most part be tax preparers who have represented taxpayers or former Department of Revenue employees who have shown their pro-taxpayer colors.

A better way to accomplish the goal of the BCA is to train special masters in tax for the existing courts. These individuals could not have any taxpayer clients, and they could be employed by the court system.

The Citizens Commitment: Bringing People to the Table
The Citizens Commitment is a broad-based group of non-profit organizations from throughout the state of Alabama advocating the interests of the impoverished and children during the tax reform discussions. The group was convened by VOICES for Alabama's Children and Alabama Arise, and continues to grow in membership and support. The colloquium advocates a tax system that is fair, efficient, reliable, simple, transparent, adequate and revenue-positive. As this is the only tax-reform advocate with a defined statement, let's try to apply its criteria to the tax problems addressed in previous articles.

The system must be fair. The system must be progressive and based on ability to pay. It should be broad-based and not exacerbate the tax burden on the working poor. Examples of this would be to reform the income tax thresholds and diversifying our revenue sources to include intangibles and other items currently not taxed.

Efficiency and reliability go hand in hand. The system must operate without unnecessary waste of time or other recourses, and the system must produce a steady source of revenue affected little by changes in the economy. Ad valorem tax is the most logical source of steady, reliable income.

Simplicity must be the hallmark of any new system. Compliance with the tax requirements must not be complicated or burdensome, and all affected must be able to understand the tax code. An example of simplicity would be to base our ad valorem system on a comprehensible measure of fair market value rather than the inscrutable mileage. We should assess so many cents per certain amount of value.

Transparency in the tax system will satisfy everyone involved that all taxpayers are paying their fair share. Information should be readily available to all taxpayers, and measures must be in place to assure compliance.

An adequate system will be a revenue-positive system. The system must produce enough revenue to adequately fund the needed services, and this will necessarily mean that the new system produces more than our current system.

We applaud these criteria for tax reform and challenge our Governor and legislature to use them as a yardstick with which to judge success.

The Citizens' Commitment is eager to discuss all options produced by any other reform group, the legislature or the governor. In fact, it is exciting that the campaign for Alabama has invited at least two Citizens' Commitment board members to serve on the Campaign's board. I am indeed pleased to note such an appearance of cooperation between two of the leading groups advocating long overdue tax reform.

A Lick and a Promise From a Constitutional Committee
Another group that will ultimately have to address tax reform is Governor Riley's Citizens' Constitution Commission. Co-chaired by former Secretary of State Jim Bennett and Birmingham attorney Lenora Pate, this commission is not necessarily interested in rewriting our antiquated centenarian constitution, but has pinpointed a few areas for examination. Two targeted issues directly affecting our tax reform efforts are home rule and a tax supermajority measures.

The commission's most recent home rule proposal seems to provide a mechanism for counties to raise their own revenue through referendum vote. However, the power to raise ad valorem tax is eviscerated by the constraints of Section 217 of the 1901 Constitution, i.e., the lid bill. Under the Governor's home rule proposal, south Alabama would continue to be a tree farm of big business, which would avoid its fair tax burden. It is high time we removed the yoke of our old constitution once and for all. As Fob James, the last governor to try to rewrite the constitution, said, "Let's start clean." I urge the commission the revisit its toothless home rule proposal to establish more representative forms of local government unfettered by the fear of progress.

Another backwards proposal by the commission is to require a 60 percent supermajority on any legislative measure raising revenue. As we have discussed previously, this will have a chilling effect on this state's ability to adapt to our state's changing needs and responsibilities. The better approach may be to restructure the procedure and required vote for an override of the governor's veto, which now only requires a majority vote of the legislature.

Get Involved
We are excited by the interest and diligence of the groups studying tax reform in this state. At the same time, however, we must be vigilant that the job is done correctly.

We encourage you to support the groups intent on better funding our schools. The only way to change Alabama's tax system is by revolution, with each citizen having a duty to participate.

The governor and the legislature must be encouraged to address a broad range of problems concerning the tax system, and they should know that we are all ready to help.



HBCUs: A TWO-WAY STREET
By Christopher Bazuaye

Like the old adage about which comes first the "chicken or the egg," there is much debate on which comes first, education or the financial support. Good education requires finances and there is a strong relationship between sound financial support and a viable and vibrant education.

Historically Black Colleges and Universities (HBCU's), like all institutions of higher learning are the developmental grounds of any community. They provide the essential elements for the opportunities and growth available to the community:

- Research
- Quantifiable trends
- Future projections (actuarial)
- Leadership training
- Scientific support for business and public policy

It is interesting how academicians are usually not directly involved in the tactical aspects of business plans or implementation of public policy. Yet, the works of these individuals are the ingredients that fuel enterprise and policy. Most of the largest cities in the southeast have at least one HBCU within its metro/statistical area. These institutions must play a greater role in the public policy and enterprise of the communities.

It is interesting to observe that a lot of the leadership of these cities are alumni of the local HBCU. Even more fascinating is the theoretical observation I made to a very successful business friend: "…there is a linear (related up or down) correlation between the capacity and involvement of the local HBCU and the (economic) progress of the adjourning municipality." I have not done a socio-financial model to quantify this, but a quick scan of cities with a HBCU does seem to make this theory worth exploring.

At the very least, HBCU's are a primary source of leadership training for the black community and their involvement and assistance in policy-formulation must become greater.

The relationship between the two (HBCU and adjacent municipality) is symbiotic and will yield positive mutual benefits. By supporting these municipalities and its leaders, HBCU's will create grater success from which it will benefit in various ways including financial and developmental support. It is true: "True love is a two-way street."



ALABAMA INDEPENDENT MOVEMENT: TAKE AIM
By Bob Friedman

The Alabama Independent Movement (AIM) had its first of three organizational meetings on Saturday, April 5, 2003 in Birmingham.

Is this about party building? No. All though one could easily make the argument for the need for multi party democracy in this state and the nation, at this point, party building tends to follow the model of the two existing major parties. Party building must also conform to the filing deadlines and reporting instructions set by state laws--laws written by the same two major parties. All of these constraints tend to force a top down process (dealing more with deadlines than organizing).

It is time for independents - 35% of the voting electorate as determined by the latest CNN/USAToday/Gallup poll (Republicans 32%, Democrats 31%) - to assert ourselves. It's time to determine that independent voters are not just a swing vote that chooses between the major parties. Independents do that, but some also only vote independent, some also only vote third party, and some also only support candidates who support various issues.

As independents, we act in many ways but fundamentally, we are not happy with the two party system which is fundamentally undemocratic. The ballot access laws, laws governing campaign finance, terms of office, citizens initiative and debates are weighted heavily in favor of the major parties and their candidates.

In our state legislature, Rep. Ken Guin, (D-Carbon Hill) who chairs the House Constitution and Elections Committee, introduced legislation (HB77) to make it more difficult for third parties to run candidates. In the Senate, Sen. Hank Sanders (D-Selma) introduced legislation to make it easier (S-284). We need to find ways to open this electoral system to millions of Americans who don't play two party, lesser of two evils, special interest politics. And to do that, we need to build a movement from the bottom up.

Over 800 independent activists from 32 states met in New York in January to talk tactics and shape the impact independents might have on the choosing of a 2004 presidential candidate. One of the outcomes of that conference was an agreement to convene a National Independent Convention in New Hampshire in January 2004, the same time as the New Hampshire primaries. Thousands of independents will decide whether to endorse one, two, or maybe no presidential candidate…but the candidates will be there and can make the choice to address the convention. Some already see the leverage in this tactic and have made plans to attend.

How do we bring Alabama's share of those thousands of independents to New Hampshire? AIM has begun a phone survey to find other independents. It stands to reason that if we are 35% of the population, then 3 out of 10 survey respondents could turn out to be independents. Our initial response rate has been between 10-15% positive. We need other independents to join us in doing this survey. It's easy and fun. Your white pages are your lists. Positives are invited to an organizing meeting such, as we'll have in Birmingham on April 26th.

For more information, call Bob Friedman at 205-933-1723 or email us at takeaim2004@hotmail.com



DONALD V. WATKINS' STATEMENT CONCERNING HIS PURSUIT
OF A MAJOR LEAGUE BASEBALL FRANCHISE

Birmingham, AL -- Last year, I have had several very positive discussions with individuals involved in Major League Baseball. They have shown me that my ambition to become an owner of a Major League Baseball team is a concept, which they look upon with favor as they continue to process my application. As we continue through that process, we will of course continue to assess with care the impact of the intense economic uncertainty confronting Major League Baseball over the next several months as the owners and players strive to reach an agreement on a satisfactory contract. I am most grateful for the support and advice I have received from Major League Baseball as I continue to seek the franchise which is right for me.

I have narrowed my options, and I am undertaking the requisite due-diligence with all deliberate speed. However, that speed is likely to be governed by overall developments in Major League Baseball economics over which I have no control. I am under several confidentiality agreements, which make any further public comment on my pursuit of a team inappropriate and impossible. For that reason, I would like to take this opportunity to thank all of the fans and others in the baseball community who have so earnestly supported me. When we finally complete the application process in the coming months, you will be the first to hear about it right here on the Voter News Network website.