Alabama mulls tax, government overhaul

May 7, 2003 at 1:24 PM
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MONTGOMERY, Ala., May 7 (UPI) -- Alabama Gov. Bob Riley is expected this week to call a special session of the Legislature to deal with the budget for the fiscal year beginning July 1.

It could mean a complete overhaul of the way Alabama does things. He says he will insist on more efficient operation of state government and education before he supports tax increases most officials say are necessary.

"We're not going to continue to fund a dysfunctional system," Riley said.

Some lawmakers say that in the next few weeks, Riley could propose a tax hike of more than $1 billion for the budget totaling $5.3 billion. The biggest chunk, $124 million, could come from raising cigarette taxes from 16.5 cents to 50 cents.

Riley told a meeting of Republican lawmakers Tuesday his package will include as many as 20 spending and taxation items.

But he said so far his staff, lawmakers and lobbyists have yet to agree on about 20 percent of the package.

"It's so complicated and complex and it deals with such (an) array of different considerations," Riley said. 'If we're going to reform this system, we're going to reform it comprehensively and we're going to reform it once and for all."

Riley has said 13 or 14 reform packages are under consideration.

Legislators said voters may have a chance to decide on a series of tax referendums late in the summer.

In addition to raising cigarette taxes, some of the options include increasing property taxes, imposing a new tax on soft drinks, requiring banks to pay corporate income taxes instead of the financial excise tax and taxing legal and accounting work.

Still more options include raising sales taxes on cars, pickup trucks, farm equipment and other items that are taxed less than the normal 4 percent sales tax.

On the other end, lawmakers said Riley has looked at raising the income level where residents start paying state income taxes. The exemption is now $4,600 a year for a family of three or four.

Republican Sen. Del Marsh has said Riley might try to raise that exemption to $21,000.

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