Bentley seeks $541 million in taxes for general fund

Published 10:05 pm Friday, February 27, 2015

By Kim Chandler

The Associated Press

MONTGOMERY (AP) — Gov. Robert Bentley said Friday that Alabama is in a budget crisis and that he will ask lawmakers to approve $541 million in taxes in the legislative session that begins Tuesday.

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“I am a conservative,” the Republican governor told reporters. “I believe there is nothing more conservative than getting our fiscal house in order.”

Bentley unveiled proposals that include increasing cigarette taxes by 82 cents per pack, ending some corporate tax deductions, and raising the sales taxes on automobile purchases from 2 percent to 4 percent.

Bentley, who at times has been criticized for being politically timid in his first term, is starting his second with the bold move of bucking the GOP’s traditional party line against tax increases. However, his proposal could put him at odds with members of his own party in the GOP-dominated Alabama Legislature.

The governor said most Alabamians will not pay an increase under his proposal. Two-thirds of the money in Bentley’s revenue proposal comes from two sources: the increases in taxes on cigarettes and automobiles. However, Bentley said he believed most Alabamians will not be affected by his proposals.

“As a doctor, the dangers of cigarettes on my patients and the people of the state of Alabama are deadly,” said Bentley, a dermatologist. Cigarettes also take a financial toll on the state, he said, because of the money spent to treat smoking-related illnesses.

The state sales tax on automobiles, even at 4 percent, would be lower than other states, Bentley said.

A key reason for the grim budget outlook is that a voter-approved fiscal bailout for the General Fund expires at the end of this fiscal year. Voters in 2012 approved taking $145 million a year for three years from a state oil and gas lease trust fund to avoid deep cuts in state services.

Bentley said the true need in the General Fund is actually around $700 million considering money that must be repaid to the state’s rainy day fund, money owed to the federal government for Medicaid overpayments and money taken from education and transportation funds to pay for other government operations.

“We cannot ignore it any longer,” Bentley said.

Bentley’s proposal would be Alabama’s first major tax increase in more than a decade. His predecessor, Gov. Bob Riley, proposed a $1.2 billion tax increase in 2003, a measure that voters defeated by a 2-to-1 margin. Bentley’s proposals will not go to a public vote, meaning lawmakers will have the final vote.

“I have been a conservative Republican my entire life, and taxes are not popular with me. No one likes to pay taxes. No one wants to pay more taxes. I don’t like it any more than you do or anyone else across this state, but we have to face the challenges at the present time,” Bentley said.

Bentley’s proposals face an uncertain future at the Alabama Statehouse.

“The House will review Gov. Bentley’s plan and give it the consideration that it deserves,” Speaker of the House Mike Hubbard said in a statement released Friday.

The Alabama Republican Party last week approved a resolution opposing taxes as a solution to budget woes.