INSIDE THE STATEHOUSE
by Steve Flowers
My tradition for over two decades has been to give my children money for Christmas. Under this system there is no returning of items. They get what they want or need. There is no way that I would know what style of clothing, color or size they like. It works well.
The most illuminating thing that occurred to me this year is that both of my daughters and my granddaughter bought all of their Christmas gifts from me online. Without question, our country and state have changed dramatically technologically in my lifetime. Therefore, Alabama and other states have to change the way that sales tax is collected. States have to find a solution and the will to derive sales tax from online purchases.
The legislature has wisely set up a budget reform task force to study, evaluate and come forward with long-term solutions to problems and loopholes in the law like online sales tax. The committee is headed by two stellar legislators, Sen. Clyde Chambliss (R-Prattville) and Rep. Danny Garrett (R-Trussville). This blue ribbon panel will review and develop recommendations as to how Alabama can adjust to 21st-century budgeting.
This non-collection of sales tax on online purchases is a serious problem and it perfectly illustrates how our tax system is more designed for the 20th century than the 21st. We, like many other states, are not keeping up with the technology shifts in the world. Legislators unquestionably have to reevaluate the state’s tax structure to reflect the new online and digital economy.
Rep. Garrett has wisely acknowledged, “We used to tax about two thirds of the economy with the sales tax. Today, we tax one third of our economy.” He further observed, “We are leaning very heavily on the income tax, and our sales tax base is eroding due to online sales.”
Another issue, which will be discussed during this legislative session, is the deterioration of our transportation system in the state. This problem is not unique to Alabama. In fact, President Trump made this a hallmark issue of his campaign last year. Most Washington political observers fully expect to see a massive infrastructure package passed in a bipartisan manner early in Trump’s administration.
Alabama needs to be poised to take advantage of this bonanza. The last major federal highway initiative came in the 1950s during the administration of Ike Eisenhower. It was also passed with bipartisan support.
According to recent studies, 15 percent of Alabama roads and highways are in poor condition and 35 percent more are rated as fair, with 25 percent of our bridges deemed obsolete. The legislature may need to look at increasing the gas tax to take advantage of this federal windfall. More than likely, a state tax contribution will be needed to match the federal dollars. Alabama’s gas tax has not been increased since 1990.
We have Richard Shelby, but he may need some help. The new Speaker of the House, Mac McCutcheon is from the Huntsville/Madison County area. The Rocket City is Alabama’s crown jewel economically. They realize the importance that adequate progressive highways are to sustained growth and prosperity. McCutcheon spearheaded the effort to increase the revenue for roads and bridges last year. About a dozen states raised the gas tax in 2016 to keep up with inflation and growth. Our neighboring state of Florida was one of them.
Speaking of McCutcheon, he is adjusting well to his new role a Speaker. He is fair and even handed. His selection of Rep. Alan Boothe to be his Rules Chairman seems to be meshing well. The House leadership has changed even more dramatically since the session began. The Republican caucus has elected Rep. Nathaniel Ledbetter of Rainsville as their new Majority Leader. Ledbetter is a freshman House member and former mayor of Rainsville. Rep. Connie Rowe of Jasper will serve as Vice-Chairwoman of the Caucus. She is the first female to hold the position. Ledbetter replaces former Majority Leader Mickey Hammond of Decatur.
Sen. Cam Ward has become the good shepherd, chief cook and bottle washer of the prison construction project. He has scaled back the size and scope of the original proposal. The legislature is trying to stay ahead of the federal courts on addressing the state’s prison overcrowding problem.
See you next week.
Steve Flowers is Alabama’s leading political columnist. His weekly column appears in over 60 Alabama newspapers. He served 16 years in the state legislature. Steve may be reached at www.steveflowers.us.