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Tax Increase Package Pulled at Last Minute: Could Come Back

Brandon Moseley

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By Brandon Moseley
Alabama Political Reporter

On Tuesday, May 12, the Republican controlled Alabama House of Representatives opened the legislative day with a calendar featuring tax increases – something most Republican House members have pledged to voters never to vote for.  In the hours before the session began though a number of sources were saying that the revenue bills would be pulled at the last second.  The plan being promoted by Speaker of the House Mike Hubbard (R-Auburn) and House Ways and Means General Fund Committee Chairman Steve Clouse (R-Ozark) would have raised an estimated $150 million annually in tax increases for the General Fund.

As expected, when the House opened at 1:00 PM negotiations were well under way on a new calendar of business.  The House Rules Committee introduced a new calendar of business that didn’t look anything like the old calendar.

Gone were the four new tax increase bills.

The biggest was a bill (HB572) to increase the tax on cigarettes by 25 cents per pack and decrease the discount to wholesalers on tobacco tax stamps from 7.5 percent to 4.75 percent. The bill was projected to generate an estimated $66 million in revenue for the state’s beleaguered general fund. HB572 was sponsored by Rep. Patricia Todd (D-Birmingham). Alabama Governor Robert Bentley (R) has asked for an 85 cents per pack tax increase.

HB267, sponsored by Chairman Steve Clouse, would increase the lease tax on rental cars from 1.5 to 2 percent. HB267 would generate an estimated $6 million.  Gov. Bentley had asked for a much larger tax increase on rental and leased cars.

The Hubbard/Clouse plan also called for a bill, HB578, to increase the fee on car titles from $15 to $25.  This was projected to generate $14 million per year for the state of Alabama’s general fund and was sponsored by freshman State Representative Chris Sells (R-Greenville).

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Finally HB581 was also on the original calendar.  HB581 raised the maximum business privilege tax from $15,000 to $22,000.  This one move was projected to generate $39 million a year for the general fund.  HB581 was sponsored by Rep. Elaine Beech (D-Chatom).

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All of the bills were postponed when the new calendar replaced the old, thus none were voted down by the House.  Any of them can come back with a new calendar.  The House and Senate are reportedly in intense negotiations on a compromise General Fund Budget.

State Senator Harri Anne Smith (R-Slocumb) said in a statement on Facebook, “There is a slow down because there is a lot of discussion between Senate and House on The REAL PROBLEM we face and that is the General Fund Budget….Sometime we are addressing one issue on the floor of the Senate while work is being done to craft a solution to other problems that take more work. The Budget will start in the house and it is good to see our own Rep. Steve Clouse (Chairman of the House General Fund) up stairs with us in The Senate Chambers sitting down with Senator Author Orr (Senate General Fund Chairman) discussing all the solutions that could be presented to the committee and the public. It is not easy to get an agreement on a solution and it is so good to see them working together. There is HOPE.”

Gov. Robert Bentley has demanded passage of a massive $541 million tax.  The Hubbard/Clouse tax plan would have just raised $150 million a year.  Most sources estimate that shortfall in the state’s General Fund at ~$261 million for the 2016 fiscal year beginning on October 1.  Speaker Hubbard also supports a compact with the Poarch Band of Creek Indians (PCI) giving the Indians a state recognized monopoly in exchange for a $250 million payment plus taxes.

Gov. Bentley has threatened to make legislators return for special sessions until he gets the tax money that he is demanding.

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