By Bill Britt
Alabama Political Reporter
MONTGOMERY—Will blame, incrimination and meddling be the legacy of the circular firing squad known as the 2016 Special Legislative Session?
Unrelenting lobbying by various groups helped kill Governor Robert Bentley’s lottery bill SB3, which was carried by Sen. Jim McClendon (R-Springville), namely, the Poarch Band of Creek Indians, those backing GreeneTrack, VictoryLand and Alabama Farmers Association (ALFA).
Each group lost something in the last minute mugging of the lottery bill… except ALFA.
Bentley suffered, as did PCI, GreeneTrack and VictoryLand. But, the biggest losers were the people of Alabama, those who depend on Medicaid, the needy, hospitals, doctors and other health care workers.
What did ALFA have to gain by opposing the lottery?
ALFA lobbyists told lawmakers that a lottery would take money out of the economy. Over the last 20 years, a massive tax incentive passed in 1995 allows ALFA to avoid paying tens of millions into the State’s General Fund Budget. Only counting from 2008 to 2013 shows ALFA received $70.6 million in Premium tax credits, which, if paid, would go into the anemic General Fund Budget where it could offset costs for Medicaid, something the lottery was supposed to do.
Contrary to ALFA’s assertion, lotteries are profit centers for many states, as shown in an article for Fiscal Times by Jenna Herron. Her report found that with the 44-State Powerball, “School children, seniors, veterans and college students are benefiting from the hot sales of lotto tickets across the country.”
Herron’s report showed in the first week of January, Wisconsin’s “Powerball sales totaled $21.7 million, seven to 20 times the average range and closing in on the $22.3 million record set in August 2001. Michigan lotto players bought $29.5 million worth of Powerball tickets for a single night’s drawing, versus $13 million that the previous drawing. Florida’s Powerball sales for the first week in January totaled nearly $108 million, or nearly 1,500 percent more than the same week last year. These are just a few example of the state’s that participate in the Powerball lottery.
Ignoring the human cost to any form of gambling is reckless, but as Herron’s report illustrates, a lottery is not exactly a drain on any state’s economy.
During last year’s Regular Session, Gov. Bentley proposed legislation to level the playing field for insurance providers, which he determined would stimulate growth, while adding to the State’s ailing General Fund. Under Bentley’s Insurance Premium Tax plan, Alabama would remove the credit for State privilege tax paid by insurance companies, the credit for ad valorem tax paid by insurers, and the office facilities and real property investment credits. The plan estimates this would increase State revenue by $25 million per year.
Here again, ALFA engaged in a full-throttle lobbying campaign to undermine Bentley. The companies aggressive efforts included threatening any lawmaker who even considered cutting its multi-millions tax benefit.
During the debate, ALFA’s Communications Director, Jeff Helms, said Bentley’s plan would raise the Premium Tax to the detriment of business development and job growth. According to Helms, the Governor’s proposal would take away tax credits that “encourage job creation and investment in the State.”
Former Gov. Bob Riley’s revenue commissioner, Judge Tim Russell, refuted Helms’ claims. A leading expert in state insurance, Russell believes the State’s Premium Tax laws are why fewer domestic companies do business in Alabama. Russell notes that since the passage of the bill in 1995, outside investment, because of premium tax credits, has never materialized: “It could be legal, but it may not be fair,” stated Russell. “Every tax should be fair and this is why we have fewer domestic companies in Alabama today.” The state insurance giant won that battle with Bentley, as it appears to have been victorious in defeating his lottery.
The question that needs to be answered is: What is the real reason ALFA lobbied to kill the lottery?