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Economy

As lawmakers consider new gas tax, Alabama remains last in per capita state, local tax collection

Chip Brownlee | The Trace

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As state lawmakers prepare to consider a gas tax increase during the next legislative session, a new report from the Public Affairs Research Council shows Alabama’s state and local governments collect less in taxes per capita than any other state in the country.

Alabama has been behind in tax collection since the early 1990s, according to the Public Affairs Research Council of Alabama, which has produced an analysis of Alabama’s tax revenues since 1988.

“This is not a new finding,” the PARCA report says. “This has been true since the early the 1990s. And it underlies the difficulties we face when trying to provide to our citizens the level of government services enjoyed by citizens in other states.”

Lawmakers have flirted with a gas tax increase in recent years, and proponents say it is imperative to raise revenues to invest in Alabama’s aging infrastructure.

In Alabama, the gas tax hasn’t been increased since 1992, when lawmakers added 5 cents to the gallon, and the state ranks 35th in per capita state and local collections on motor fuel.

Several neighboring states have increased their motor fuels taxes in recent years, leading to Alabama’s rank declining relative to other Southeastern states. In 2016, only South Carolina collected less in motor fuels taxes, but South Carolina will likely surpass Alabama in the next few years because it adopted a plan recently to gradually increase its gas tax, and its rate now exceeds Alabama’s.

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It isn’t just the gas tax that hasn’t really been adjusted in years.

Alabama’s low taxes — while they may be a positive for your pocketbook — are often the single largest contributor to near-perpetual budget crises in Montgomery, placing a significant barrier for lawmakers as they balance the two state budgets every year. It’s a constitutionally mandated requirement.

While budgeting over the last two years in Alabama has been a smoother process — largely because the state has had billions on hand from a settlement with BP Oil over the 2011 Deepwater Horizon oil spill —Alabama is expected to face another budget shortfall this year.

The last major budget shortfall in 2015 led to an increase of some taxes, including the cigarette tax and taxes on nursing home beds — but property and income taxes haven’t moved much in years. Alabama’s extremely low property taxes are the main reason tax collections fall below other states.

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If Alabama’s per capita property tax collections matched the average of other Southeastern states, state and local governments would have an additional $2 billion — yes, billion with a “b” — to spend on services and education, and the overall tax revenue per capita would be in the middle of other Southern states.

Though Alabamians are some of the most averse to taxes, the meager tax collections result in a strained pool of money for popular public services like schools, roads, courts, health care and public safety.

While Alabama has avoided passing general tax increases, it has turned to selective sales taxes. Alabama ranks high in per capita collections on alcoholic drinks (No. 3 in the U.S.) and on public utilities (No. 5) in the U.S.

PARCA conducted the analysis of Alabama’s tax revenues by relying on the U.S. Census Bureau and its annual survey of state and local governments across the country. The Census Bureau data makes it possible to compare the finances of state and local governments across the 50 states.

This year’s data is from 2016, the latest available, and tax rates haven’t changed much at all since then.

State and local spending are considered together because states vary in how they decide to divide up the taxation and collection responsibilities for funding public services and government.

Alabama has the lowest property taxes, both state and local, in the country, ranking 50th of the states. Alabama’s property taxes fund education, state and county general funds and county road and bridge funds.

The base of wealth in Alabama is also smaller than most other states, which also contributes to lower taxes. In Alabama, taxes amount to 8.2 percent of the total personal income earned by state residents, when comparing total personal income to total state and local taxes collected. Tennessee and Florida have lower tax rates as a percentage of percental income, and Georgia and Florida have lower taxes as a percentage of GDP.

Alabama and its local governments have developed a reliance on the sales tax and already has some of the highest sales tax rates in the country, ranking 29th in the U.S. And unlike other states, our sales tax applies to groceries and medications.

Sales taxes are often considered regressive because they more heavily affect low-income individuals than high-income individuals. Alabama is one of three states that continue to apply sales tax fully to groceries without providing offsetting relief for low- and moderate-income families.

At the same time, Alabama’s sales tax is not as broad as other states and doesn’t apply to most services. Despite higher taxes, Alabama’s sales tax isn’t as productive as other states.

Alabama sales tax applies to almost all sales of goods, but it does not apply the tax to most kinds of business, professional, computer, personal or repair services. And in recent years, the economy has moved more toward the consumption of those services, lessening the effectiveness of Alabama’s sales tax.

In 2016, the last year the Census Bureau performed its analysis, state and local governments collected a total of $15.6 billion in taxes or $3,203 per resident. Across the U.S., the median per capita value for state and local taxes was more than $1,281 higher at $4,484.

If Alabama collected taxes at the per capita rate of the median state, local and state governments in Alabama would have an additional $6.2 billion to spend on building roads, providing public safety protection, operating courts, supporting schools and colleges and maintaining parks and libraries.

Even if national comparisons are ignored, Alabama stands out among other Southern states when it comes to revenue.

Arkansas, North Carolina, Louisiana, Kentucky, Georgia, Mississippi, Florida, South Carolina and Tennessee all collect significantly more taxes per capita.

If Alabama collected taxes at the same rate as Louisiana, for example, the state would have about $3.2 billion more in tax revenue. If it collected the same amount of revenue as Arkansas, it would have $3.7 billion more.

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The full report is available here.

 

Chip Brownlee is a former political reporter, online content manager and webmaster at the Alabama Political Reporter. He is now a reporter at The Trace, a non-profit newsroom covering guns in America.

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Economy

NAALC to hold public union event in Madison

The event will allow a variety of labor union members and officials to meet and discuss pertinent issues and planning. 

Josh Moon

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(STOCK PHOTO)

The North Alabama Area Labor Council will hold a solidarity event on Saturday in Madison, with several area labor union members present to answer questions from the public. 

The event, which will start at 9 a.m. at the Steamfitters and Pipefitters Union Hall on Madison Blvd., also will allow a variety of labor union members and officials to meet and discuss pertinent issues and planning. 

According to a press release from the NAALC, a number of current representatives from area unions will be present, including members from the American Federation of Government Employees Local 1858, International Association of Machinists and Aerospace Workers (IAMAW) Local 44, IAMAW Local 2766, Ironworkers Local 477, International Alliance of Theatrical and Stagehand Employees Local 900, American Postal Workers Union Local 259 and the International Federation of Professional and Technical Employees Local 27.

The union reps plan to discuss basic issues with anyone interested, such as the basic benefits of union membership and how to form a union at your local workplace. 

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Economy

New unemployment claims decreased last week

Fewer people joined the unemployment rolls last week compared to the week before.

Micah Danney

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There were 7,964 new unemployment claims filed in Alabama last week, down from 8,581 filed the previous week, according to the Alabama Department of Labor. 

Of the claims filed between Oct. 11 and Oct. 17, there were 4,032 related to the COVID-19 pandemic. That’s 51 percent, compared to 36 percent the previous week.

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Economy

Governor announces auto supplier IAC plans Alabama expansion

IAC is committing $34.3 million in new capital investment to expand its new manufacturing facility located in Tuscaloosa County.

Brandon Moseley

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Gov. Kay Ivey announced Monday that International Automotive Components Group North America Inc. plans to invest over $55.9 million in expansion projects that will create 182 jobs at two Alabama facilities.

“International Automotive Components is a leading global auto supplier, and I am pleased that this world-class company is growing significantly in Alabama and creating good jobs in Cottondale and Anniston,” Ivey said. “IAC’s growth plans show that Alabama’s dynamic auto industry continues to expand despite today’s challenging environment.”

Nick Skwiat is the executive vice president and president of IAC North America.

“Alabama was the logical choice due to its skilled workforce and proximity to the customer,” Skwiat said. “We are excited to see the continued growth of the automotive industry in Alabama and we plan to grow right along with it. We thank the Governor and Secretary Canfield for their leadership in this sector.”

IAC is committing $34.3 million in new capital investment to expand its new manufacturing facility located in Tuscaloosa County. This facility will produce door panels and overhead systems for original equipment manufacturers. That project will create 119 jobs at the production site in Cottondale.

IAC also plans to invest $21.6 million at its manufacturing facility located in the former Fort McClellan in Anniston. That East Alabama project will create another 63 jobs.

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This project builds on a milestone 2014 expansion that doubled the size of the Calhoun County facility. There IAC manufactures automotive interior components and systems. Key components produced at the Anniston plant include door panels, trim systems and instrument panels for original equipment manufacturers.

IAC Group is a leading global supplier of innovative and sustainable instrument panels, consoles, door panels, overhead systems, bumper fascias and exterior ornamentation for original equipment manufacturers.

IAC is headquartered in Luxembourg and has more than 18,000 employees at 67 locations in 17 countries. The company operates manufacturing facilities in eight U.S. states.

“With operations around the globe, IAC is the kind of high-performance company that we want in Alabama’s auto supply chain to help fuel sustainable growth,” said Alabama Commerce Secretary Greg Canfield. “We look forward to working with IAC and facilitating its future growth in this strategic industrial sector.”

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Danielle Winningham is the executive director of the Tuscaloosa County Industrial Development Authority.

“International Automotive Components is a valued part of Tuscaloosa County’s automotive sector,” Winningham said. “We are grateful for IAC’s investment in our community and the career opportunities available to our area workforce as a result of their investment.”

“The City of Anniston is excited that IAC has made the decision to expand here. I have enjoyed working with the leadership at IAC, the Calhoun County EDC, and the state of Alabama to get this project finalized,” said Anniston Mayor Jack Draper. “This is even further evidence that Anniston is indeed open for business.”

Only Michigan has more automobile manufacturing jobs than the state of Alabama. Honda, Mercedes, Hyundai, Polaris, Toyota and soon Mazda all have major automobile assembly plants in the state of Alabama.

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Courts

Aderholt fully supports Barrett’s confirmation process

Confirmation hearings began last week and a vote on her confirmation is expected in the next week just days before the general election.

Brandon Moseley

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Congressman Robert Aderholt

Congressman Robert Aderholt, R-Alabama, updated his constituents on the confirmation process for Supreme Court nominee Amy Coney Barrett. Aderholt said, “I do support her fully and I know she will defend life, protect the Constitution, and uphold our freedoms.”

Confirmation hearings began last week and a vote on her confirmation is expected in the next week just days before the general election.

“Senate Democrats are not seriously questioning Judge Barrett on her credentials, instead they have decided to attack her character and her beliefs,” Aderholt said. “I am disappointed to see this unfold on the national stage, but I think Judge Barrett stood strong and did well during this first week of hearings.”

“While I do not have a vote in her confirmation process, I do support her fully and I know she will defend life, protect the Constitution, and uphold our freedoms when she is officially sworn in as an Associate Justice on the Supreme Court,” Aderholt said.

Barrett is a Notre Dame graduate, has served on the U.S. Seventh Court of Appeals and is a former clerk for the late Supreme Court Justice Antonin Scalia.

“I clerked for Justice Scalia more than 20 years ago, but the lessons I learned still resonate,” Barrett said. “His judicial philosophy is mine, too: A judge must apply the law as written. Judges are not policymakers, and they must be resolute in setting aside any policy views they might hold.”

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Barrett vowed to keep an open mind on any matter that comes before the court, though Democrats fear she is prepared to overturn Supreme Court precedent on abortion rights and the Affordable Care Act.

That the Republican controlled committee will recommend that Barrett be confirmed appears certain. A vote to confirm Barrett to the nation’s highest court by the full Senate could occur just days ahead of the Nov. 3 election.

President Donald Trump has been the president of the United States for less than four years but if Barrett is confirmed, then he will have selected one third of the U.S. Supreme Court. Barrett fills a place created by the death of the late Associate Justice Ruth Bader Ginsburg, who died in September.

Aderholt is in his 12th term representing Alabama’s 4th Congressional District. He faces Democratic nominee Rick Neighbors in the Nov. 3 general election.

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