Alabama Governor Reveals Plan to Raise Taxes

Date: April 14, 2015

Gov. Robert Bentley has put forth a plan to cover a projected $700 million budget hole in Alabama’s General Fund by increasing several taxes over the next few years. None of the proposed taxes would go to a vote of the people.

Bentley spoke on how he plans to cover an estimated $700 million revenue hole in the state budget at a luncheon held on Feb. 2, 2015. Since then, Bentley’s tax proposals have been introduced by democrat and republican house members.  The proposed taxes include increasing the sales taxes for automobile purchases, cigarette and tobacco, financial institutions, individual and corporate income, rentals, utilities and health, life, property and casualty insurance.

“As we begin the 2015 Legislative Session, one of the most serious issues we face is the funding of our state’s General Fund,” Bentley said at the luncheon. “…I am presenting a plan that will increase revenue for the General Fund and make taxes more fair and equitable for everyone.”

Many solutions that have been suggested in the past to fix Alabama’s budget problems are no longer viable options. Instead, Bentley is looking ahead for a long-term solution by increasing revenue.

Alabama’s General Fund gains its revenue from more than 40 different taxes, according to the Budget Office. The two most expensive programs are Medicaid and the prison system, where spending has quickly grown over the past several years. Because these programs are viewed as essential, cutting their budgets may not be an option. The only choice is to raise government revenue through taxes, Bentley says.

For a governor who has twice run electoral campaigns promising no new taxes, the proposals are somewhat surprising.

State legislators remain undecided on the governor’s proposals. While Alabama’s General Fund needs to be funded and budgeted properly, many are opposed to raising taxes on all fronts.  Legislative leadership has indicated they will propose more government downsizing, consolidation and reduction in spending before raising taxes.

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