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December 01, 2005   Email to Friend 

Alabama Posts Double-Digit Increase in Tax Collections

Alabama finished the fiscal year with $299 million in budget surpluses thanks to a double-digit increase in tax collections during the past 12 months. According to the state Revenue Department, tax collections rose 11 percent during the fiscal year that ended Sept. 30. Tax collections, after refunds, totaled $7.1 billion for fiscal year 2005, up from last year's $6.4 billion.

Personal income tax collections, which comprise the state's largest source of revenue, were up 11 percent from last year. The secondlargest revenue source, sales tax, was up 6 percent. Corporate income taxes jumped 43 percent due in large part to the economic recovery, the Revenue Department reported.

Economists said the increase in income tax collections was fueled by a drop in the unemployment rate. In August, Alabama's jobless rate was 3.8 percent, compared to a national rate of 4.9 percent.

Alabama Farmers Federation Governmental Affairs Director Freddie Patterson said the latest numbers from the Revenue Department prove voters were right in 2003 when they rejected a proposed $1.2 billion tax hike known as Amendment 1.

"This is a shining example of how businesses and a strengthening economy grow revenue, not higher taxes," Patterson said. "Businesses create jobs, which lead to increased spending and higher tax collections."

Ironically, Alabama's revenues have increased by $1.2 billion in the two years since Amendment 1 was defeated -- the same amount requested in the failed referendum.

According to the Alabama Policy Institute, revenues in the Education Trust Fund alone are up more than $900 million since 2003. And, during the last legislative session, $554 million more was spent on education than the previous year.

Auburn University Montgomery economist Keivan Deravi told the Associated Press that Alabama is "sitting absolutely gorgeous, not even pretty, in terms of job creation."

Those comments were echoed by State Finance Director Jim Main who told reporters the revenue totals "could not have been better."

Increased tax collections had a direct effect on the state's budgets, which despite fears of shortfalls during the regular session of the Alabama Legislature, ended the fiscal year in the black. The state education budget finished with an unexpected surplus of $265 million while the General Fund budget ended with a $34 million surplus.

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