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.