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June 30, 2003   Email to Friend 

Jeff Helms
(334) 613-4212
June 30, 2003

MONTGOMERY, Ala.-- The Board of Directors of Alabama Farmers Federation adopted the following position June 30 on the Riley Tax Plan:

Our organization, which represents 440,000 members, was not allowed the opportunity to offer meaningful input in developing the tax package offered by Governor Riley to the legislature. The Alabama Farmers Federation was prepared to assist the governor in developing fundamental change in government that would lead to greater efficiency, more accountability and additional revenue should that be proven necessary. If we had been allowed to be a part of the process, perhaps the end result would have been a package more compatible with the farmers, homeowners and working people of Alabama whom we represent.

After being omitted from the pre-legislative process, we worked diligently with lawmakers to amend the bills so they would be more acceptable to our membership. Unfortunately, our efforts fell far short of our expectations and those of the membership we serve. After the legislature passed the $1.2 billion tax increase, we surveyed hundreds of leaders within our organization by mail. Since the governor has postured the package so that citizens must vote for all of it, or none of it, the result of our leadership survey showed 84 percent against the Riley plan, 9 percent for and 7 percent undecided.

Our concerns include:

--The plan calls for a record tax increase of $1.2 billion, double what the governor himself says he needs to balance the budget. Many believe the tax hike may reach $1.8 billion to $2.0 billion, which would triple the amount said to be needed to balance the budget.

--The plan does not take into account the $230 million the governor says he has saved since he came into office, nor the $270 million the federal government is sending back to Alabama, nor the estimated $100 million increase from annual reappraisals the governor has ordered. That in itself would almost balance the budget without raising taxes.

--It places an unfair share of the tax increase on our farmers, homeowners and working families. State taxes on farms and homes will go up 300 percent or more. It cuts the state tax rate in half but increases the tax base ten times by assessing property at 100 percent of value instead of the present 10 percent. It eliminates classes of property at the state level, resulting in lower property taxes on major utility companies but increasing taxes on farms and homes.

--It limits claiming "current use" values on acreage over 2,000. Some of Alabama's most productive farms are more than 2,000 acres. In high land market areas, losing current use could force these acreages into development because the farmers could not afford to pay taxes based on speculative market value.

--The accountability provisions in the package are a step in the right direction but only a small step. There is only a token effort at unearmarking. It amounts to only a small percentage of revenues and includes a loop hole that allows the legislature to re-earmark these revenues, if it chooses.

--We support legislation which would require budgets to be based on the previous year's revenue instead of projections of revenue. This was not included in the package. Prior-year budgeting almost guarantees the elimination of proration. This was a major part of the governor's campaign platform that we supported.

--We believe such a tremendous tax increase will be a detriment to the overall economy of Alabama. A study by Beacon Hill Institute in Boston, Mass., points this out, saying 24,000 jobs will be lost, investments will decline $331 million and disposable income for Alabamians will decline $2.29 billion. At least one major company in the Montgomery area has announced it is reconsidering expansion due to the tax proposal. Economists at the Federal level are cutting taxes to boost the economy while the Riley Plan proposes raising Alabama's taxes.

--Almost 90 percent of this tax increase will be borne directly by farmers, homeowners and working families that our organization represents. We do not believe our members can, or should, withstand such a disproportionate and unfair increase in taxes.

Therefore, the Board of Directors of Alabama Farmers Federation opposes the Riley Plan to be voted on September 9 and asks that its members be given a voice when the governor's administration begins work on "Plan B."

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