Amendment helps save current use status for Alabama farmers
An amendment to Gov. Bob Riley’s proposed property tax increase that was adopted by the House Education Finance and Appropriations Committee could soften the blow for farmers if it is approved by voters later this year. HB 3 was set to be considered by the full House on Friday. However, at press time the vote had not taken place.
Sponsored by Rep. Mike Hubbard, R-Auburn, HB 3 would raise more than $400 million a year by changing Alabama's property tax laws. The bill passed the House Education Finance and Appropriations Committee Thursday afternoon with four amendments, including the one proposed by Rep. Lindsey.
“We are pleased that, under the leadership of Rep. Richard Lindsey, D-Centre, the House Education Finance and Appropriations Committee amended HB 3 to restore the current use law in its original form,” said Alabama Farmers Federation Executive Director Mike Kilgore. “This formula has been tested in court and has proven to be effective in placing a fair value on land based on its productivity and profitability.”
The committee rejected a substitute offered by Rep. Joe Carothers, D-Dothan, which would have restored classification to farm, home and timberland to its current 10 percent ratio of assessment.
In addition, Carothers’ substitute would have increased the current state millage of 6.5 mills to a total of 18.5 mills (a 12-mill increase statewide). This substitute would have produced revenue levels sought by the governor’s proposed ad valorem changes.
Rep. Jeremy Oden, R-Vinemont, successfully offered an amendment approved by the committee that would give farmers a tax exemption up to $150,000 annually of the assessed value for improvements on farm buildings and facilities.
Rep. Oden also offered an amendment that was passed by the committee which would allow farm corporations (such as Limited Liability Entities and Limited Liability Partnerships) along with individuals to utilize the 200 non-contiguous acreage exemption.
Rep. Robert Bentley, R-Tuscaloosa, sponsored an amendment that was passed by the committee which would allow a farmstead exemption for up to 200 non-contiguous acres.
“This in no way means that farmers will not take a direct hit from the ad valorem package that passed committee,” Kilgore said. “Under the amended plan, state property taxes still would increase by more than 430 percent on cropland and by almost 400 percent on a $150,000 home. We remain concerned that the ad valorem portion of the governor’s package places a disproportionate burden on homeowners and family farms.”
This week, the Alabama Farmers Federation has responded in good faith to requests from legislators to engage in meaningful discussions with the Riley administration in an attempt to arrive at more equitable ad valorem tax changes.
Proposals made by the Federation would not have had such a disproportionate impact on homeowners and family farmers. The Federation suggested that the additional property tax revenues sought in the governor’s plan could be raised without changing current use or classification. Those suggestions were rejected by the governor’s representatives.
“We had no other choice but to pursue changes to the governor’s property tax bill in the legislative process,” Kilgore said. “The Alabama Farmers Federation understands that education and necessary state services must be adequately funded. But, we have a responsibility to our members and the citizens of Alabama to pursue fairer, more equitable property tax alternatives.”
More tax proposals move through House of Representatives
HB 2, a bill that would raise cigarette taxes from 16 and a-half cents per pack to 31 cents per pack, passed the House by a vote of 76 to 20.
HB 4, sponsored by Rep. Mac Gipson, R-Prattville, would adjust utility taxes but would not raise any new revenue. It will streamline the collection of the state utility tax. The bill has passed the House and is on the Senate calendar.
HB 7, sponsored by Rep. Richard Laird, D-Roanoke, would double mortgage and deed taxes. It passed the House this week and has been placed on the Senate calendar.
HB 11, sponsored by Rep. Richard Lindsey, D-Centre, has passed the House. It levies sales tax on certain installation and repair services, increases the tax rate on the sale and lease of automobiles, increases the tax rate on vending machines and repeals the tax exemption of lubricating oil from sales and use taxes.
HB 13, sponsored by Rep. Marcel Black, D-Tuscumbia, passed the House and is on the Senate calendar. It would limit and repeal certain credits allowed for insurance companies that have offices and employ workers in Alabama. The bill passed the House on a 70 to 23 vote and is on the Senate calendar. Currently, taxes on insurance premiums already are the largest contributor to the state’s General Fund. Only Hawaii collects more in insurance premium taxes than Alabama.
HB 14, sponsored by Rep. Mike Hill, R-Columbiana, passed the House by a vote of 79 to 14 this week. It increases business privilege taxes and clarifies the definition of taxable income.
HB 22, sponsored by Rep. Yvonne Kennedy, D-Mobile, would levy taxes on intangible property such as stocks and bonds. It passed the House by a vote of 56 to 41. The new tax will apply to securities valued at more than $100,000 for singles and more than $200,000 for couples.
HB 25, sponsored by Rep. Jack Page, D- Gadsden, passed the House by a vote of 70 to 21. It makes several changes to the excise tax paid by banks and other financial institutions in lieu of corporate income tax.
HB 19, sponsored by Rep. John Knight, D-Montgomery, passed the House Government Finance and Appropriations Committee on Thursday and was expected to be considered by the full House on Friday. However, a vote had not been taken at press time. The bill would lower income tax for most lower and middle class Alabama residents while raising taxes for upper income taxpayers.
Accountability measures appear to be on the fast track
The Senate approved legislation backed by the Alabama Education Association that requires the same level of teachers and support workers in the next fiscal year as were employed this past year.
The Senate Finance and Taxation Education Committee has approved eight of the governor’s nine accountability and budget reform measures.
The House Education Finance and Appropriations Committee passed five of the governor’s accountability bills by voice votes. The bills were similar to those approved by the Senate budget committees earlier in the week.
According to the Associated Press, the bills would:
• Extend the school year by one day each year until it reaches 180 days in 2008 and bring all public schools up to staffing standards required for accreditation.
• Institute new fiscal standards for schools to follow, including training for their chief financial officers.
• Revise the teacher tenure process, including using arbitration for dismissals.
• Remove tenure protection for new assistant principals, instructional supervisors and school financial officers hired after July 1, 2004. They will start working on contracts, which is the same method used for principals hired since July 2000. Under the bill, people already in those three positions could give up tenure protection in return for a one-time payment from the state of $5,000.
• Create financial incentives for teachers willing to go into underserved areas.
Also approved by Senate committee were bills that would require active and retired state employees and education workers to pay more toward the cost of their health insurance coverage.
Another accountability bill approved by the Senate committee would change the method the state uses to divide money among local school systems.