1981 Alabama and Georgia Legislatures: Revenue and Spending Top Priorities
By Clint Deveaux
Vol. 3, No. 1, 1980, pp. 4-5
Lawmakers in Alabama generally agreed with legislative activists in their state on the issues likely to be key during the 1981 legislative session. Topping the list of major concerns are: education, taxation and spending priorities, community development and unemployment and reapportionment. The Alabama legislature convenes Tuesday, February 3, 1981.
A revenue shortfall for Alabama’s Special Education Trust Fund combined with an increasingly inadequate state-local funding formula has generated heated debate about education priorities. Only Mississippi and Georgia spent less per pupil on elementary and secondary education than Alabama, according to National Education Association estimates for 1978-79, and Alabama’s local communities shared less of the public education budget than the local communities of any state except Alaska, Hawaii, Kentucky and New Mexico.
The trend toward earmarking of specific taxes for particular expenses has compounded Alabama education’s financial problems. As economic conditions have worsened and as tax and spending limitations have been adopted, revenue collections from taxes designated for the Trust fund have not grown at a rate adequate to meet Alabama’s educational needs. The current year’s educational expenditures are being reduced by 7 percent across the board.
While many agree that Alabama needs to generate new sources of revenue to meet its unmet responsibilities, Governor Fob James seems determined to reduce state expenditures—especially in the area of social services. The impact of this policy on the Department of Pensions and Securities which administers the Aid to Dependent Children program is devastating. Such shortsightedness will also geometrically reduce the matching federal funds which flow to Alabama’s economy.
Several new “sin taxes” on consumer items not considered necessities were passed during the last session and more such proposals are expected next year. A major battle on increasing the state-wide sales tax is also expected. Many legislators fear the increase will pass, making Alabama’s tax scheme more regressive than it already is. Proposed increases in corporate income taxes have failed in each of the last two sessions.
In 1978, an election year, the legislature passed a “lid bill” designed to limit property tax increases which were the result of a state-wide property reappraisal ordered by the federal courts in 1971. Threats of a renewed suit because of reappraisal failures generated a proposal, accepted by the courts, from Alabama’s Revenue Commissioner, Ralph Edgerton, Jr. He proposed a county by county “maintenance” updating beginning in October 1980 to be completed within two years. State Finance Director Sid McDonald sees the “lid bill” as a “permanent and dangerous roadblock to sensible funding.” He is critical of Alabama’s property taxes which are the lowest in the country.
Most progressive legislators expect their major effort will again be a negative struggle to kill or at least soften the impact of the regressive tax measures that surely will emerge. They, nevertheless, expect the enactment of some regressive tax proposals which will place a disproportionate burden on poor Alabamians.
Legislators and state leaders are disturbed over the failure of either government or business to focus on Alabama’s sagging economy. Many legislators see economic development and the creation of jobs as a major priority with little state effort now directed toward that end.
Recent history and major changes in population growth patterns dictate that reapportionment will be a contentious issue in Georgia and Alabama. While Georgia’s legislature is expected to produce acceptable plans, few knowledgeable Alabama observers expect the plans produced by the state’s House and Senate to survive justice Department scrutiny or anticipated federal court challenges.
Alabama already has a joint legislative committee at work on reapportionment. Georgia’s two reapportionment committees are likewise already at work, with their staffs gathering data and resources and examining potential computer formulae for reapportionment plans. While no general approach is acknowledged by the legislative leadership, both states have indicated that special legislative reapportionment sessions will be held in the fall of 1981. Final figures from the 1980 census on which reapportionment will be based are expected next June. Resolution of presently ongoing litigation by major cities challenging the undercount of minorities, aliens and the poor will surely affect the outcome and may change the timing.
While Alabama has suffered revenue shortfalls and has had to prorate its expenditures, Georgia has consistently underestimated its revenue expectations. The budget planning process is thus a major concern to Georgia legislators from a very different perspective. At the beginning of each session a supplemental budget is determined allocating the surplus revenue to the current fiscal year. Georgia’s surpluses in 1978 and 1979 were $161 and $133 million respectively. Georgia’s revenue officials expect more than a $140 million surplus to be available from fiscal 1980 for supplementary allocation in 1981. Within both the supplemental and the general budgets, however, the highway requests have always received full support while human services requests have been cut back.
In addition Georgia lawmakers have expressed strong interest in tax reform, AFDC, medicaid and infant mortality, day care and revision of the state’s usury laws. Tax reform proposals from Governor George Busbee and the Tax Reform Commission are expected to generate conservative opposition, and a perennial proposal to increase the state’s sales tax is again likely.
The state department of human resources and the governor have made priorities of increasing aid for families with dependent children-AFDC payments. Support for these proposals by updating the standard of need and increasing the cash outlays is increasing in the legislature.
A major proposed revision of the state’s usury laws is expected along with new provisions of consumer loan interest laws. Most interest rate increases passed during the 1980 session were coupled with a sunset provision reverting to the previous lower rates in July 1981 without legislative action. The joint committee examining the usury laws is expected to propose permanent higher rates.
The 1980 legislature eliminated 1100 slots for day care and after school care programs from the social services budget. Expansion of infant mortality programs and medicaid is needed and will be likely proposed. Also, Grady Hospital will again seek state financial support. These needs can be met with the state’s current revenues if the legislature chooses to give greater priority to human services.
The Speaker of the Georgia House has long supported four-year terms for legislators as well as increased salaries or staff allotments. While often unpopular, these measures may appear before the session ends.
Georgia’s legislators are expected to gather on January 12th and, after Speaker Thomas Murphy gavels the House into order, more than a hundred pounds of bills and paper will be introduced for passage. Only days later will anyone know if the planned agendas survive.
Clint Deveaux is a former state legislator and directs SRC’S Southern Legislative Research Council.