Ala. Voters Reject Tax Increase
Referendum Results Seen as Warning to Officials Nationwide
By Dale Russakoff
Washington Post Staff Writer
Wednesday, September 10, 2003; Page A02
Alabama's conservative Republican governor yesterday met resounding defeat in his highly publicized crusade for a $1.2 billion tax increase -- eight times the biggest previous increase in state history -- to resolve an unprecedented fiscal crisis, shift the tax burden from poor to rich and improve public schools funded at the nation's lowest level per child.
With 94 percent of precincts reporting, Alabama voters were rejecting Gov. Bob Riley's ambitious package 67 percent to 33 percent, consistent with recent polls that had shown it likely to fail by 20 or more percentage points, even among low-income people who stood to receive large tax cuts.
The vote was seen nationally as a warning against raising taxes, even as large deficits loom in almost every state. With state reserve funds mostly depleted by the first three years of large shortfalls, analysts have said the only alternatives to tax increases are large spending cuts in basic services such as public schools, higher education, corrections and Medicaid.
"This is a shot across the bow for next year's decision-making," said Grover Norquist of Americans for Tax Reform, who made defeat of Riley's proposal a cause of conservative, anti-tax groups. "Every Republican governor who thinks of raising taxes next year will walk past Traitor's Gate and see Bob Riley's head on a pike. The voters of Alabama have saved taxpayers from California to Maine billions of dollars."
Scott Pattison, executive director of the National Association of State Budget Officers, essentially agreed with Norquist's analysis.
"The political will to raise taxes was low already, and this makes it even lower," he said. "We will probably start to see tradeoffs like trying to protect public schools from major cuts, which will mean making disproportionate cuts in everything else."
Riley's package of tax, equity, education and accountability measures passed the state legislature in June, but had to go before the voters because unlike most state tax codes, Alabama's is written into its constitution. Changing it requires a constitutional amendment.
Although Alabama is not known for California-style direct democracy, the referendum added a bicoastal element to the political turmoil growing out of states' financial problems. In Oregon, where the legislature voted to raise taxes by $800 million over two years to close a record deficit, Republicans are gathering signatures to hold a referendum to override the tax increase.
Riley's proposal was a major aberration from other governors' approaches to their fiscal crises. Most have recoiled from tax increases or have made them a minor part of their deficit-reduction packages. It was also an aberration for Riley, an anti-tax Republican who boasted that in six years in Congress he never voted for a tax increase.
But Riley, who was elected in November, said closing Alabama's $675 million deficit primarily with budget cuts would bring about a "catastrophic failure of government" because the state had starved basic services. Alabama has the nation's lowest state and local taxes per capita and ranks near the bottom in tests of public school performance. It also has more than 28,000 inmates in a prison system built for 12,000, and its state police force has only six troopers patrolling 67,500 miles of roadway after midnight. Riley's plan also aimed to shift the tax burden to the wealthiest Alabamians, who pay an effective tax rate of 3 percent, from the poorest, who pay 12 percent.
The former door-to-door egg salesman turned wealthy businessman called the overall package "Alabama's Foundation for Greatness" and traveled the state selling it as the path to economic growth and opportunity. To those who warned that higher taxes would scare away businesses, he asked in a recent stump speech: "Where the devil are they going to go? Every state around us charges more. If having the lowest taxes in the nation means we're going to have an economic explosion, where is it?"
But his arguments foundered on voters' deep cynicism toward government -- a feature of politics nationally, but even more so in Alabama. Interviews around the state found that many voters believed more spending was needed, but did not trust the legislature to spend the money wisely. Riley's promise of new accountability measures apparently did not sway them.
"It's much easier to reinforce what people already believe than to change what they believe," said David Azbell, Riley's press secretary.
Perhaps most striking was opposition among low-income voters, whose taxes would have been cut dramatically. A poll conducted late last week by University of Alabama at Birmingham communications professor Larry Powell found that low- and middle-income voters opposed the plan by a margin of about 30 percentage points. Upper-income voters, who would face tax increases, opposed it by a margin of 14 percentage points.
The poll found overwhelming opposition in almost every demographic group -- by age, race, gender, geography -- and in both parties. The only exception was black voters, who were evenly divided, with about a quarter undecided.
Riley's stature as a conservative, anti-tax Republican was expected to help sell the package, but he ended up largely isolated politically. His own state party came out against his proposal while the plan's natural constituency of Democrats -- particularly black Democrats -- kept their distance.
"Obviously, black voters and low-income voters are not inclined to trust conservative Republican politicians," said David Lanoue, chairman of the political science department at the University of Alabama at Tuscaloosa.
© 2003 The Washington Post Company