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Riley targeting tax cut in new term
Proposal would cost state $205 million when phased in over 5 years, governor says

By Phillip Rawls
Associated Press Writer

TUSCALOOSA — Republican Gov. Bob Riley told the newly elected Legislature on Wednesday that he plans to make another income tax cut a priority for the first legislative session of his new term, which wasn't received enthusiastically by some Democrats.

The Republican governor's proposal to lower the taxes on families making less than $100,000 annually and eliminate the state income tax on the first $10,000 of taxable retirement income would cost $205 million annually when fully phased in over five years. With the state income tax dedicated to public education, some Democrats worry about having less to spend in the classroom.

"We already have the lowest taxes in the nation. It makes no sense to take money away from education for another tax cut," said Senate President Pro Tem Lowell Barron, D-Fyffe.

Barron was referring to a recent study by the Public Policy Institute of New York State that showed when state, county and city taxes are combined, Alabama has the lowest taxes per capita of any state in the nation.

Riley said another tax cut — this one more than triple the size of the one he got approved this year — will stimulate the state's economy and generate even more tax revenue in the long run.

"Do not ever buy into the concept that we can't do more for the people who need it the most in the state of Alabama and still build an absolutely world class education system," Riley told legislators as they wrapped up an orientation meeting at The University of Alabama.

The newly elected Legislature begins its organizational session Jan. 9 and its first regular session, where the tax cut and other proposals can come up, on March 6.

In the last session of the old Legislature, Riley worked with lawmakers to pass a tax cut that raised Alabama's threshold where a family of four starts paying income taxes from $4,600 — the lowest in the nation — to $12,500.

Riley said the tax cut ended Alabama's reputation "as a poster child for an unfair tax system," but more needs to be done, including taking the tax threshold to $15,000 and increasing the standard deduction and personal and dependent exemptions to help families making less than $100,000 annually.

Senate budget committee Chairman Hank Sanders, D-Selma, said Alabama shouldn't be talking about another tax cut when its $6 billion education budget ranks the state 45th in public school spending per student.

"In spite of $6 billion, we don't have enough money for the children of this state," he said.

Speaking to the new Legislature before Riley, Sanders said, "Get ready, you'll have to decide between a tax break and our children."

Riley said Wednesday he plans to have a lengthy legislative agenda based on his "Plan 2010" campaign platform, including a $500 million bond issue for school construction and technology projects. Riley proposed an identical bond issue in the spring, but it died in a Senate committee.

Riley said that's why he's talking with the Senate's 12 Republicans and a few dissident Democrats about organizing the Senate under new leadership that would make sure his bills get to the Senate floor for debate.

Senate Minority Leader Jabo Waggoner, R-Vestavia Hills, said the success of Riley's proposals depend on whether Barron and his allies run the Senate again or a group aligned with the governor takes control during the organizational session next month.

"If we organize the Senate, he will get a fair hearing. If the other side organizes, he will have a difficult time," Waggoner said.

Rep. Steve McMillan, R-Gulf Shores, said Riley will also have a difficult time in the House because the argument will be framed as the governor trying to hurt school children.

In addition to the tax cut and bond issue, Riley said he will advocate a package of ethics legislation that will include a ban on transferring money between political action committees to hide the source of the contribution.

Sen. Larry Dixon, R-Montgomery, said that will be among the hardest of Riley's proposals to pass because some legislators don't want voters to know the sources of their contributions.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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