Alabama | Fiscal Balance (2003):
Former Governor Riley's campaign to reform his state's tax system failed at the polls, but demonstrated the kind of political courage we should demand of our leaders.
Leading the Fight for Fiscal Fairness and Flexibility | By Rob Gurwitt | Governing
Had Bob Riley's attempt to reform Alabama’s tax structure been passed by the voters in September, he would have earned a place for himself in the state's history books and might have become one of the most prominent governors in the country. As it is, his initiative lost, so Riley stands out only for having offered the most conspicuous display of political courage any state has seen this year.
Explanations abound for why Riley failed. He tried to do too much at once. He shouldn't have tried to tax automobile and appliance repairs. His allies never quite figured out what they were campaigning for — a better education system? lower taxes on the poor? the people versus the special interests? doing "the right thing"? Riley himself was clear: He wanted to make Alabama's education system the best in the country and to develop a tax base that could support it. But in the tumult of the campaign, that message got blurred.
Yet second-guessing can't mask the rare sight of a politician willing to look an insupportable situation square in the face and put his popularity on the line in a bid to correct it. Faced with a massive budget deficit, the 59-year-old Riley tried not only to close the gap but also to reshape his state by addressing the basic inequities and fiscal incongruities that have held it back over the decades. A conservative Republican, he did this despite the opposition of his own party, his allies within the state’s Christian right, big farming and timber interests, and what turned out to be a sizable majority of the state’s voters.
The specifics of Riley's plan amounted to a formidable list of goals. He wanted to raise $1.2 billion, about half of which would have gone to closing the state’s deficit and the rest to various education initiatives; the state's schools are among the poorest-funded in the country and produce students who fare equally badly on national exams. To do this, he wanted to lower income and property taxes on the poor and increase them on the wealthy, especially the extractive industries that own the vast majority of the state’s land but pay only a tiny portion of its property taxes. He wanted to extend the sales tax to cover labor on car and appliance repairs. And along the way, he wanted to improve the "accountability" of state government by banning legislators from the common practice of quietly directing state departments to spend money in their particular districts. The plan also called for leaving the new tax dollars un-earmarked. Currently, 92 cents of every dollar in state revenue is assigned to particular purposes, including the entire income tax, which goes to teachers’ salaries. "We literally don't have the flexibility to spend money where the need is most critical," Riley says.
The breadth of the measure may have been its biggest drawback, since it gave opponents the chance to cherry-pick their issues. They zeroed in on the repair-labor tax, contending it would hurt low-income people the most; argued — wrongly but convincingly — that the increase in property taxes would likewise hurt the poor; and played effectively to Alabamians' deep distrust of the legislature and political leaders in general.
Yet what Riley was trying to do was straightforward: He wanted to modernize state government, make the tax code fairer and give Alabama the wherewithal to compete in the new economy. "This is not complicated," he says. "I think you'd change Alabama fundamentally if in six years someone said, 'If you want the best education in America, you’ve got to live in Alabama.' You'd change economic development, change the image of this state, you’d offer these kids an opportunity they otherwise would never have had, and it would become the basis of having the best-trained workforce in the country. And if we're going to have comprehensive reform of state government here, you can't let a state system that begins taxing a person’s income at $4,000 stay in place. It's just fundamental fairness."
Riley won't get the chance to make those changes now; instead, he has spent the weeks since the referendum in an agonizing round of budget-cutting. But his vision and his performance remain no less noteworthy. "I am just amazed at Bob Riley’s courage in fighting this through," says Wayne Flynt, a historian at Auburn University. "No opportunistic politician concerned about his own reelection would have done this. He’s one of the few governors in recent generations to try to exercise leadership."
— Rob Gurwitt
Photograph by Jackson Hil
Governing's Public Officials of the Year for 2003