Alabama on pace to collect record taxes, revenue commissioner says it’s still not enough

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July 6, 2016

MONTGOMERY, Ala. — The State of Alabama is on pace to collect a record amount of taxes this year, according the Revenue Department, but some government officials are still sounding the alarm that it might not be enough.

“At the end of the fiscal year I expect to break 10 billion dollars,” state Revenue Commissioner Julie Magee told WSFA. “That will be the first time in our history we’ve ever brought in 10 billion dollars.

“It’s still not going to be enough,” she continued. “It’s still not going to solve our General Fund problem.”

The reason, Magee explained, is earmarks.

In this context, earmarking simply means mandating certain tax revenues be spent on certain programs, no matter what. Alabama does this with 91 percent of its money, far more than any other state.

Alabama receives roughly $21 billion from federal and restricted funds. Dollars from the feds must go to whatever programs or projects Washington dictates. But when it comes to state-level tax revenue, there have been sporadic efforts in recent years to un-earmark some of the money to increase flexibility for lawmakers to move money around and patch holes.

Such efforts have often been quelled in favor of tax hikes, even under Republican leadership.

Governor Robert Bentley (R-Ala.) proposed a massive $700 million tax increase package last year, and the GOP-controlled legislature ultimately opted for a smaller hike of approximately $100 million.

The tax hike efforts in the House were spearheaded by General Fund Budget Chairman Steve Clouse (R-Ozark), who is now running for Speaker of the House, meaning the speaker’s race could become a battle over the fiscal and ideological direction of the House.

The revenue commissioner says the state will likely never have enough money for the General Fund, even during prosperous years, while such a high percentage of the revenues are earmarked.

“As long as the earmarking is there, the General Fund will be woefully underfunded,” she concluded.

(h/t WSFA)