By an enormous 34 point margin, Alabama voters yesterday soundly rejected Gov. Bob Riley’s (R.) referendum to hike state taxes by $1.2 billion.
The tax plan, which fell in a 67% to 33% vote, would have raised income and property taxes in order to further skew the state’s tax burden onto higher earners. By further misallocating Alabamans’ private capital and tying it up in the public treasury, the tax hike would have decreased economic activity and eliminated jobs throughout the state.
Had the referendum succeeded, it would have also broadened the class of government-dependent non-taxpayers, thus weakening the argument for tax cuts in the future. By increasing the progressivity of state taxes, Riley’s plan would have further opened the door for leftists to invoke the class war rhetoric that has become a staple of politics for Democrats.
The referendum, required under Alabama law for all proposed tax hikes, demonstrates just how out of touch Alabama’s elected officials have become from their constituents.
The $1.2 billion increase in taxes was meant to cover a state budget shortfall of $685 million. That deficit, however, was caused not by a lack of tax revenues, but by excessive government spending. Alabama increased its inflation adjusted per capita spending by 39% between 1991 and 2000, according to a 2002 study by the Cato Institute. It ranked 19th in its spending increase over that period.
Riley, who did not campaign on a tax hike when he barely won office in November’s contested election, has almost certainly brought to an end his otherwise stellar career in politics by pushing this referendum. Prior to this regrettable incident, he had compiled one of the most conservative records of any member of the House of Representatives, with a 97% American Conservative Union rating over six years of service.
Riley’s attempt to raise state taxes has bewildered his supporters. Many of those who fought fiercely for his election as governor just months ago have now turned on him. Among the murmurs over yesterday’s vote is the intriguing possibility that Alabama Chief Justice Roy Moore (of recent Ten Commandments fame) will try to oust Riley in a primary in 2006. Riley would almost certainly step aside in this case.
Another candidate mentioned to replace Riley is Alabama Attorney General Bill Pryor (R.), a strong conservative who would only be available to run if Democrats prevent his confirmation to the federal bench with their ongoing filibuster.