MONTGOMERY, AL (WSFA) - Alabama ranks 50th, or lowest, in per capita state and local tax collections. Alabama has maintained that ranking since the early 1990s. No one pays less in state and local taxes than we do. I can hear the high fives going on in living rooms across the River Region.
Low taxes per capita don't necessarily mean low tax burdens for everyone. A mix of different taxes make up total tax collections, and each state structures its taxes differently. There are three principal types of state and local taxes: property, income and sales. A tax system that is balanced among these three sources promotes fairness and stability. Alabama's tax system is not balanced. Alabama has the lowest property tax collections in the country. To make up the difference, Alabama relies more heavily on sales taxes. This strategy of using sales tax to make up for a low property tax cannot go on forever.
The governor and legislature struggle to find enough money to adequately support the functions of state government. In the past several years, the government has made cuts to state services, borrowed from the state savings account and applied one-time sources of money to balance the budget.
We all know that there is no simple answer, but the reality is that we do not have enough money coming in to pay for the essential needs of this state. If you look at the per capita revenue advantage other Southern states have over Alabama, some of the numbers are staggering. Don't forget some of that extra money would go to infrastructure and better schools to help lure in industry that bring higher wage jobs and more tax revenue to the state. In the end, our cash problem is much more complex than raising taxes. It may require more of a system reboot. These are tough decisions that need to be made by our elected officials. It is up to us to continue to keep the discussion in the forefront.