Business Associations’ Tax Coalition Six-Point Permanent Proration Prevention Plan

The Business Council of Alabama's Business Associations Tax Coalition has offered the following plan in response to Governor Siegelman's $160-million business tax plan to ease the education funding crisis in Alabama.

(1) A constitutionally protected Proration Prevention Account must be established. Funds from this account will be protected by a vote of the people and can only be released after the governor has officially declared proration. The goal should be to build a $250 million balance and to include a growth factor to protect against inflation.

(2) It is essential that we pass legislation to implement an appropriations process that relies less on revenue projections, one of the primary causes of proration. Right now, we make appropriations based on revenues that are projected 23 months out. This is a prescription for proration. The BATC feels strongly that actual revenues from the previous year should be used to set a ceiling for the allocation of appropriations for the next budget to be considered by the Legislature. Only once in the past 20 years has the state received less revenue in one year than it had received the year before. BATC feels this policy change is a key element in preventing proration permanently.

(3) A freeze on all community service grants and flow-through funding in the current fiscal years' budget. Regardless of the merit of any individual program, pork is a losing battle in this economic environment.

(4) Establish, by act of the Legislature, an Education and Cost Containment Commission comprised of Alabama's leading business and finance experts. The Commission would closely review the expenditure of education dollars and recommend ways Alabama can save or better allocate resources while enhancing the quality and accountability of public education. Included among the initial items to be addressed should be

  • management and governance of education from K through PhD., with particular attention to the duplicative administrative structure that oversees Alabama’s 128 school districts and higher education institutions;
  • duplication of programs, courses, campuses, services and degrees at all levels of education; and
  • a comprehensive analysis of the fringe benefits currently offered to active teachers, state employees and retirees and the associated costs of those programs to the taxpayers of Alabama. The commission shall release its first report in March 2002. Commission members shall be appointed jointly by the chairman of the Business Associations’ Tax Coalition and the executive director of the Public Affairs Research Council of Alabama. The work of the commission shall be paid for with private funds.

(5) Establish an Alabama Council of Economic Advisors whose primary responsibility is to advise the Finance Office, Budget Office, Legislative Fiscal Office and legislative leaders on economic trends and facts that affect the Alabama economy both short- and long-term.

The advisory council should be comprised of business school deans from higher education, leading Alabama economists and researchers, a cross-section of chief executive officers from business and industry, and leaders from the small business, high-tech, retail, manufacturing, agribusiness and service sectors. The council shall hold public meetings quarterly to report and discuss its findings.

Council members shall be appointed jointly by the chairman of the Business Associations' Tax Coalition and the executive director of the Public Affairs Research Council of Alabama. The work of the council shall be paid for with private funds.

(6) Establish a two-year moratorium on any fringe benefit increase for active and/or retired teachers and government workers.

Source:  The Business Council of Alabama