A tale of two states

By Ed Muir 

Entering a third year of fiscal woe, states now have to decide between cutting spending and raising taxes. Battle lines are being drawn. Often, the most important battle is between anti-tax zealots and coalitions of Democrats and Republicans wanting to avoid the worst cuts. Alabama and New York provide two stories of such battles and demonstrate what’s at stake.

Alabama’s battle started with a conversion. Bob Riley is a conservative Republican and former member of the U.S. House of Representatives. Frequently described as a “Gingrichite,” Riley is a reliable proponent of small government and lower taxes. No one thought this would change when he was elected governor of Alabama. But Riley, who is also a fundamentalist Christian, settled into the governor’s mansion just as a remarkable analysis of Alabama’s tax and spending patterns was making the rounds in state policy circles.

Written from a Christian theological perspective by Alabama law professor Susan Pace Hamill, the analysis was dubbed by editorial pages as the “What Would Jesus Tax?” question.

Riley was moved by the argument that his responsibility was “to look out for the least among us.” He laid out a plan that would shift the tax burden to the wealthiest and provide revenues for education. Put before the voters on Sept. 8, the plan was resoundingly defeated, done in by a nationally funded conservative media campaign and by the suspicions of citizens unable to overcome their distrust of the governor.

In the aftermath, Grover Norquist, president of the anti-tax group Americans for Tax Reform, warned other Republicans who might be inclined to support new taxes rather than cut education or healthcare: “A Republican cannot be elected and govern successfully—that is, in such a way as to make possible re-election or higher office—without staking out an unequivocal anti-tax-hike position.” For those not familiar with Norquist, he is one of America’s premier advocates not only for lower taxes but also for anti-labor legislation like paycheck deception and right-to-work.

New York’s battle was different. Another Republican governor, George Pataki, crafted a budget to address a massive shortfall. But this one called for major cuts, including an 8 percent drop in K-12 aid. Concerned about the effect on children and seniors, Democratic legislators led by Assembly speaker Shelly Silver, and Republican legislators led by Senate majority leader Joe Bruno, passed a better budget. It had smaller cuts, raised the income tax on the state’s wealthiest taxpayers and closed corporate loopholes. There were cuts, but most vital services were saved.

The governor vetoed the new taxes and Norquist was at his side, telling New York Newsday: “The governor said he will veto any income tax increases. The governor asked for our support and we’re going to give it. We expect to spend hundreds of thousands of dollars on mailings and radio commercials.” But within days, the Legislature had overridden the governor’s vetoes. Norquist has not been seen in New York since.

What was different? The leadership of a strong and unified labor movement in New York was one key factor. The New York State United Teachers, for example, helped organize a rally of 40,000 at the state Capitol in support of education funding. In Alabama, the education unions could only do so much.

A better question might be: What was lost and what was gained? New Yorkers who make more than $100,000 a year will pay more state taxes, but not so much that the federal tax cuts won’t still enrich them. The state will cut K-12 funding by less than 2 percent, it will not lay off state employees, it will keep mental health facilities open and it will not break the backs of families trying to send their children to college.

On the other hand, Alabama’s wealthiest families still have an effective tax rate of less than half that of the poorest families. The governor’s new budget will release 5,000 inmates, cancel the new class of state troopers, close the trooper training facility, reduce Medicaid nursing home support by 3,000 beds, cap Medicaid prescription drug coverage and lower the number of children covered by the state Children’s Health Insurance Program by 11,000. Hundreds of layoffs in prosecutors’ offices will delay trials by 18 months. HIV medication no longer will be provided to 100 patients struggling with that disease.

It’s funny that Norquist doesn’t talk about what happened in New York—Democrats and Republicans pulling together to solve a problem. It’s sad that he considers what happened in Alabama to be a victory for anyone.

Ed Muir, an assistant director of AFT research and information services, specializes in state funding and policy.