Earmarking has put state in hole
By By BILL CRIST - Publisher
When it comes to this state's constitution, it's hard to determine exactly how the current state of affairs came to be, and even more difficult to explain the justification behind many of the rules that it put into place regarding the governance of Alabama.
One such area is the earmarking of tax dollars. Simply put, the state, and therefore all the government agencies that receive funding from the state, has to spend tax revenue in a certain, prescribed way. According to Governor Bob Riley, the constitution dictates how more than 90 cents of every tax dollar may be spent.
It's possible that in its purest form, earmarking can be seen as a way to help cut down on budget items that many constituents would call "pork." But as voters, over the years, we've tied the legislature's hands in how they can and cannot spend money, and few would argue that pork spending is not still rampant.
It can also be seen as a way to keep power in the hands of those in charge in Montgomery, particularly as it relates to how the money it doles out to counties, cities and schools is spent. By designating funds for certain departments, our legislators exert control over local expenditures, usually at the expense of the entities that know best what is needed at home.
During his campaign for governor, Riley said he planned to work to un-earmark dollars in Alabama. Last weekend Riley addressed delegates at the Alabama Press Association and said that no other state in the country puts as many restrictions on revenue as ours does. In fact, only two other states earmark more than half of the their money, with many in the low teens and single digits.
Setting money aside for special projects is a smart approach to fiscal management. Many of us do it at home, not only following a budget each week or month, but setting aside a percentage of our income for special purchases and down the road for our retirement. We invest in IRAs and 401K plans. We put money aside in Christmas Club accounts so that we have money to spend on gifts each December. On a civic level, cities and schools set aside funds for capital improvement projects, like new gyms and school buildings.
In those ways, earmarking money makes sense. Whether we want to look at it as forced discipline on ourselves, or more positively, as planning for the future, making those funds available when we'll need them helps avoid debt, and the interest and debt-service expenses that come with borrowing money.
The fiscal problems that plague Alabama will likely continue if we continue to earmark revenue to the extent that our state currently designates how money can be spent, though. Those elected to represent us at the county and city level have a much better understanding of the specific needs of our area and where tax dollars would best be allocated than those who work for us in Montgomery. As an example, money designated for school building projects does little good in an area that's still using outdated textbooks.
Riley says he has a plan to turn the fiscal situation in our state around and set Alabama on solid footing. Unearmarking tax revenue is one phase of that plan. While more specific details about his plan are needed before anyone offers a blanket endorsement (he says they are forthcoming), on the surface it appears to be a much-needed step in the right direction. Let's hope that the cumbersome set of rules that established the system in the first place, don't allow it to live beyond its usefulness.
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