The most-admired American political scientist of the mid-20th century understood Southern politics as few have before or since. In his masterwork on the subject, published in 1949, he portrayed Alabama as a one-party Democratic state dominated by its "big mules"--the manufacturers, financiers and power brokers of Mobile and Birmingham, ever vigilant against any expansion of government they might have to pay for.
If Key returned to Alabama today, some 40 years after his death, he would no doubt be prepared for a significant amount of change. It is unlikely he would be shocked by the presence of Republican Governor Bob Riley. Resentment against the national Democratic Party was already growing in Alabama at the time Key wrote. In the coming years, he predicted in 1949, Republicans in Alabama and other Deep South states would find "a larger and larger group of prospects susceptible to their appeal."
But it is safe to say that Key would find one element of present-day Alabama politics utterly astonishing. He would see the Big Mules crusading for reform--and demanding higher taxation. And he would see the Republican governor fighting to get it for them.
Riley, inaugurated six months ago as the third GOP governor of Alabama in modern history, wasted little time in confounding both parties' expectations of him. A former car salesman who boasted during the campaign that he had never once voted to raise taxes over a six- year congressional career, he went to the legislature in March and proposed a tax increase so huge it was difficult even to grasp: $1.3 billion (22 percent of the state's current revenues), with more than a third of the money to come from higher taxes on property, and much of the rest from incomes above $150,000. In exchange, the income tax on the state's poorest citizens would be abolished.
Legislators reacted mostly in disbelief, with many of Riley's Republican allies denouncing him, and many Democrats praising his courage. Still uncertain what to make of it all, the House and Senate nevertheless passed most elements of the package in June, and in September it will go to a referendum of the voters.
The national press has portrayed the 58-year-old governor as a moral convert to the tax reform cause, citing Riley's frequent scriptural quotations about justice for the poor. And they have dwelt on Alabama's current fiscal problem, a shortfall so severe that failure to address it, budget writers say, would mean layoffs among teachers and state troopers, evictions from public nursing homes, early release of inmates from state prisons, and worst of all, cancellation of the football season at some high schools.
There is no question that Riley is a big part of the story, and the short-term budget crisis is another big part. But to really understand what is going on in Alabama this summer, it helps to go back into history.
All over the country right now, states are trying to figure out how to modernize tax systems that were designed for the industrial economy of the 20th century. Alabama doesn't have that problem. It never got that far. Its constitution, adopted in 1901, is a document of the 19th century, written for people who own large tracts of land. It is designed to protect the wealth of the planters and timber magnates who were rich long before the factory owners arrived. That is why farmland is taxed not according to its market value, as it is in virtually every other state, but according to its "current use," which means land that could bring in millions from development can be planted with a few rows of soybeans and taxed at very little. The result is that the state's property taxes, as a whole, are 64 percent lower than the national average. Meanwhile, income and sales taxes are disproportionately high. Residents in some cash-poor small towns pay 11 percent on the groceries they buy. Anybody who makes $4,600 a year has to pay income tax. No other state reaches into the pockets of the working poor quite so shamelessly.
The system is as unfair as it is inadequate. That is no secret. Critics have been harping on it for generations. Democratic Governor Albert Brewer tried to promote constitutional reform in the early 1970s, and Republican Governor Guy Hunt made a less ambitious effort in the early 1990s, but neither got very far. Democrat Don Siegelman, Riley's predecessor, decided essentially to give up on the fairness question and institute a state lottery to bring in more money. But the voters turned him down.
The circumstances of each of these defeats were a little different, but the politics was essentially the same: Reform failed because too many of the Big Mules didn't want it. The planters and timber companies were being asked to support changes that would cost them enormous amounts of money. Birmingham banks and insurance companies, while less blatant beneficiaries of the 1901 tax system, worried about what a breach of that system might mean to their own tax liabilities in the long run.
But the Big Mules have not been one united herd. The Alabama Business Council, representing the financial interests of the larger cities, has been embarrassed by the state's low ranking in every social category from health to housing, but especially by the quality of Alabama's schools, which rank close to 50th among the states. It has become an article of faith among the business elite that Alabama's future fortunes depend not on keeping taxes low but on creating a workforce good enough to attract new investment. Despite some highly publicized recruitment successes of the 1990s--such as Mercedes-Benz, which set up shop in Alabama in exchange for a $250 million public subsidy--the state has, in fact, been losing economic ground, even against its historically poor Southern neighbors.
Since the late 1980s, the Alabama Business Council has supported spending more money on schools. But the tax system doesn't generate the cash to invest much even in good times, and the 1901 constitution restricts local governments from raising taxes without state permission even if they want to. So the corporate elite in Birmingham and Mobile has slowly, reluctantly, come to a simple conclusion: Alabama will never progress very far until the tax system changes.
This represents a crucial realignment in state politics, but it is not one that makes Alabama unique. In much of the country, business elites are breaking away from a traditional anti-tax ideology. If you look at any of the states where Republican governors have sought tax increases this year, you will find the Chamber of Commerce or an equivalent group going along. And the reason is nearly always the one that is expressed in Alabama: Business needs a better workforce, the schools have to provide it, and they can't do that without more money.
It does make for some strange alliances. In taking up the cause of tax reform, Alabama's corporate elite has reluctantly made common cause with the man who for decades has been the bete noire of the state's conservatives: Paul Hubbert, the powerful director of the Alabama teachers' union, who came within 45,000 votes of winning the governorship himself in 1990.
When Riley won legislative approval of his tax reform plan in June, it was with the help of Hubbert, of the legislature's senior Democratic leadership, of the Realtors, who were willing to swallow $450 million in higher property taxes, and nearly all the major banks, despite the fact that they stand to lose some lucrative exemptions from the sales and use tax.
That will be a formidable coalition for the September referendum, but it doesn't exactly constitute consensus. Left behind in the conversion to tax reform is part of the original Big Mule alliance: organized agriculture and timber. The state's planters, cattlemen and lumber barons have less direct interest in the quality of the state's workforce, and they will take a huge hit if the Riley package is approved. Land parcels of 2,000 acres or more will no longer be assessed at "current use" but at "highest and best use," a change which the Alabama Farmers Association has equated to a tax increase of 300 to 400 percent.
The opposition has a bit of a renegade quality. It reveals something about the way Alabama politics has changed that the most virulent criticism of the governor currently comes out of a publication known as "Suppressed News." Had Riley's Democratic predecessor proposed a plan like this, the editor of "Suppressed News" wrote recently, Republicans all over the state would have reacted "with howls of dismay and a determination to attack it with vengeance." This is undoubtedly true. It also doesn't seem to make much difference. Nixon went to China and got away with it. Bob Riley can promote a tax reform plan that Don Siegelman didn't dare talk about.
What matters in the end will be the opinion of the rural and working- class voters whose suspicion of government and opposition to taxes are more powerful than their partisan loyalties. Outgunned as they may seem, Riley's opponents can defeat the referendum in September if they manage to activate this grassroots suspicion. Even some supporters of the plan believe this is what ultimately will happen. One of them, state Representative John Rogers, told a group of lobbyists after voting for the plan that, "If this thing passes, I'll eat your hat."
At this point, the smart money isn't predicting that Riley will win, and it isn't predicting that he will lose. The smart money doesn't know what to expect. It's all too unusual. But I have a hunch what V.O. Key would say if he were cruising around Alabama this summer. He would say that, in the end, the business elite nearly always gets what it wants. It just so happens that this time, it wants something that will benefit the entire state in the long run.
