The Alabama Constitution and Economic Development

The Alabama Constitution and Economic Development Joe A. Sumners, Ph.D. Director Auburn University Economic Development Institute 334-844-4704 sumneja@auburn.edu 1 Alabama’s Fundamental Problem A defective constitution is not the only problem facing Alabama today,but, it is a fundamental problem. A flawed constitution is the root of many of the crises we face today. Looks Backward: Racism and Roadblocks Prevents Local Governments from Addressing Local Problems Preserves a Failed Tax Structure Mom and Pop’s Constitution: 1 Imagine Mom and Pop’s grocery store. It seems the old store has been open forever. Mom and Pop have continued to add on to the store, but not according to any evident plan. Aisles are filled to overflowing with items in no particular system of order. Behind the cash register one can still see the old painted-over sign that says, “Whites Only.” The 1901 Constitution The two primary goals of the framers: 1. Strip blacks (and poor whites) of all political power. 2. Limit the power of government. Preserve low taxes on property Limit government regulation of business Concentrate political power in Montgomery (no home rule) Problem 1: Looks Backward: Racism and Roadblocks “But if we would have white supremacy, we must establish it by law” -- John Knox, President of 1901 Convention Problem 1: Looks Backward: Racism and Roadblocks Black Disenfranchisement  In 1900 there were 181,000 registered African American male voters in Alabama; in 1903 there were fewer than 5,000. In the first election after enactment of the 1901 Constitution, overall voter turnout declined by 38% (white turnout by 19%, and black turnout by 96%).  Problem 1: Looks Backward: Racism and Roadblocks ROADBLOCKS  The Alabama Constitution is “Strangled in Specifics,” resulting in: preservation of the status quo (low taxes) limits on the power of the Legislature to act (no public improvements; debt limits) 746 amendments (attempts to loosen the original restrictions) Alabama’s Constitution – The World’s Longest • The Alabama Constitution is about 40 times as long as the U.S. Constitution and over 12 times as long as the typical state constitution . • The combined constitutions of our neighbors – Mississippi, Georgia, Tennessee, and Florida equal only one third the length of the Alabama Constitution. • The Alabama Constitution is over 4 times as long as the next longest (Texas; 80,000 words). Problem 1: Looks Backward: Racism and Roadblocks Amendments to the 1901 Alabama Constitution 502: Allows a Morgan County Sheriff’s posse 351: Mosquito and rodent control in Mobile County 482: Right to dispose of dead farm animals in Lauderdale County 497: Prohibition of overgrowth of weeds and storage and accumulation of certain junk, motor vehicles and litter in Jefferson County 520: Excavation of human graves in Madison County 34: Tax for malaria control in Limetone County Problem 1: Looks Backward: Racism and Roadblocks Implications for Economic Development  State Image: “Racist” and “backward” are words that outsiders associate with Alabama. We have worked hard to shed this image to attract economic development, e.g, Mercedes, Honda, Robert Trent Jones Trail, NASA, Boeing, etc..   The 1901 Constitution is “backward looking,” designed with Reconstruction in mind. The accommodations needed to overcome a flawed foundation burden the entire governmental system: in effect, the Alabama Constitution imposes a gigantic Inefficiency Tax on the Alabama people. Effective government is “strangled” by our constitution. Mom and Pop’s Constitution: 2 The rich and powerful in town like Mom and Pops’ because Mom and Pop give them big discounts. Mom and Pop can’t really afford to do it but they feel like they need the support of the powerful to stay afloat. Anyway, they can almost make up the difference by charging the poor folks more. All around shiny new stores have opened up. They offer products and services that Mom and Pop can’t afford to offer. At least not unless they raise prices or make the rich pay their fair share. They won’t do either. Instead they will cut back on the services they offer. In fact, Mom is thinking of firing Pop to make payroll. Problem 2: Preserves A Failed Tax Structure  Taxing property at the national average would produce an additional $2.4 billion per year Georgia -- $1.8 billion  Alabama taxes are not adequate, fair, or reliable The total state and local tax burden in Alabama is the lowest in the nation   To compensate for extremely low property taxes, Alabama relies heavily on a regressive sales tax.  Alabama property taxes are by far the lowest in the nation History of Economic Development in Alabama    Throughout the 20th Century, Alabama’s economic development strategy was built on low taxes and unskilled, low-cost labor. In the later 20th Century, the U.S began to export low wage, polluting industries; new focus on high technology. Alabama was poorly positioned to compete when question became not “what does labor cost?” but “what does labor know?” Problem 2: Preserves A Failed Tax Structure IMPLICATIONS FOR ECONOMIC DEVELOPMENT  Education is the key to economic development and a higher quality of life in this state The current tax system makes it difficult to raise local funds to support education.  Alabama fails to provide adequate infrastructure (roads, bridges, water and sewer systems, technology) and quality of life (e.g., public health, public safety) Mom and Pop’s Constitution: 3 Year’s back Mom and Pop’s son, Junior, opened up a branch store just outside town. He’s in worse shape than Mom and Pop. Junior has wanted to make improvements in his store, but Mom and Pop don’t trust him to make decisions and handle all that responsibility. Before Junior can change prices, add new stock items, or give a pay raise to his stock boy, he has to get permission from Mom and Pop. Two years ago, Junior asked if he could raise the price of bread by two cents. Mom and Pop said they’d think about it. Last week they gave the OK. Too bad that now Junior needs a price increase of two cents more. Problem 3: Prevents Local Governments From Addressing Local Issues  Over 70 percent of  The 1901 Alabama Constitution concentrated power in the Legislature. Alabama’s 746 amendments apply to a single city or county.  Alabama’s Legislators spend about 40 percent of their time on strictly local issues.  Counties cannot raise taxes, regulate development, alter their structure, increase court fees, salaries, etc.  Alabama is the only Southern state to deny Home Rule to county government. Problem 3: Prevents Local Governments From Addressing Local Issues Implications for Economic Development INEFFICIENCY TAX   At county level: Wasted time and resources to get around the restrictive government structure. At state level: Wasted time and resources dealing with local concerns while persistent statewide problems are not addressed. Mom and Pop’s Constitution: 4 Everyone keeps telling Mom and Pop they need to change and modernize to keep up with the times. Maybe they are right. They’re losing money, there’s no more room, and things are so disorganized that people keep getting lost in the store. Pop finally gives in. He’s decided to add on another room. That will fix things for now. Unheeded Advice “Many of the provisions of our present antiquated fundamental law constitute insuperable barriers to most of the important reforms necessary to meet modern conditions and to secure greater economy and efficiency in the administration of state government…The only rational option is to assemble a constitutional convention to take into consideration the entire subject and remodel the entire constitution.” -- Alabama Governor Emmet O’Neal, message to the Alabama Legislature, 1915 Alabama Citizens for Constitutional Reform Website www.constitutionalreform.org A Century of Controversy: Constitutional Reform in Alabama. Bailey Thomson, editor. University of Alabama Press, 2002.