Mobile, Ala. (May 20, 2003) -- While President Bush was busy touting a new tax cut package, the freshman governor of Alabama was poised Monday to unveil a billion-dollar-plus package of tax hikes for the cash-strapped state.

Gov. Bob Riley, a conservative Republican who served for six years in Congress, called a special legislative session on Monday to explain the initiative, which will be presented to state voters as an all-or-nothing deal.

While the initiative's passage is by no means assured, Riley has secured the backing of the state's largest teachers union, which has agreed to concessions on health insurance and retirement benefits. In return, he added a college scholarship program to the bill, as well as a possible pre-kindergarten plan.

The state's infrastructure is already feeling the financial crisis, with many school systems announcing layoffs for the coming school year, and three state facilities for the mentally retarded are facing closure. Alabama schools, universities and state agencies face an estimated shortfall this year of $600 million, according to the Mobile (Alabama) Register newspaper. If a tax hike isn't imposed, Riley warned it would lead to more than 2,000 teacher layoffs and vast cuts in medical services for the poor.

The legislation is expected to increase both the property and income tax on the wealthy and require teachers to pay more for their health insurance, generating up to $1.2 billion in new revenue each year.

-- WebCPA staff

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