REPORT OF JENNRO, LLC TO VOTER NEWS NETWORK ON ALABAMA'S PROPOSED CONSTITUTIONAL, AMENDMENT NUMBER ONE, APPLYING TO THE STATE AT LARGE

PREPARED AND SUBMITTED BY:

Richard Arrington, Jr., PhD
President
Jennro, LLC
2170 Highland Avenue, Ste. 100
Birmingham, AL 35205

George Munchus, PhD
James D. Slack, PhD
Birmingham, Alabama

August 28, 2003

REPORT OF JENNRO, LLC TO VOTER NEWS NETWORK ON ALABAMA'S PROPOSED CONSTITUTIONAL, AMENDMENT NUMBER ONE, APPLYING TO THE STATE AT LARGE

I. INTRODUCTION

On September 9, 2003 Alabama voters face an important voter referendum aimed at addressing one of Alabama's most serious problems - creating a viable and fair state taxation and accountability system. Voter News Network (VNN), consistent with its commitment of serving as a political information forum and a source of information for "independent voters", has requested JennRo to assist it with educating voters about the proposed Amendment One, which if approved, would establish "The Alabama Excellence Initiative Fund" into which would flow all of the tax funds generated by the eighteen (18) legislative bills that are part of the Amendment One proposal. Voters will be given the opportunity in a single "yes" or "no" vote to approve or reject all 18 items contained in the Amendment. The specific tasks for the consultant panel of JennRo were (1) analyze the arguments on both sides of the issue and render a decision as to the merits of the arguments and the research data supporting them, (2) recommend a position that VNN should take on the Amendment and (3) to recommend how the ten Political Action Committees (PACs) of VNN can most effectively use up to $200,000 of their available funds to support the VNN position.

There is a great wealth of information available to the public on the proposed Amendment, setting forth the positions of supporters and opponents of the Amendment. In fact, it is the complexity of an 18-issue Amendment and the voluminous amount of data supplied in support or opposition to the Amendment that suggest the need for voters to be well informed as they go to the polls on September 9. JennRo consultants have compiled and reviewed most of the information available to the public. In addition to reviewing the findings of two voter-preference polls, JennRo has completed it own voters' survey or poll on the Amendment.

The members of the Consultant Panel: James D. Slack, PhD, Professor and Chair of the Department of Government at the University of Alabama at Birmingham; George Munchus, PhD, Professor of Business at the University of Alabama at Birmingham and Director, Center For Research and Advocacy on African-American Entrepreneurship; and Richard Arrington, Jr., PhD, former Mayor of the City of Birmingham, former Visiting Professor, University of Alabama at Birmingham, Visiting Professor in Government at Miles College and President of the Consulting Firm, JennRo, LLC.

II. ALABAMA TODAY

Alabama is a State rich in natural resources. It has an abundance of water resources, coal deposits, timber and farmland. But as is well known, in nearly every evaluation/study of the indicators generally used to assess the quality of life factors, Alabama ranks at or near the bottom. In the national competition for who provides a good quality of life, Alabama trails its sister states. Even when Alabama has earned national recognition for leadership in some areas, such as its nationally recognized Reading Initiative Program, its lack of adequate funding has hampered the implementation of the program throughout its public school system.

Report after report over the past couple of decades has pointed out weaknesses of Alabama's tax revenue and accountability system. In the 1990s two Alabama Tax Reform Committees set forth recommendations for improving Alabama's Tax System. None of their proposals have been adopted to date.

Alabama's Tax Revenue System and consequently a large percentage of its people, has been hampered by an antiquated and unfair Tax System characterized by the lowest tax revenue among states, the lowest property tax, excessive earmarking of available tax funds, under-funding of schools, nursing homes, senior programs, healthcare, mental health, prisons and other essential state services. Alabama has one of the nation's most regressive tax systems.

The September 9, 2003 Amendment One tax reform election is indeed a major crossroad for the people of Alabama!

III. GOVERNOR RILEY'S PROPOSED TAX AND ACCOUNTABILITY AMENDMENT

The wording of the official ballot for the September 9, 2003 election reads as follows:

OFFICIAL BALLOT
CONSTITUTIONAL AMENDMENT ELECTION
STATE OF ALABAMA
SEPTEMBER 9, 2003

"Shall the following be adopted to the Constitution of Alabama"?
PROPOSED AMENDMENT WHICH APPLIES TO THE STATE AT LARGE

PROPOSED STATEWIDE AMENDMENT

"Proposing an amendment to the Constitution of Alabama of 1901, establishing the Alabama Excellence Initiative Fund which may be used to fund programs including, but not limited to, the furtherance of excellence in public education, college scholarships, health care benefits for senior citizens and job training program to attract new high paying jobs and otherwise provide for distributing state tax revenues; to adjust income and property taxes; to establish the General Fund Rainy Day Account; to provide for the replenishment of the General Fund Rainy Day Account and the Education Trust Fund Rainy Day Account".
Proposed by Act No. 2003-78

YES

NO

IV. RECOMMENDATION

After a careful review of the information available on amendment one and the research supporting arguments for and against amendment, the consultant staff strongly recommends that VNN support Amendment One! Our reasons for this recommendation are as follows:

Simply stated, Amendment One provides:
A. Funding necessary to help improve the quality of life for all Alabamians;
B. Taxing only those who can most afford it; and
C. Assurance that politicians will not "misuse" the funds provided.

In greater detail, Amendment One provides:
A. Accountability reform that prevents waste and mismanagement of our tax dollars;
B. Education Reform, including holding our educators accountable for their actions; and
C. Tax reform which rids Alabama of its regressive tax system and fairly taxes the large corporations and land owners.

Listed below are specific examples of how Amendment One will achieve the above results:

· Sixty-seven percent of Alabamians will pay the same or lower state income taxes
· Now a family of four must pay state income taxes starting at $4,600 earning. Under the proposed plan this same family pays no state tax on the first $19,000 of income.
· Provides significant tax relief by raising child exemptions for families.
· Pension and social security income that are currently tax-exempt will continue to be completely exempt under the proposed Amendment.
· If your family annual income is $40,000 or less your taxes will be cut.
· If your home is valued at $50,000 or less your property tax on the home drops to zero (no tax).
· If you are 65 years old or older you will pay no tax on the Alabama home you live in.
· How will the projected $1.2 billion be used? $675 million will cover our deficits for health care, public safety and prisons. $344milion goes for education to support programs including Alabama Reading Initiative, College Scholarships and support for our local schools. County law enforcement, schools and senior citizens programs will get $104 million.

Those who oppose Governor Riley's tax and accountability program make the following claims:

· That Alabama's much maligned and unfair regressive tax system that unfairly taxes low incomes provides an incentive for more economic development. We find no data that support this contention.
· That Alabama schools already receive adequate funds, which are mis-managed. The President of A-Plus, a program for education reform, calls this claim false, listing several educational programs that are currently inadequately funded.
· That the $1.2 billion expected to be raised by the passage of Amendment One is more than the state needs to meet a projected $675 million deficit. They say that this is "an over-kill" on taxpayers. Yet if one bears in mind that $675 million will only enable us to maintain the status quo of being at the bottom of the quality of life scale among states, we readily see the need for more than $675 million. The $675 million only "plugs the broken dam" and defers the crisis until next year. Alabama needs to move up the quality of life scale not remain stuck on the lowest rung of the ladder.

In summary we believe that passage of Amendment One means:

A. Greater State Government Efficiency. The $1.2 billion package will allow Alabama public agencies to compete more readily with their counterparts in securing federal and private sector grants for needed public services that require matching state funds. We estimate that a minimum of $10 million is potentially lost among 37 state agencies and departments as a result of insufficient funds to match available federal grants. The amount is probably greater if limitations of the majority of Alabama schools and human resource agencies are considered.

B. Greater State Government Effectiveness. While most States earmark about 20 percent of state budgets, Alabama earmarks well over 85 percent. This prevents state government from having the ability to address new crises in a business-like manner. No successful company would tie its budgetary hands to prevent the flexibility needed to meet new challenges, heighten productivity, and create additional wealth for the stockholder. The same is true for state government. Diffused distrust in government, albeit justified in far too many instances in Alabama, is counter-productive to professional management of public concern.

C. A Giant Step Towards State Government Reform. The accountability dimensions of Amendment One are sufficient to hold elected state official's "feet to the fire." It also opens the door to further reforms down the road - reforms that most state and local governments in the United States underwent a century ago. The accountability reforms in Amendment One is the first step in returning trust to government in Alabama.

D. A Fair Structure. According to the Public Affairs Research Council of Alabama, a non-profit and non-partisan organization, Amendment One would remove the high tax burden on low-income families, an issue in Alabama for many years. Even with the passage of Amendment One, "Alabama's taxes will remain among the lowest in the U.S."

E. Hope For The Poor And Vision For The Middle Class. Amendment One will begin the democratic process that changes the political power equation in the state. It will decrease the amount of fiscal power held by the very rich and increase the fiscal power of the poor and middle classes. This will make their votes more meaningful in the future and bring about the opportunity for greater hope and vision for the middle class in Alabama.

V. RECOMMENDED STRATEGIES FOR VNN IN SUPPORT OF AMENDMENT ONE

An examination of recent voter preference polls on Amendment one suggests what the strategy for supporters of the amendment must be, if there is to be any realistic chance of success.

THE POLLS. A July, 2003 poll of 500 likely voters (conducted for The Birmingham News and Fox 6) showed that approval of the referendum trailed 49% to 39%, with 12 % of those polled undecided. Support for the amendment was stronger among black voters (44%) than white voters (38%). Blacks make up 32.5% of the total Alabama voters.

Two polls conducted by The Mobile Register and the University of South Alabama on August 3 and August 17 showed almost identical results. According to those polls, 52% of the 828 voters surveyed opposed the referendum and 27% favored it. Interestingly, the voters in the economic classes that would probably benefit most from approval of the amendment showed more opposed to it than supporting it. One might assume that these voters might be persuaded to support the amendment if they better understood the benefits that could accrue to them. Yet others might argue that these voters don't trust legislators to deliver on the promises, even if the amendment passes.

A VNN poll conducted by JennRo pollsters between August 22 - 25 of 500 likely voters in Alabama showed that the Tax and Accountability Referendum still faces an uphill battle. Forty-eight percent oppose the plan while 32 percent would vote for the referendum. Twenty percent were undecided. The margin of error for this poll was ± 4%. Riley's plan continues to build support among black voters, with 39 percent saying that they now favor the plan. Most of Alabama's black legislators have indicated strong support for the plan. Voters were not surveyed by income categories. They were only asked if they were likely to vote in The September 9 referendum, and if they had to vote today, would they vote yes, for the plan or no, against the plan.

Based on the results of the known surveys/polls, the strategy for supporters of the referendum becomes clear - work for a large pro-amendment turnout using targeting and tracking data to know where the support is located and where to wage the GOTV efforts. A strong GOTV phone bank plan from September 5 through September 9 is an essential component of the plan. A large black voter turnout could push Riley's program over, Since political campaigns in Alabama's black community are historically driven by black political organizations like the Alabama Democratic Council, The Progressive Democratic Council, The Metropolitan Democratic Women, The Alabama New South Coalition, The Jefferson County Citizens Coalition, The Bessemer Civic League and Concerned Citizens, The Fairfield Democratic Women, etc., the active support of these organizations along with the push from black ministers become critical. It will not be enough for these groups to just endorse the plan and pass out sample ballots. Each one must be contacting black voters from September 5 - 9, urging them to vote.

On election day their volunteers need to be visible on the streets with their Ride-To-The -Polls vehicles and public announcement systems. It would be wise if their volunteers who are assigned specific areas to work are given a projected minimum number of voters they must get to the polls on September 9.

There should be no question that a major catalyst for voter turnout in the black community is the activity of these black political organizations and churches. Without these black political organizations actively participating in each election - sometimes competing with one another - Alabama black voter turnout would probably decrease 50 percent. Throughout their existence these organizations have educated black voters on the issues and stirred them up enough to go to the polls.

VI. WHERE SHOULD VNN PUT ITS RESOURCES?

The political action committees (PACs) of VNN would be wise to put its resources into GOTV activities, especially in the black community. We recommend that black political organizations be urged to submit to VNN a brief, no more than a single page, GOTV plan containing the projected number of voters they will work to get to the polls and how and where, and the amount of financial resources needed to successfully implement their GOTV plans. Based on the merit VNN sees in the plans it would contribute some of VNN's financial resources to those groups. The application process for VNN funds could be down loaded from the VNN website.

Richard Arrington, Jr.
President
Jennro, LLC
2170 Highland Avenue, Ste. 100
Birmingham, AL 35205
(205) 410-0388
August 28, 2003