Running Alabama Like A Business

 

The highway department received earmarked funds, and it was bloated with employees. Since I've been in office we've cut the highway department from 6,000 to 4,000 employees and we'll probably go further. Earmarking is the reason we have a $7.5-million maximum-security hospital in Tuscaloosa standing empty when we lack the money to build prisons to house criminals. Because the prison system receives no earmarked funds, we have 1,400 state prisoners scattered around in city and county jails. And the federal courts are releasing those dangerous criminals out on the streets.

As long as you earmark taxes you can forget about zero-based budgeting. Earmarking destroys the budgething process as a tool to discipline bureaucracy and insure that people receive the services for which they are taxed. There is no incentive to save under earmarking, only to spend.

INC: You've clearly had a good deal of success at managing the machinery of state government, but your track record with the political process is far less spectacular. Someone recently said that any time Fob James has to get something through the Legislature, he's in trouble.

James: I'm two years into my term and I probably have suffered some setbacks in the House and Senate because I haven't worked hard enough to create a rapport with individual legislators. But I'm learning. Tonight we're having a dozen senators over for dinner. My budget's going to the State House tomorrow.

INC: But you still refuse to play traditional politics, to be a "good old boy." You angered many of your supporters, for example, by giving jobs to people who supported your opponents instead of to your own campaign workers. How are you going to get reelected doing this kind of thing?

James: If you're so interested in playing politics and putting together a campaign organization for the next election, you'll never make the hard decisions that will bring government to the level of the people who are paying for it.

Anyway, I've never subscribed to the theory that you have to stay in office for two terms to accomplish anything. We fought World War II in four years.

INC: You're often described as inflexible, unwilling to compromise. How true is this?

James: I don't think we can afford the luxury of compromise anymore at any level of government. We have compromised ourselves to the point where our currency is dangerously devalued, we're in a self-inflicted dangerous position internationally, and we're seeing a way of life erode.

I'm a recent grandfather and I see my son unable to buy a house for his family at a reasonable price. We've compromised our way of life by failing to retool, from the smallest machine shop to our major industries. At the state level, on a billion-dollar budget, I can compromise on $50 million, but if there is a deep principle or philosophical question that the budget absolutely violates, I'd say it's best if they override my veto.

INC: Still, at times you seem to go out of your way to antagonize powerful lobbies. You've been especially critical of teachers and state employees, and they're up in arms about your plans.

James: I have not been intentionally harsh. I have been honest. Alabama has the richest state employee and teacher retirement system in the United States -- richer than any other state or the federal government. On October 1, if my legislation is passed, state employees will retire at 100% of their net takehome pay the last year they worked. Now that's after my reductions. Without my changes, state employees would continue to retire at a rate as high as 144% of their paychecks. My changes will save the state $100 million a year and $1 billion in the next 10 years.

If these changes aren't made, this baby's going to jump the tracks just like it did in New York. That's not fair to state employees. This state cannot continue to pay out 17.5% of its total tax in-take in retirement funds.

I said the taxpayers are being raped. Now was that harsh?

If a particular program is costing too much money and has to be cut by 10%, it doesn't matter how you present it. The bureaucracy scream, exhorts, and criticizes. I don't know how to take a hog away from the trough and not have him squeal. I'm just not that good a salesman.

INC: What are you doing to encourage new business and help existing businesses in Alabama?

James: One of the best things government can do for business is to stay away from it. In my judgment, the greatest thing we can do to improve the economic climate in Alabama would be to improve our literacy rate by 30%.

INC: Yet in fact you've been aggressive about recruiting new business for the state and providing substantial tax incentives. Didn't Alabama lead the South in dollars spent in capital outlay for new and existing industries from 1972 to 1978?

James: Yes, and I believe we lead in the Southeast today, though the trend has slowed recently because of the high cost of money. We're now looking for companies with cash to expand in Alabama, and also for foreign firms to come here.

INC: Do you distinguish between small and large companies in your recruiting?

James: No. We have many high-capital operations down here, such as chemical plants that can cost half a billion dollars to build. But some of these large operations only employ 150 people. I forget the exact statistics, but I believe that something like 60% of all new jobs are created in firms with 20 or fewer employees. Those are startling statistics.We'd like to see more fabrications, assembly, and plastics operations employing 100, 200, 300 people. Small firms pump new life into the economy and they put more people to work.

INC: What must America do to reindustrialize?

James: First we must retool. Second, we must lower tax rates on unearned income and liberalize depreciation schedules. My party has to admit to itself that it is still part of capitalist society. If we continue to tax investments and dividends we'll never create any savings.

The real hope for this country comes from real companies, businesses that get started, make a product, meet a payroll, turn a profit, pay a reasonable return to investors -- yet we penalize these companies.

INC: What have you learned about government?

James: Government is a power puff. Too often, it's lacking in the hard decisions. It's an incubator for egos. What's really needed is an effort to explain to the public the complexities of government, the rationales for decisions, in a way that will take the mystique out of government.

We politicians all tell you how much stress and strain we work under and how lucky you are that we're down here in Montgomery or up in Washington struggling for you. That's all horseshit. Always remember that we're spending your money, not our own. And very few of us come home from Montgomery -- or Washington -- of our own accord.

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