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With ARPA done, economic incentives now lawmakers’ ‘priority No. 1’

MONTGOMERY, Ala. – The Alabama Legislature will resume its 2023 regular session on Tuesday and high on lawmakers to-do list is legislation to extend and expand the tax incentives the state uses to entice new employers.

“(The Alabama Jobs Act) is going to be priority No. 1 coming back after break, I think you’ll see a big push for that,” Speaker of the House Nathaniel Ledbetter, R-Rainsville, said Thursday. “They’ve been very positive for our state, we’ve seen the job growth has been tremendous because of it. We’ve looked at the numbers, we got a return on the investment of 173% over a 20-year period.

“I think anybody in the business world, if they could make that kind of investment and get that kind of return, they would do it, so I think it’s certainly important for our state. (The economic incentives) sunset in July, so I think it’s imperative that we get those out rather quickly when we come back.”

The proposed legislation has not yet been filed, but state leaders, including Gov. Kay Ivey and Lt. Gov. Will Ainsworth, as well as the Alabama Department of Commerce, have for months discussed possible changes to the incentive laws.

Passed in 2015, the Jobs Act created two separate incentives: The Alabama Jobs Credit and Alabama Investment Credit. The Jobs Credit gives companies cash rebates on their previous year’s payroll for qualified employees. Companies can get higher rebates if they locate in rural parts of the state or hire veterans. The Investment Credit pertains to a company’s capital investment and can be applied to several taxes, including income. Companies can receive the incentives for up to 10 years.

The incentives are currently capped at $350 million annually and Alabama Department of Commerce Secretary Greg Canfield has warned lawmakers the department has been bumping up against that limit, hindering what it can offer prospective new companies.

Last year, Ainsworth led a Joint Legislative Study Commission on Renewing Economic Development Incentives that made more than a dozen recommendations to make the state more attractive to industry. It recommended increasing that $350 million cap, but didn’t specify an amount.

Canfield has said that since 2015, the Jobs Act has helped the state recruit 217 projects creating more than 38,000 jobs.

“Alabama has led the Southeast in economic development, job, creation, and industrial recruitment for roughly 20 years, and much of that success is the result of the incentives we offer,” Ainsworth told Alabama Daily News on Thursday. “If we are going to continue that incredible success for decades to come, our incentives must remain competitive with those offered by our sister southeastern states, and this proposal does just that in a conservative, common sense manner.

“The pay-as-you-go package we have crafted also ensures taxpayers are protected from companies that are unable to fulfill their commitments.”

Other recommendations from the task force in December included:

  • Extending the Alabama Jobs and Growing Alabama incentives until July 31, 2028.
  • Making constructing, owning, and operating renewable energy generation a qualifying project under the Jobs Act. 
  • Allowing the State Industrial Development Authority to create  “brownfield redevelopment zones,” to provide liability protections for  owners who remediate former industrial sites. 
  • Making information on all past and future recipients of Jobs Act incentives publicly available, on a rolling basis, after a final project agreement has been executed between the state and the private company.
  • Increasing the state’s supply of shovel-ready megasites available to large industries.

House Minority Leader Rep. Anthony Daniels, D-Huntsville, on Thursday praised Canfield and the attention he’s put on development in rural parts of the state.

“…(Canfield) understands that states like Kentucky and others are doubling down in their investments in rural areas, and so I’m glad that the language around the meg sites – everybody doesn’t have megasites around the state of Alabama – so we’re moving that particular language (to) open opportunities for some of our rural communities that have not gotten a lot of action or attention,” Daniels said. “So those are things that I think are very positive and that I’m looking forward to debating on the floor.”

Some debate and amendments are expected.

“I know the administration wants to move this bill quickly, but I believe there’s going to be some controversy over that bill,” Sen. Greg Albritton, R-Range, said on Alabama Daily News’ podcast. “I think there’s going to be some amendments … that change the face of this.” 

About increasing the incentive limit, Albritton said tax abatements have real financial value and the “controls” of a cap are necessary for state revenue and budget planning. 

“Very often, when you talk about economic development, and you talk about the credits, no one really thinks of that as real money, but it actually is,” Albritton said.

Several other lawmakers confirmed that incentives are a priority next week.

“When we come back, the economic incentive package to me is the No. 1 priority,” Rep. Marcus Paramore, R-Troy, said. “I want to make sure that gets done, make sure it gets out, make sure we can continue to recruit good businesses and good high quality jobs for our constituents.”

“(The Alabama Jobs Act) is a priority to me because I want to get Alabama to work and keep them working, so I think that we need to explore any way we can motivate people to get back into the workforce and be productive,” said Rep. Chad Robertson, R-Heflin.

Rep. Phillip Ensler, D-Montgomery, said he needs to see the details, but in general knows being able to continue to attract business is critical for the state.

“But as with any bill, I want to look at the details, and having it done in a way that is equitable and making sure that we’re doing it in a way where the numbers of it make sense,” Ensler said.

Rep. Bill Lamb, R-Tuscaloosa, said he’ll have to read the new Alabama Jobs Act legislation before he commits fully to it, “but I think it’s been successful in the past and we’re doing real well as a state, and I’d like to continue that.”

Lawmakers are expected to meet for three legislative days next week, Tuesday through Thursday, and then take a spring break the following week, returning April 3. 

Alabama Daily News’ Alexander Willis contributed to this report.

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