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Unknown and unbridled by law: Economic developers set to make millions off tax incentives

Bill Britt

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A new law establishing a class of individuals known as economic development professionals opens the door for profit-driven incentives paid with taxpayer funds to vaguely described, unknown agents not registered or held accountable to state law.

There are many reasons to suspect that House Bill 317 is filled with loopholes not yet fully understood by the Legislature that passed it, those responsible for policing it or the public who will supposedly benefit from it and pay for it.

One point that never seemed to enter the discussion was the fact that unlike lobbyists, this new class of economic development professionals can be paid based on a contingent fee.

As enrolled, The Alabama Jobs Enhancement Act carves out a class of economic development professionals that are no longer subject to the Alabama Ethics Act as enacted by the Republican super-majority in 2010, under the leadership of then-Gov. Bob Riley and future felon Mike Hubbard.

Under ALa. Code 36-25-23 (d) and § 36-25-18 (6) working for or being paid on contingency is strictly prohibited.

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§ 36-25-23 (d) No principal or lobbyist shall accept compensation for, or enter into a contract to provide lobbying services which is contingent upon the passage or defeat of any legislative action.

§ 36-25-18 (6) A statement signed by each principal that he or she has read the registration, knows its contents and has authorized the registrant to be a lobbyist on his or her behalf as specified therein, and that no compensation will be paid to the registrant contingent upon passage or defeat of any legislative measure.

“there is an even darker motive afoot here: some site location consultants work on commission; that is, they get paid largely or in part by a percentage of the subsidies they negotiate for the company.”

With its new class distinction, economic development professionals may be hired on a contingency contract, eliminating any risk to a principal or a lobbyist who might hire them.

HB317 allows economic and site developers to be paid based on contingent fee contracts. In other words, the more incentives an economic development professional can obtain from the state, the more money those individuals can make off the state.

According to Greg LeRoy, executive director of Good Jobs First, besides the windfall for companies who receive state taxpayer incentives to relocate a business, “there is an even darker motive afoot here: some site location consultants work on commission; that is, they get paid largely or in part by a percentage of the subsidies they negotiate for the company.” LeRoy’s research shows that a consultant, or what now passes as an economic development professional, can earn as much as 30 percent of a subsidy package.

Also under HB317, the public is denied a right to know who these economic development professionals are or what they are paid for at least two years. However, according to the new stature, this period may be extended at the whim of the secretary of commerce or others.

Not allowing the public to know who is benefiting from the incentives and permitting contingent fee contracts are the two issues that were never at the forefront of discussions on HB317.

Beyond all the secrecy and profit-driven deal making is the ambiguity on precisely who is an economic development professional.

After the bill passage, State Sen. Cam Ward, R-Alabaster, took to social media to discuss that very issue, writing, “Well I think you hit the nail on the head when you asked what an economic developer is. That definition is not entirely clear if you ask me.”

“While the lobbyists and special interests were rewarded with a loophole in the ethics law, the super-majorities failed to do their jobs for the people of Alabama.”

Ward, who works in economic development and is head of the Senate Judiciary Committee, should know but freely admits the legislation as passed is unclear.

Republican-dominated state government is being pummeled in the press and on social media. Some State lawmakers who voted for the act are being called out by name, such as Senate President Pro Tem Del Marsh, R-Anniston, but most of the anger, distrust and disappointment is aimed at Gov. Kay Ivey, Attorney General Steve Marshall and Commerce Secretary Greg Canfield. Ivey and Marshall face reelection bids, and their rivals see the passage of HB317 as an opportunity to paint them as weakening the state ethics laws.

Democrat gubernatorial hopeful Tuscaloosa Mayor Walt Maddox was first to call out Ivey, and his pointed accusation is continuing with reported media by underscoring the deceptive passage of HB317.

Democrat Mayor Walt Maddox sees what lawmakers and governor can’t

The day after HB317 was sent to Gov. Ivey, Maddox wrote, “Yesterday, the majority of Alabamians went to work with the full expectation of doing their jobs. The same cannot be said about the super-majorities in the legislature which again ended another session failing to address critical needs in education, mental health, health care, corrections, and infrastructure.” In what is becoming an internet meme, Maddox said, “While the lobbyists and special interests were rewarded with a loophole in the ethics law, the super-majorities failed to do their jobs for the people of Alabama.”

In branding HB317 as weakening the state’s ethics laws to favor lobbyists and special interests, Maddox is turning Republican messaging on its head by pointing out the hypocrisy of conservatives who claimed they came to Montgomery to root out Democrat corruption. Ivey, in a recent TV ad, said she had cleaned up the messiness in Montgomery. For now, the passage of  The Alabama Jobs Enhancement Act is a dumpster fire, but it may grow as the state heads into election season which, like HB317, is unknown and unbridled.

 

Governor

Ivey: Pelham to resign, Bonner to take over as chief of staff

Josh Moon

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Chief of Staff Steve Pelham is officially resigning from Gov. Kay Ivey’s office, a release from the governor’s office said Tuesday morning. Former congressman Jo Bonner will take Pelham’s spot.

Pelham’s resignation was first reported by APR earlier on Tuesday.

“Steve has been a close friend and a trusted confidant for a number of years and has provided our office with outstanding leadership,” Governor Ivey said.  “When we made the transition to the Governor’s Office in 2017, Steve was responsible for leading the effort to make certain the Ivey Administration was up and running on day one.  He has maintained that level of commitment to our organization, structure and focus to details throughout our first term together.”

Bonner joined Ivey’s staff in December as an advisor — a move that seemed to be in preparation for Pelham’s eventual departure.

“Jo brings a wealth of experience and knowledge to our administration,” Ivey said, “and I know we aren’t going to miss a step as my cabinet, staff and I work, every day, to honor the support and confidence the people of Alabama gave us last November.”

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Pelham will become the new Vice President for Economic Development and Chief of Staff to Auburn University President Steven Leath in February.

 

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Sources: Ivey chief of staff set to resign

Josh Moon

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via BCA Today

Steve Pelham, the chief of staff to Gov. Kay Ivey, is planning to resign from that position later this week, multiple sources close to the governor’s office have told APR.

Pelham is expected to take a job in the Auburn University president’s office, working directly for university President Steven Leath.

He will remain with Ivey’s administration for 30 days ensuring a smooth transition.

The move is a dramatic shakeup in Ivey’s office, where Pelham was long considered one of the most influential voices. In fact, at times, people in and around the governor’s office referred to Pelham as the “acting governor,” and he was leaned on heavily by Ivey to make day-to-day decisions.

Her trust in Pelham isn’t hard to understand.

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He took over as her chief of staff when she took office as the state’s lieutenant governor in 2011. He never left her side, helping her navigate the tricky transition to governor when Robert Bentley resigned in 2017.

Pelham’s workload increased over the last year, as Ivey — already known for her tendency to work outside of the office — missed even more days while campaigning. For much of the year, Pelham was the de facto governor of the state.

It’s unclear at this point who would replace Pelham — if Ivey will look to promote from within the office or look elsewhere, perhaps seeking a strong voice to help her better communicate with lawmakers as they ready for fights over a gas tax increase and the building of new state prisons.

 

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Sheriff resigns sentencing commission in protest

Bill Britt

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Choctaw County Sheriff Scott Lolley submitted a letter of resignation to the Alabama Sentencing Commission on Jan. 7 citing his frustration over issues he says the commission board could resolve.

Specifically, Sheriff Lolley is “concerned and frustrated” that, “The vast majority of drug cases are being placed on probation, sentenced to drug courts, or the sentences are suspended for drug rehabilitation.”

Lolley, in his resignation letter addressed to Executive Director of the Alabama Sheriff’s Association Bobby Timmons, says the citizens of Choctaw County are, “being victimized and re-victimized constantly by the same drug suspects.”

He complained that, “It’s virtually impossible to sentence someone on drug charges to the Alabama Department of Corrections.” For this Lolley blames, at least in part, the sentencing guidelines that have reduced the state correctional facilities’ in-house population while leaving the burden of rearresting and housing repeat offenders to the county sheriff.

The Alabama Sentencing Commission Mission Statement reads, “The Alabama Sentencing Commission shall work to establish and maintain an effective, fair, and efficient sentencing system for Alabama that enhances public safety, provides truth-in-sentencing, avoids unwarranted disparity, retains meaningful judicial discretion, recognizes the most efficient and effective use of correctional resources, and provides a meaningful array of sentencing options.”

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Sentencing reforms have in part led to a reduction in the overall prison population. According to the latest report on file issued by ADOC in Sept. 2018, its in-house population was 20,087 inmates. ALDOC defines in-house population as, “an inmate where ADOC maintains custody of an inmate to a period of incarceration. ADOC In-House Population inmates are housed within correctional facilities owned and operated by ADOC; this includes transient inmates between correctional facilities.”

One of the goals of the sentencing commission, ADOC, as well as the state Legislature, is to reduce prison overcrowding.

Alabama’s prisons rank as some of the worst in the nation, and anyone who has toured even the best facilities will find they are old, dilapidated and nearly uninhabitable.

Legislation enacted by the Republican supermajority has dramatically reduced prison overcrowding from 198 percent capacity in 2013, to 153 percent in 2018, according to ADOC.

September ADOC statistics show the total number of in-house beds is 22,309, and it also shows a total in-house population of 20,087, which means 2,222 beds are unoccupied.

The same September ADOC report says ADOC’s in-house designed capacity is 13,318. Footnote two in the report says the 13,318 capacity is based on “Original architecural (sic) design plus renovations.”

However, ADOC personnel and those who have worked at ADOC say this statement is misleading because In-House Designed capacity means inmate capacity according to the facility’s original design and does not take into consideration additional building or other space added to existing structures in subsequent years.

As a result of Legislative intervention, the number of non-violent offenders in state prisons has been reduced dramatically, going from a prison population of 35 percent non-violent to now under 14 percent. An unintended consequence of not locking up non-violent offenders is a very violent population inside the prisons, making it more dangerous for correctional officers.

Could leasing be the answer to new state prisons?

Lolley’s dilemma illustrates that for some counties these reforms are a double-edged sword.

“Law enforcement continues to arrest the problem offenders, but the judicial system continues to place them in alternative sentencing,” writes Lolley. “This system simply does not work.”

He also says, “A chronic drug offender could be arrested anywhere from 2-15 times and never be sent to the Alabama Department of Corrections.” He also claims that sentenced state inmates are being held in the county jail for months before the Alabama Department of Corrections will accept them and that “inmates incarcerated at the Alabama Department of Corrections are receiving parole hearings and release at a ridiculous rate.”

In Nov. 2017, Gov. Kay Ivey floated the idea of leasing built-to-order prisons to reduce overcrowding and to ensure the state prisons can house offenders. There is growing support for Ivey to utilize that option rather than trying to corral lawmakers into supporting a billion dollar bond to build three mega-prisons. Ivey made solving the state’s prison problems a prominent part of her inaugural address on Monday.

Lolley was first elected Choctaw County Sheriff in 2014; he was reelected in 2018 to a second term.

 

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Opinion | Why do Alabama governors insist on taking the unpopular path?

Josh Moon

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We’re doing it again.

The same thing. We’re doing the same thing again, and hoping for a different outcome. Which I believe is the definition of insanity. And that might as well be our state motto at this point.

Alabama: The Insane State.

The state where the people continue to elect people who promise to do the same things as the last people who we hated, and who will eventually totally renege on those promises and try to do the opposite.

Case in point: Kay Ivey.

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At her inauguration on Monday, Ivey was all smiles and upbeat rhetoric. She talked of steadying the ship and putting Alabamians back to work. And she was governor while those things happened, so the rules say she gets credit, even if it’s mighty tough to pinpoint exactly what it is that she did to cause any of those good things.

But Ivey also dropped a few hints about the future.

To no one’s surprise, she discussed a gas tax without ever saying the word “tax,” and she talked about a new prison construction proposal.

Actually, neither of those ideas is “new,” and the proposals Ivey and the Legislature will put forth in the coming months won’t be new either. We’ve been talking about prisons for three years now, if not longer, and the gas tax was kicked around during the last legislative session.

And both will be met with roughly the same amount of disdain by voters this time around.

No matter how badly we might need to renovate our current prisons or build new ones, the average Alabama voter doesn’t want to do that. In fact, those voters have proven to be amazingly willing to let prisoners out of jail, if the alternative is a higher tax bill.

And on the gas tax front, yeah, that’s a big ol’ no.

I’m sorry, but you can’t set up a state income tax system that charges janitors more than CEOs, leaving the state with consistently no money to make necessary repairs to infrastructure, and then ask the working stiffs to pick up the bill for those repairs when things fall completely apart. And make them pay for it by charging them more to get to work every day.  

I don’t care that we just held elections and most lawmakers are safe for another four years. You vote for that sort of a tax on working people, and it’ll hang around your neck for the rest of your political career. What’s left of it.

If you doubt this, ask Robert Bentley.

He tried something similar. Actually, come to think of it, he was a lot like Ivey following his re-election in 2014. Very popular. Had pledged not to raise taxes. Was generally trusted by most people around the state.

And then he hit people with a proposal for a cigarette tax.

His whole world blew up from that point forward.

Because it’s not right. Taxing gas or taxing cigarettes is a coward’s tax.

It’s an admission that you know we don’t have enough revenue but you’re not brave enough to attack the real problem — to raise property taxes or restructure our state income tax.

Or to do what’s popular: Legalize gambling.

Why do Alabama Republicans continue to run from legalized gaming? It makes zero sense, considering the massive edge they hold in statewide voting and the unprecedented popularity of gambling among Republican voters.

Poll after poll shows that conservative voters in Alabama now massively favor legalizing gambling. In one of the more recent polls, more than 60 percent of likely Republican voters were in favor of a vote to legalize full-fledged casinos with sportsbooks.

And yet, Ivey, like the two governors who came before her, will stand on a stage at her inauguration and push for two completely unpopular ideas —— prisons and a gas tax — but never speak of the one subject that’s both popular and could raise enough money to pay for the infrastructure repairs. And the prisons.

So, here we are again. Another governor who thinks she can thumb her nose at the will of the people. Another governor who seems hellbent on ignoring a popular solution. Another fight that will lead to nowhere.

Insanity. That’s what it is.

 

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Unknown and unbridled by law: Economic developers set to make millions off tax incentives

by Bill Britt Read Time: 5 min
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