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House Bill Causing Stir

By Susan Britt
Alabama Political Reporter

This afternoon, the Alabama State House of Representatives will continue discussion on bills HB 159 and 160. The debate started last Wednesday and has spilled over into this week.

The bills are sponsored by Representative Barry Mask (R-Wetumpka) and is the remaining pieces of the jobs package promised by the Republicans. However, it seems there is some confusion over how the bill will work.

The objective is to pass an amendment to Alabama’s constitution creating an incentive program for attracting new businesses and retaining jobs that already exist but are at risk.

“This is the same bill as last year,” said Mask.

If it passes the House, it will go on to the Senate for vote packaged with three other bills that represent the jobs package. Ultimately, the voters of Alabama will make the final decision in November 2012.

The main opposition to this bill that seems to be coming from the Alabama Teachers Association (AEA) whose stance on the bill is that it would cost the Education Trust Fund an estimated $300 million.

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“There are companies that [in this state] that have proven that they will up and move.This will be a good tool in keeping [companies]. You lose a company in a community that has 1,600 jobs and a $45 million payroll and you see how much tax is generated for local education or otherwise,” said Chairman Mask.

HB 159 proposes the amendment to the Alabama Constitution to authorize the incentive program.

The specifics of the proposal are found in HB 160. The summary states:

“This bill would make Legislative findings regarding the use of economic incentives provided to companies that undertake projects in the state that create and retain jobs. This bill would allow the State of Alabama to conduct public revenue estimates and subsequently allow new and existing companies which undertake certain qualifying projects in Alabama to retain a percentage of state income taxes withheld from eligible employees.

“I think this is the most important piece of legislation we had ever seen,” said George Clark of Manufacture Alabama.

If the company proposes a new or expansion project the can use between one and 90 percent of state income tax withholding for its funding. A retention project allows from one to 75 percent. The incentive period will be determined by the Governor but is not to exceed 20 years. Any company that enters into an agreement must sign a binding contract with the state.

“I assure you that the ADO, Revenue, and the Governor’s office are going to run every trap. I have seen one of the project agreements and it is tight,” said Mask, “to make sure the state is safe.”

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If they pass both the House and Senate and then is approved by the voters the new amendment will be called the Alabama Job Creation and Retention Act of 2012 and take effect immediately.

ADO and the Department of Revenue will implement the act and exercise all of its powers. Companies wishing to participate in the program will be screened by the ADO Director and the Director of Finance. If approved, the company’s proposal will accompany a recommendation, in writing, to the Governor. It is at the sole discretion of the Governor to make the final determination.

“…the Governor shall consider whether approving a company as an approved company serves a valid public purpose and is in the best interests of the citizens of the state.”

The job retention portion sets the thresholds for the capital costs. If not in a favored geographic area the minimum expenditure is set at $2 million, if so the project cost is set at a minimum of $500,000.

The bill states:
“…withholding incentives shall not exceed 100 percent of the capital costs of the qualifying project.”

Ron Scott of the Economic Development Association of Alabama said, “In fact, I think it is the legislation for our local economic developers in the state. This is the one that will hit the ground running and have the most immediate impact on what is happening in this state over the next four or five years.”

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Susan Britt
Written By

DIG DEEPER