By Brandon Moseley
Alabama Political Reporter
On Tuesday, March 22, the Alabama Renewal Act, House Bill 34, passed the Alabama Senate. HB34 creates new incentives to increase industrial recruitment and economic development.
House Bill 34 was sponsored by Representative Mac McCutcheon (R-Capshaw) and carried in the Senate by Senate Majority Leader Greg Reed (R-Jasper). The sponsors say that it builds upon last year’s “Made-in-Alabama” economic incentive legislation to provide additional, pay-as-you-go incentives for existing business expansions and new industrial projects.
Senator Reed said, “Our economy is improving and the legislature is committed to doing everything possible to create more jobs, especially in rural Alabama. The Alabama Renewal Act will help us achieve this goal while being fiscally responsible to taxpayers.”
State Representative McCutcheon said, “Creating jobs by incentivizing companies to invest in Alabama will mean more of our citizens get to take home a respectable paycheck. That is the most important job we have at the State House.”
The bill creates two new tools for increasing economic development. First, it will increase the availability of shovel-ready land sites for job creation through use of the Growing Alabama Credit. Second, HB34 will stimulate cargo traffic at the State’s port facilities and connect Alabama businesses to new opportunities around the world via a new Port Credit.
The sponsors say that most neighboring states have similar incentives. Economic development leaders say that HB34 will give state economic developers greater flexibility to create incentive packages to bring more companies and jobs to the state.
Alabama Department of Commerce Secretary Greg Canfield said, “The Alabama Renewal Act will enhance the competitiveness of our economy. We are thankful for the legislature giving our state another tool we can use to facilitate growth and expand Alabama’s employment base.”
According to the fiscal note, the Alabama Renewal Act creates a port credit for increased use of the State’s port facilities and is capped at $5,000,000 annually with a cumulative cap of $12,000,000. This credit is nonrefundable, may be carried forward for five years, and may be transferred or sold. Port credits issued for economic development project agreements with the State may have allocations made by the Governor and approved by the Renewal of Alabama Commission created herein not to exceed $3,000,000, provided a company commits to investing at least $20,000,000 and creates 75 jobs. Port credits granted under project agreements may not be granted for more than three years.
The Growing Alabama Credit giving a credit for contributions of cash to a local economic development organization approved by the Renewal of Alabama Commission. The maximum credit amount would be the 50 percent of the tax liability for the current year and they may be carried forward for no more than five years. This credit amount may not exceed $5,000,000 in fiscal year 2016, and $10,000,000 for fiscal years 2017 through 2020. The Commission must reserve at least 25 percent of the credits for projects in targeted counties. The taxpayer’s contribution cannot exceed the amounts set by the Renewal Alabama Commission. This credit will sunset in 2020. Both tax credits would reduce taxes paid by the companies to the Education Trust Fund, though presumably some of that would be made up by the payroll taxes paid by the workers and the economic multiplier effect of greater economic activity in the State.
The Business Council of Alabama (BCA) supports HB34.
Due to a minor amendment added in the Senate, HB34 will go back to the House for consideration before being transmitted to the Governor for final signature.