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Committee rejects legislation to sunset all the tax credits, exemptions and deductions

Brandon Moseley

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By Brandon Moseley
Alabama Political Reporter

Wednesday, the Alabama State Senate Fiscal Responsibility and Economic Development Committee voted to reject legislation that would have sunset most of the numerous tax credits, exemptions and deductions that have accumulated in the Alabama tax code over the decades.

Senate Bill 187 was sponsored by Senator Bill Hightower, R-Mobile.

Hightower said, “You passed the same bill last year it did not come out of the House.”

“I have met with all of the concerned people involved,” Hightower said. “The number of credits and exemptions have slowly risen. No-one wants to turn down legislators promoting a worthy cause. This bill asks for a sunset.”

The bill would automatically sunset every deduction, exemption or tax credit in the seven years after it went in to effect. Since many of the exemptions, deductions and credits are in the state Constitution, SB187 has to be passed as a constitutional amendment.

“We have a funding issue in Montgomery, and part of that is that we keep giving tax credits, deductions and exemptions,” Hightower said.

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Sen. Cam Ward , R-Alabaster, said, “Why wouldn’t you do it on a case by case basis?”

“We are dealing with a budgetary system that was established in 1940,” Hightower said. “The tax code is riddled with these tax credits, deductions and outcomes.”

The Senate Fiscal Responsibility and Economic Development Committee is chaired by Sen. Phil Williams, R-Rainbow City.

Williams said, “Sunset just creates more legislative work. I have been here seven years, and I have only seen one board not renewed, and that is because it was defunct.”

“It would not go through the sunset committee,” Hightower said. “This is a way to clean up the tax code. Honestly, our tax rates are so low that it really does not drive behavior. It does work at the federal level.”

George Clarke with Manufacture Alabama said, “I am here representing the manufacturers of Alabama. Thank you for working with us. The bill that was originally filed was a disaster for existing manufacturers and economic development in the state of Alabama. It is still not good public policy.”

Clarke said, “We gave Mercedes all kind of incentives to locate at Vance and that has been an incredible success.” Incentives were given to U.S. Steel, NUCOR, etc. “This as written will apply to them, and they will have to come to the legislature at some point. This does not need to be in the state Constitution.”

“The exemptions given to manufacturers create jobs, and they continue to create jobs,” Clarke said. “Every state competes for that corporation’s capital, even if that plant has been in Alabama for 40 or 50 years.”

Williams said, “We are not looking at going back and breaking an existing contract.”

Clarke said, “What they would have to do is come back every number of years to get a piece of legislation to renew it that is the issue.”

Hightower said, “They are already exempt. Secretary Canfield is in agreement with this. I sat down with him, and he said do this; and I can live with it.”

Clarke said, “Alabama has been a leader in recruiting new industry to come to Alabama and to entice existing industries to expand. Other states are looking at what we are doing and are matching what we do.”

Hightower said, “This will not affect economic development incentives.”

Susan Kennedy with the Alabama Education Association said, “I agree with George, but this should not affect economic development. We have over $4 billion of lifetime exemptions in the education budget now. We have exemptions on lightning rods and playing cards. This brings some accountability to the process.”

“We are not in a state that likes to pass new taxes, and I am good with that,” Kennedy said. “What I like to call the dark budget that is growing every year.”

Rosemary Elebash with the National Federation of Independent Businesses spoke out in oppositon to the bill.

The bill failed in a 4-5 vote.

Hightower is a GOP candidate for governor.

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