Alabama Attorney General Steve Marshall wrote in an opinion Tuesday that county and city governments can not provide public funds to private businesses that were impacted by the forced economic shutdown to fight the coronavirus.
“During the COVID-19 pandemic, this Office has received numerous inquiries from counties and municipalities regarding whether a program could be developed using Amendment 772 (Section 94.01 of the Alabama Constitution) as a vehicle for giving economic development grants and loans to small businesses,” Marshall wrote. “While the desire to keep these businesses afloat during the crisis is understandable, unless the grants and loans contemplated under these proposed programs serve a public purpose rather than merely confer a private benefit, they violate section 94 of the Alabama Constitution.”
“Section 94 prohibits the Legislature from “authoriz[ing] any county, city, town, or other subdivision of this state to lend its credit, or to grant public money or thing of value in aid of, or to any individual, association, or corporation whatsoever, or to become a stockholder in any corporation, association, orcompany, by issuing bonds or otherwise (emphasis added).” ALA. CONST. art.
“The Alabama Supreme Court, howeve r, held in Slawson v. Alabama Forestry Commission, 631 So.2d 953, 956 (Ala. 1994) that Section 94, as amended, is not violated when the funds of a subject governmental entity are appropriated for a “public purpose.” Whether the funds are appropriated for a public purpose depends on if they bring about a “direct public benefit of a reasonably general character . . . to a significant part of the public ” rather than merely a “remote and theoretical benefit. ”
Amendment 772 is widely cited by proponents of such a grant or bridge loan program as providing a constitutional basis for the program.
Marshall explained, “The Legislature passed Amendment 772 as a codification of Slawson insofar as economic and industrial development is concerned. Amendment 772 specifically gives a county or municipality authority “to lend its credit to or grant public funds and things of value in aid of or to any individual, firm, corporation, or other business entity, public or private, for the purpose of promoting the economic and industrial development of the county or the municipality. ”
There are two requirements under Amendment 772, the county or municipality must comply with: “(1) The action proposed to be taken by the county or municipality is approved at a public meeting of the governing body of the county or municipality, as the case may be, by a resolution containing a determination by the governing body that the expenditure of public funds for the purpose specified will serve a valid and sufficient public purpose, notwithstanding any incidental bene fit accruing to any private entity or entities and (2) At least seven days prior to the public meeting, a notice is published in the newspaper having the largest circulation in the county or municipality, as the case may be, describing in reasonable detail the action proposed to be taken, a description of the public benefits sought to be achieved by the action, and identifying each individual, firm, corporation, or other business entity to whom or for whose benefit the county or the municipality proposes to lend its credit or grant public funds or thing of value.”
“Although Amendment 772 gives counties and municipalities flexibility to grant or loan funds to private entities without violating section 94, the definition of “economic and industrial development” for purposes of Amendment 772 must be read in light of Slawson’s requirement that the benefit conferred be a “direct public benefit of a reasonably general character . . . to a significant part of the public,.” Marshall wrote. “Whether the expenditure is made for a public purpose is a factual question to be determined by the local governmental body making the expenditure by looking to the statutes setting forth that body’s authority. Opinion to Honorable Robert S. Presto, Escambia County Attorney, dated August 24, 1995.”
“Grants, loans, interest payments, and other similar awards to a private business for the sole reason of keeping that business operating would not meet the Slawson test,” Marshall stated. “Whereas such payments would bestow a significant private benefit, any benefit to the public -at-large would be remote and indirect. The governing body of the county or municipality must be able to articulate a rationale for the expenditure which benefits the public-at large in a more direct manner and is supported by the governing body’s statutory authority. Furthermore, using entities such as the Chamber of Commerce or private banks as “pass-throughs” to facilitate the expenditures does not change this analysis so long as ultimately public money is being lent or granted in aid of a private entity and no public benefit is served.”
“Conclusion While the Office sympathizes with the desire of municipalities to assist small business during the COVID-19 crisis, the current dire circumstances do not provide for a workaround to the requirements of Section 94 of the Alabama Constitution,” Marshall concluded. “As previous Attorney General’s Opinions have found, unless the grants and loans contemplated under these proposed assistance programs serve a public purpose rather than merely confer a private benefit, they violate section 94 of the Alabama Constitution.”
The Attorney General’s opinion effectively bars efforts by city councils and county commissions to help businesses in their towns with grants or bridge loans in order to make it through the forced economic shutdown to stop the spread of the coronavirus.
There is some federal assistance available through the CARES Act and Senate Majority Leader Mitch McConnell, R-Kentucky, has proposed a $250 billion package to provide assistance businesses; but that bill has encountered resistance from Senate Democrats.
Nationally recognized financial consultant Dave Ramsey and other persons in the financial consulting field have long recommended that businesses, and even families should maintain an emergency fund equal to three to six months of expenses. Unfortunately, many business (including very profitable ones) failed to follow that advice and were overleveraged with insufficient cash reserves when they were unexpectedly forced to close by county health officers and orders from Alabama Governor Kay Ivey (R).
The forced economic shutdown to fight the spread of the coronavirus began to be implemented in early March and will not be lifted before April 30. On Thursday, Treasury Secretary Steve Mnuchin expressed optimism that the economy will be able to reopen at some point in May. All Alabama citizens remain under a shelter in place order thru April 30.
Globally 1,491,829 persons have been confirmed as having COVID-19 and 87,458 have died. In this country 468,566 Americans have contracted COVID-19 and 16,691 have died. Alabama has had 2,838 confirmed cases of COVID-19. 78 Alabamians have died and 339 are hospitalized with COVID-19.
EDITORIAL NOTE – Yesterday morning the Alabama Political Reporter published an article based on a legal opinion we were forwarded that we wrongly believed was written by Steve Marshall. That story was immediately retracted when the AG’s office reached out to us. We deeply regret the error, and we apologize for any confusion that our error may have caused.
State unemployment rate dropped to 5.8 percent last month
Alabama’s unemployment rate decreased from 6.7 in September to 5.8 percent in October.
Alabama’s unemployment rate decreased from 6.7 in September to 5.8 percent in October, according to the Alabama Department of Labor. October’s seasonally adjusted rate represents 130,329 unemployed persons, down from 153,338 in September. That compares to 61,210 in October 2019.
“We’re glad to see a drop of almost an entire percentage point in our unemployment rate this month,” said ADOL Secretary Fitzgerald Washington. “We will continue to see fluctuations in these economic indicators as pandemic concerns remain, but this month showed growth in both the number of jobs we are supporting and the number of people who are working.”
The number of people counted as employed in October was 2,121,505, up from 2,119,297 in September, but down from the 2,186,771 measured in October 2019.
There were 9,262 new unemployment claims filed in Alabama last week, up from 8,764 the previous week, according to the Alabama Department of Labor.
Of the claims filed between Nov. 8 and Nov. 14, there were 3,001, or 32 percent, that were related to COVID-19, down from 38 percent the previous week.
Governor announces $200 million “Revive Plus” small business grant program
Revive Plus is the second wave of funding for organizations with 50 or fewer employees and will award grants of up to $20,000 for expenses.
Gov. Kay Ivey on Wednesday announced Revive Plus, a $200 million grant program to support small businesses, non-profits and faith-based organizations in Alabama that have been impacted by COVID-19. Revive Plus is the second wave of funding for these organizations with 50 or fewer employees and will award grants of up to $20,000 for expenses they have incurred due to operational interruptions caused by the pandemic and related business closures.
“As the state has rolled out over $1 billion of the CARES Act monies to the individuals and businesses affected by COVID-19, it became evident the group most overwhelmingly hurt during the pandemic were the small ‘mom and pop’ shops,” Ivey said. “A second round of assistance through Revive Plus will ensure that the small business owners who have borne the brunt of the downed economy can be made as whole as possible. As we head into the holiday season, my hope is that this will be welcome news for our businesses and help ease their burdens from what has been a very hard year.”
Entities may receive up to $20,000 to reimburse qualifying expenses if they have not received federal assistance for the corresponding item they are claiming with the state of Alabama. The Revive Plus grant is in addition to any state of Alabama Coronavirus Relief Fund grant previously received, including the Revive Alabama Small Business, Non-Profit, Faith-Based, and Health Care Provider grants. There is no set cap on the number of entities that may be awarded a Revive Plus Grant. Grants will be awarded to qualifying applicants on a first-come, first-served basis until the funds are exhausted.
“The Revive Plus program is much needed in our small business economy,” said Senate General Fund Chairman Greg Albritton, R-Atmore. “I commend Governor Ivey for taking this action, recapturing unspent dollars and using a proven program to bring economic relief to our small business owners.”
Alabama received approximately $1.9 billion of CARES Act funding to respond to and mitigate the coronavirus pandemic. Alabama Act 2020-199 initially designated up to $300 million of the Coronavirus Relief Fund for individuals, businesses, non-profit and faith-based organizations directly impacted by the coronavirus pandemic. After the initial $100 million for small business that was reimbursed starting in July 2020, legislative leadership approved a second round of $200 million from allocations made to reimburse state government and from other grant programs that have ended with the full allocation unspent.
“This second round of funding for Alabama entities will provide much needed resources for our state’s economy,” said Senate Minority Leader Bobby Singleton, D-Greensboro. “I appreciate the governor and the Finance Department’s work to ensure we utilize these funds to the benefit of our citizens.”
Entities may access grant information and the grant application through the Coronavirus Relief Fund website. The application period for the Revive Plus Grant Program will open at noon, Nov. 23, 2020 and run through noon, Dec. 4, 2020.
“This is welcome news for small businesses, non-profits and faith-based organizations that are continuing to feel the adverse effects of the Covid-19 virus,” said House General Fund Chairman Steve Clouse, R-Ozark. “Time is of the essence and I urge all qualified entities to apply as soon as possible beginning Monday, November 23rd.”
A coalition of the Business Council of Alabama, the National Federation of Independent Business of Alabama (NFIB Alabama) and the Alabama Restaurant Association worked closely with the governor’s office to revisit the grant program after the initial round of Revive Alabama reached the $100 million cap.
“Businesses throughout the state are working diligently to keep their employees and customers safe, all while ensuring commerce throughout Alabama continues to move,” said Business Council of Alabama President and CEO Katie Britt. “Revive Plus will be essential in giving Alabama businesses access to the necessary and needed funding to keep their doors open and keep hard working Alabamians employed. Our broad coalition of businesses, associations and chambers commend Governor Ivey and her administration for putting these critical funds into the hands of businesses who need it most.”
Qualifying entities must have been in business March 1, 2020, are currently in business and have a valid W-9 to apply for a Revive Plus Grant.
Applications open the Livestock Auction Market Direct Payment Program, Poultry Processor Reimbursement Program
Each program will assist Alabama’s agriculture with costs associated with disruptions experienced due to COVID-19.
Alabama Commissioner of Agriculture and Industries Rick Pate announced that both the Livestock Market Direct Payment Program and the Poultry Processor Reimbursement Program applications are open.
The applications are available at agi.alabama.gov or crf.alabama.gov. The deadline to submit applications is Dec. 1, 2020. Each program will assist Alabama’s agriculture with costs associated with disruptions experienced due to COVID-19.
Pate and agricultural stakeholders developed a broad-based relief plan to support agribusiness in the state of Alabama, which has been hard hit by the coronavirus crisis and the resulting supply chain interruptions.
In August, Gov. Kay Ivey announced that $26 million of CARES Act Funds could be used to assist Alabama agriculture impacted by COVID-19. These funds were used to establish the Alabama Agricultural Stabilization Program (AASP).
Pate said on Monday that the Livestock Market Direct Payment Program is a $500,000 program to provide direct payments to stockyards affected by the crisis. Payments cannot exceed $25,000. Only licensed Alabama cattle auction markets are eligible.
Pate said the Poultry Processor Reimbursement Program is a $1.2 million program to reimburse Alabama poultry processing facilities for purchases of Personal Protection Equipment (PPE), disinfectants, workstation dividers and COVID-19 testing kits to protect their employees from COVID-19.
Reimbursements for these expenses would be capped at a maximum of $40,000 per facility. Additional eligibility requirements will be posted at agi.alabama.gov or crf.alabama.gov.
The state has until the end of the year to spend nearly $1 billion in CARES Act money or it goes back to the federal government.
Sewell’s annual job fair will be virtual this year
Job seekers will have the opportunity to connect with employers from 10 different industries.
Congresswoman Terri Sewell’s annual job fair is open for registration. This year, the job fair will be virtual, hosted via Zoom.
Sewell announced the opening of registration for Alabama’s 7th District 9th Annual Job Fair. Job Fair 2020 will be a two-day event held virtually on Wednesday and Thursday, Nov. 18 and 19, from 10 a.m. to 6 p.m. central time.
Job seekers will have the opportunity to connect with employers from 10 different industries. Registration is required via Eventbrite. Participation in the job fair is free and open to the public.
“Since the COVID-19 pandemic, I know so many jobs have been lost, and now more than ever our annual Job Fair is needed,” Sewell said. “For the past 8 years, the Job Fair has been a space for job seekers in Alabama’s 7th Congressional District to connect directly with employers. We are very excited to continue our tradition with a robust 2020 virtual program! Over the course of two days, job seekers can learn about jobs available right NOW in Alabama.”
This year’s virtual event will feature employers from more than 10 types of industries, including automotive, restaurant and food management, transportation and construction, hospitality and retail, health services, utilities and telecommunications, manufacturing and production, staffing agencies, government agencies and law enforcement.
Sewell said she made a commitment to work to improve the lives of people in the 7th Congressional District when she was elected. Getting people jobs and growing the economy of the district has been the goal of the job fair.
Sewell said that when she was elected, the counties of the district had some of the highest unemployment rates in the country. Coming out of the Great Recession, the district had an unemployment rate about 14 percent.
That rate is now down to 6 percent — still double the national average but a tremendous improvement for the people in the district. Then COVID hit.
Sewell said that the district, like the rest of the country, was hard hit by the coronavirus crisis and many jobs, particularly in the hospitality sector, were lost.
Sewell said that they don’t have as many employers participating in this year’s job fair as in some in the past but it is “still a great opportunity.”
“We have a pretty good track record,” Sewell said. According to surveys, 25 to 30 percent of participants in past job fairs found jobs through the Job Fair, Sewell’s office said. Since that is dependent on participants responding to the surveys, they suspect the number is higher.
“We do have very strong participation from all the largest employers in the state,” Sewell said. There are opportunities there for people with a variety of skill sets.
Sewell said that she is very proud of all of the investments that have been made by manufacturers in the 7th Congressional District and cited the expansions at Hyundai and Golden Dragon in Wilcox County.
“We have a very good track record,” Sewell said of past job fairs. “Everywhere I go I meet people who tell me how their lives changed because of our job fairs.”
On Nov. 3, Sewell was elected to her sixth term in the U.S. House of Representatives.