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Opinion | Alabama improves transparency in Economic Tax Incentives

This a major victory for those concerned about government transparency and accountability.

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For the past year, Jobs to Move America and its coalition partners in Alabama have been pushing legislators to assure best practices in economic tax incentives. In its current session, the Alabama Legislature passed a bill to create more transparency around these incentives that included two of our recommendations.

The Transparency in Incentives Act (SB151), sponsored by Senator Garlan Gudger, amends the Alabama Jobs Act to require the Department of Commerce to post on their website the name of the company receiving incentives, its location, estimated capital investment, number of new jobs it plans to create, average hourly wage, value of investment and projected 10-year and 20-year return on incentive. Aggregated data from all past recipients of incentives will also be publicly available.

This a major victory for those concerned about government transparency and accountability.  

Alabama has awarded over 5 billion dollars to corporations to set up shop in the state, including Amazon, Hyundai, Honda, Mercedes and others. It is important to remember that these incentives are provided with tax dollars, but the public has not had access to the companies’ names, incentive amount, type of incentive, and hourly wages. Many of the jobs created do not pay a living wage and are not considered quality jobs. Manufacturers who received incentives are having a hard time finding enough workers to fill the open positions and a Hyundai supplier (that they own) was recently found guilty of using immigrant child labor.

In 2021, JMA published the report The Hidden Costs of Alabama’s Economic Tax Incentives, which highlighted the lack of transparency and accountability in how the state awards and evaluates incentives.

The incentives awarded to companies include sales and use tax exemptions, property tax exemptions, building of infrastructure, workforce development training and more. Most of the incentives impact the education budget and reduce the funds available to improve public education in Alabama. This is critical because according to 2022 rankings from the National Assessment of Educational Progress (NEAP), also known as The Nation’s Report Card, Alabama ranks 39 in reading and 40 in math among fourth-grade students in the nation. Overall, Alabama is 44th in the country in education, according to U.S. News and World Report rankings. 

JMA worked with the Lieutenant Governor’s office and the Chair of the House Education Budget Committee to encourage them to provide the public with more information on these incentives. Legislators were interested in how other states have increased transparency and accountability and expressed interest in learning more over the next few years. Since the Alabama Legislature only meets for 30 legislative days a year, any changes could take years to pass. 

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While we applaud these new changes, more needs to be done. 

PEW Charitable Trust, Good Jobs First and other think tanks have developed best practices for policy for tax incentives that include:

  • A separate budget for incentives so legislators and the public can see how much is being spent and the actual return on investment
  • Require companies that are found guilty of violations of labor or environmental laws to refund some or all of the subsidy money it received, also known as a “clawback”
  • Requirements that incentives create quality jobs with a living wage
  • Requirements that companies receiving incentives negotiate a Community Benefits Agreement with local coalitions
  • Ban non-disclosure agreements between companies and public officials that keep the terms of incentives packages hidden from the public

Tax incentives are used to recruit a business to set up shop in the state as a way to boost job creation. But we need more information on wages and benefits offered to make sure we are not giving taxpayers’ money to bad actors—companies that have a history of environmental, labor, or safety violations.

JMA will continue to advocate for legislation that will assure that every job created is a good job.

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