Lapse in economic development incentives coming

Lapse in economic development incentives coming
(Source: Todd Stacey Alabama Daily News)

By MARY SELL, Alabama Daily News

A tax incentive used by local economic development organizations expires Wednesday without renewal by the Legislature.

“The expiration of the Growing Alabama Credit will cause an interruption to a successful program that has been used by economic development organizations around the state to make infrastructure and site improvements at industrial sites, support tech accelerators and other worthwhile projects,” Angela Till, deputy secretary of the Alabama Department of Commerce, said.

“Not having the Growing Alabama Credit in our tool kit is potentially disruptive to these EDOs in the near term, but we are confident that the Legislature will renew the program once lawmakers are able to return to their duties in Montgomery.”

The Growing Alabama Credit and the larger Alabama Jobs Credit and Investment Credit, which expire at the end of the year, were expected to be renewed in the spring legislative session. COVID-19 shortened the session and lawmakers' list of priorities, leaving the credits in limbo. State officials have pledged to renew them in the 2021 session that begins in February.

Asked about the lapse, the importance of renewal and any chance of a special session yet this year, a spokeswoman for Gov. Kay Ivey said she has a track record that “clearly shows she is absolutely committed to keeping Alabama’s economy growing and is the biggest cheerleader for our state when it comes to attracting businesses.”

“That remains a top priority for her,” Gina Maiola said. “She and her team at the Department of Commerce have been in discussions related to these items, and all options remain on the table.”

Alabama Commerce Secretary Greg Canfield in July said his office is looking for other options should lawmakers not act this year.

“Although, those options are pretty limited,” Canfield said. “If we don’t have a special session, it certainly will have some impact on the negotiation of certain projects that we’re currently working on or projects that might come to us in the fall.”

The Growing Alabama Credit allows local economic development organizations to leverage state funds to build industrial parks or other job-attracting sites. Since its creation in 2016, 10 economic development organizations have applied for and qualified for the Growing Alabama Credit and $7.5 million had been claimed through 2019, according to the 2020 report. Commerce estimates that incentive has helped create 2,630 jobs.

The 2015 Alabama Jobs Act includes both the Jobs and Investment credits. They’ve been tied to the state’s largest new industry announcements in recent years.

Through 2019, project agreements with Alabama Jobs Act incentives are expected to create an “estimated 29,389 direct jobs with an annual payroll of $1.6 billion, resulting in an estimated annual sales tax revenue of $26.8 million and estimated annual income tax revenue of $57.1 million,” according to a Commerce report.

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