By Susan Britt
Alabama Political Reporter
MONTGOMERY – As promised, job growth legislation was the top priority in the first week of the Alabama Legislature’s 2012 Regular Session, as bills aimed at boosting job creation passed the House of Representatives on Thursday.
“As much progress as Alabama has made reducing unemployment faster than any other state and adding 41,000 jobs since last year, too many people are still without work in this tough economy,” House Speaker Mike Hubbard said. “That’s why our number one focus is boosting private sector job growth and getting more Alabamians back to work. We have legislation designed to help existing businesses grow and hire more workers, and give our state more tools to recruit new jobs.”
Three bills authorizing incentives targeting industries with great potential for growth in Alabama received House passage Thursday and will now go to the Senate for its consideration. These are:
The Alabama Data Processing Center Economic Incentive Enhancement Act, House Bill 154 sponsored by Rep. Dan Williams (R-Athens), passed by a vote of 72 yeas, 18 nays and 2 abstentions.
•Data processing centers are key components of the 21st century economy. These centers employ a skilled workforce, provide high-paying jobs, and have a low environmental footprint. Alabama is uniquely positioned to compete for jobs in this growing industry.
•This proposal would expand the scope of certain tax incentives in order to focus on recruiting more data processing centers to Alabama.
Aviation and Aerospace Economic Incentives, House Bill 39 sponsored by Rep. Paul Lee (R-Dothan), passed by a vote of 80 yeas, 8 nays and 4 abstentions.
•This bill would provide for a special tax incentive allowing Alabama to target aircraft manufactures and aircraft parts manufactures.
Enhanced Incentives to Recruit Job-Creating Coal Mining Projects, House Bill 144, by Rep. Bill Roberts (R-Jasper), passed by a vote of 80 yeas and 3 nays
•This bill enhances the state’s ability to recruit coal mining companies by allowing them to qualify for certain existing tax incentives currently available to manufacturers and other businesses.
The following is a breakdown of the jobs package day in the Alabama house of Representatives.
HB 151
Economic Development and Tourism Committee
Number of amendments: 1
Sponsor: Rep. Alan Baker (R-Brewton)
Although with no real impact on job creation, this bill would change the titles for the Alabama Department Office to be renamed and the Director of Development to the Department of Commerce and the Secretary of Commerce.
The amendment will also authorize the Secretary of Commerce to employ people outside of the State Merit System. Specifically, this bill will create three additional assistant secretaries that would increase personnel costs by an estimated $140,350 per additional secretary.
Rep. Patricia Todd (D-Birmingham), shared her opposition to the bill saying that since the hires would be made outside of the merit system that it would be left to the discretion of the director whom to hire. She called this a “slippery slope.”
Rep. Alan Harper (D-Aliceville) ranking minority member of the Economic Development and Tourism Committee explained that the Economic Development Professional Office had lost 3-4 recruiters last year and he would like to see those people replaced. He also said, “The only way to increase the Education Trust Fund is to increase jobs.”
BIR*: 89-0
Amendement: 92-0
Final 94-1
HB 144
Economic Development and Tourism Committee
Number of amendments: 0
Sponsor: Rep. Bill Roberts (R-Jasper)
This bill expands existing tax incentives to encourage new capital investments by companies in the coal mining industry. Add coal mining to list of other companies that that qualify for tax abatements concerning sales, use, mortgage, deed and non-educational property tax under the state’s 1992 abatement law. This would also include them in the state’s income tax capital credit.
Rep Roberts said that this bill is designed to allow the coal mining industry to be included in the existing tax incentives. He said that the industry is a major source of employment, employing approximately 4,000. The average wage is $25 per hour and with overtime, miners can make from $70,000 to $95,000 per year. He said that Alabama’s coal is metallurgical coal and that the Port of Mobile processes 52 million tons per year.
Rep. Patricia Todd (D-Birmingham) opposed the bill. She said, “I want more jobs to come to alabama make no mistake about that.” She said that this bill is fiscally irresponsible and that more information is needed. She said that the bill needs transparency and demanded that it include the proposed number of jobs to be created.
Rep. John W. Rogers, Jr. (D-Birmingham) said that “We can’t afford to lose anymore money out of Jefferson County.” He was concerned about the coal funds that are collected by Jefferson County.
BIR: 74-7-1
Final: 80-3
HB 39
Economic Development and Tourism Committee
Number of amendments: 1
Sponsors: Representatives Lee, Moore (B), Chesteen, Shiver, Barton, Weaver, Gaston, Ison, Fincher, Mask, Millican, McMillan, Collins, Johnson (K), Williams ℗, Wren, Wallace Buttram, Sessions, Beckman, Baker, Patterson, Sanderford, Faust, Galliher, Hill, Farley and Clouse
House bill 39 relates to sales tax exemptions for any parts, components, and systems used in the conversion, reconfiguration, or maintenance of aircraft certified as a transport category airplane or rotary wing aircraft. The bill will reduce potential sales tax receipts to the Education Trust Fund (ETF). The reduction is estimated at a minimum of $4.8 million and a maximum of $7 million.The abatement has no time limit associated with it.
Local sales taxes will not be effected unless a resolution is made by the local governing bodies.
Rep. Lee said, “I hope that we can be known for this type of business in Alabama.”
Rep. Oliver Robinson (D-Birmingham) asked where the places were in the state that would be effected by this bill. Rep. Lee responded that it would be Dothan, Mobile and Huntsville.
Rep. Greg Burdine (D-Lauderdale) said that 300 jobs at $300,000 salary would be a loss of $15 million tax dollars.
Rep. Demetrius C. Newton (D-Birmingham) expressed his concern over the estimated loss of $7 million to the Education Trust Fund already identified in the bill. Lee responded by saying, “When people are working they are spending so that will put the money back in the fund.”
Rep. James E. Buskey (D-Mobile) said that in his district they service FedEx aircraft which generates $12 million in payroll taxes and employ 1600 workers. He said that their contract expires in 15-16 months. He said that they many move to another state because that state provides this type incentive. He said, “It is worth it. It is needed.”
BIR: 78-11-3
Rep. Patricia Todd (D-Birmingham) said that it “what might be helpful is to develop a plan. We need a general plan of recruiting business of this nature. A plan that says, ‘we think we can bring X number of companies, creating X number of jobs, generating $X in taxes.” She said she didn’t want to just write a blank check. She said that an abatement forever, “I can’t support that.”
Amendment: 82-1
Final: 80-8-4
Opened for Co-sponsors: 48
HB 154
Economic Development and Tourism Committee
Number of amendments: 0
Sponsors: Representatives Williams (D), Wood, Bridges, Buttram, Boothe, McMillan, Treadaway, Farley, McClendon, Williams (J), Greer, Millican, Long, Johnson (W), Roberts, Rich, McCutcheon, Faust, Shiver Nordgren, Fincher, Lee Henry, Gaston, Moor (B), Tuggle, Johnson (K), Collins, Baker, Weaver and Beckman.
This bill would allow abatements of taxes for data processing centers (call centers) from certain types of ad valorem taxes and construction-related transaction taxes for a period of up to 30 years. It allows municipalities, county, or public industrial authority to grant these abatements.
This bill would enact the Alabama Data Processing Center Economic Incentive Enhancement Act of 2012.
It amends the employment threshold from 50 new employees to 20 new employees provided that certain minimum capital investment requirements are met to qualify for for abatements under the state’s 1992 abatement law as well as the state’s income tax capital credit. It also amends the the maximum allowable abatement period from 10 to 30 years and expands the allowable items for which tax abatements may be granted.
To qualify the average wage of employees cannot be less than $40,000 including benefits.
Included in this bill are warehousing and storage facilities not necessarily related to data processing centers. The facilities can be distribution warehouses for major retailers.
Rep. Dan Williams (R-Athens) said that this bill is an amendment to existing legislation passed last year and will include direct and indirect jobs. He said it also includes processing system warehouses.
BIR: 79-2
Rep. Chris England (D-Tuscaloosa) asked what budget it is going to effect. Williams replied that the abatement was from sales taxes and non-educational taxes.
Rep. England replied that it would effect the General Fund. Williams replied that it would not effect any existing tax collections.
Naming off many of the departments financed from the General Fund, England expressed his concern that with the state of that fund and how this future lack of funding would impact it.
Rep. Williams said that this bill contains no caps, that individual counties set the caps. England said that the caps should be set by the House. He went on to say that because of the loopholes in other incentive plans that the state of Alabama is “being fleeced.”
Rep. Alan Harper (R-Aliceville) said that this bill is like the coal bill and that the sales and other taxes goes to the education fund not the general. Williams responded by saying this is only for new jobs.
Rep. Harper said that site selection companies run searches on states for the best incentive packages for companies looking to move there location. He said that most of these are high-paying specialized jobs and that servicing these types of companies creates jobs especially since these are technology jobs. He said, “I would choose 70 cents for 30 cents any day.”
Rep. James E. Buskey (D-Mobile) asked if the abatement under this bill is non-educational. Williams responded, “Yes.”
Rep. Buskey asked why change the requirement for employee from 50 to 20. Williams response was that because of the advancement of technology not as many employees are needed.
Rep. Laura Hall (D-Madison) asked how the state would keep these companies after the incentives expire reminding Williams that Dunlop and Chrysler left after their incentives had expires.
Rep. Blaine Galliher (R-Gadsden) reminded the House of the arguments that they had over the incentives for Mercedes. He said the Rosewood Act contained $320 million in incentives. He said that before 1993 it was very difficult to get companies to consider coming to Alabama. He said that Mercedes “changed the global perception of Alabama.” He said that set the stage for Honda and now everyone calls Alabama the “Detroit of the South.”
Final: 72-18-2
Bills 159 and 160 were under discussion when a recess was called at 3:36 p.m. There are 22 remaining bills in the jobs package. The House has been adjourned until Tuesday, February, 14 at which time the will resume with HB 159 and HB 160.
More jobs bills will be on the agenda when lawmakers reconvene on Tuesday. Those include:
◦The “Heroes for Hire” Tax Credit Act, House Bill 152, sponsored by Rep. DuWayne Bridges (R-Valley), passed unanimously out of the Education Ways and Means Committee on Wednesday.
•With wars winding down in Iraq and Afghanistan, thousands of Alabama veterans will soon return home to a difficult economy in which it is hard to find a job.
•This proposal would offer Alabama businesses a $2000 tax credit for hiring a veteran recently returned from war.
◦The Alabama Job Creation and Retention Act, House Bills 159 & 160 Sponsored by Rep. Barry Mask (R-Wetumpka), passed out of the Economic Development and Tourism Committee on Wednesday.
•Alabama’s success in landing world-class companies like Mercedes, Honda, Hyundai and ThyssenKrupp proves how effective tax incentives can be for bringing jobs to this state.
•This constitutional amendment (HB 159) would allow voters to give the Governor and the Alabama Development Office more flexibility in offering tax incentives to land major economic development projects and retain companies that might otherwise relocate outside Alabama without having to call a special session of the Legislature.
•The corresponding enabling bill (HB160) sets strict parameters for how incentives can be used to ensure return on investment.
*BIR is the budget isolation resolution. It’s a constitutional requirement from the first term of Gov. Fob James requiring the House and Senate prior to adoption of the budgets to submit bills and constitutional amendments to a preliminary, BIR vote.
