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Incentives update would spur Alabama job creation, top officials say

MONTGOMERY, Alabama – Leaders of Alabama’s economic development team are working with Governor Robert Bentley and other top officials to overhaul Alabama’s incentive laws, enhancing the state’s competitiveness as it pursues new jobs and investment.

Governor Robert Bentley and Alabama Secretary of Commerce Greg Canfield outlined the initiative to members of the Economic Development Association of Alabama (EDAA) at the group’s winter conference this morning at the Renaissance Hotel & Spa in Montgomery.

The approach was initially called the Accelerate Alabama Jobs Incentive Package and has now taken the Made In Alabama name. Originally named after the state’s strategic economic development growth plan, Accelerate Alabama, the package would provide a new credit for job creation while reducing the state’s reliance on debt to fund incentives.

Secretary Canfield said work on the incentives update has been a collaborative effort. Feedback has been sought from seasoned site selectors, the EDAA and the state’s senior economic development recruiters, the Economic Development Partnership of Alabama, legislative leaders, and others.

“This is still a work in progress. With Governor Bentley’s leadership, we have sought out and received input from legislative leaders and incorporated their ideas as we work to develop a competitive incentives platform that can be embraced as part of the coming legislative agenda,” Secretary Canfield said.

Governor Bentley stressed the new incentives platform would make Alabama more competitive in recruiting new companies, spurring job creation – the No. 1 goal of his administration.

“Since 2011, we have created 63,000 new and future jobs right here in Alabama, and we are not talking about any jobs. That number includes highly skilled and high-paying jobs,” Governor Bentley said. “But with any great plan, you have to make adjustments and improvements along the way.”


Secretary Canfield said the package currently features a line-up of five bills that update the state’s outmoded approach to incentives, which remain a factor in industrial recruitment. An analysis by CBRE Economic Incentives Group found that Alabama is not considered as aggressive as neighboring Southern states when it comes to available incentives for projects, he added.

Secretary Canfield said a centerpiece of the Made in Alabama Jobs Incentive Package focuses on a job credit that would allow a company making a new investment in the state to collect a cash rebate of 3 percent of the previous year’s gross payroll. Rebates would end after 10 years.

He said this represents a “pay-as-you-go” approach, meaning new revenues flow to state coffers from construction activity, sales and property taxes, and withholding before the incentive is paid out.

“We need to make our incentives more competitive, especially as they relate to job creation,” Secretary Canfield said. “We need a new approach that is sustainable and has a ‘pay-as-you-go’ feature that will reduce our reliance on debt.”

The Made in Alabama Jobs Incentive Package would also extend a credit of 1.5 percent against qualified capital investment expenses for a project that meets designated guidelines, each year for 10 years. This credit could be used to reduce income tax, business privilege taxes, and taxes on utility services.

A number of safeguards are built into the package, as it is now structured. For example, to receive these incentives, a project must create jobs and its tax payments must exceed the tax incentives being sought.

In addition, contractual clawbacks, which allow the state to pursue reimbursements if a project fails to meet promised milestones, would have to be part of every incentives agreement. Also, the governor would have the power to reduce incentives to ensure that a project’s economic benefits exceed its incentives.

The Made in Alabama Jobs Incentive Package would also provide additional incentives for companies locating projects in the state’s most rural counties and for those employing Alabama’s military veterans.

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