Alabama Economic Development Incentives

Returning from their Spring Break recess, members of the Alabama Legislature introduced four separate bills, what Gov. Kay Ivey’s administration has dubbed the “Game Plan,” to modernize and extend Alabama’s primary business incentives programs.

The first bill pertains to the Jobs Act and Growing Alabama programs. The bill would extend the current sunset date from July 31, 2023 to July 31, 2028. It would also increase the monetary incentive cap from $350 million currently to $475 million in 2027 by increasing the cap by $25 million a year for five years. The proposed legislation also adds renewable energy projects to the list of eligible industry sectors for Jobs Act incentives. Crucially, the bill extends the transferability period for income tax credits to five years, up from three, allowing companies to monetize an additional two years of the credits on the front-end. Finally, the bill extends the sunset date for the existing data center tax abatement program to July 31, 2028.

The second bill is entitled the Site Evaluation and Economic Development Strategy Act (“SEEDS”), which is designed to strengthen the capabilities of the State’s site development program. Currently, the State Industrial Development Authority (“SIDA”) has limited statutory authority to issue grants for the preparation of industrial sites, which only allows it to survey, grade, drain, and improve access to the site. The SEEDS Act would allow SIDA to issue site assessment and site development grants as well to local economic development authorities. Grants would be available for properties of at least 50 acres for site assessment grants, and at least 200 acres for site development grants. Depending on the population near the site, a sliding scale of local financial participation would be required. Lastly, the Alabama Site Development Fund would be created to receive legislative appropriations, federal grants, and other funding streams to further the goals of SIDA.

The third bill is the Innovation and Small Business Act which reforms how the Growing Alabama program operates. Currently, the provisions of the Growing Alabama Credit that incentivize technology accelerators and underrepresented companies fall under the management of the Department of Commerce. This bill would rename it the Innovating Alabama program and move the program to the Alabama Innovation Corporation. The bill also establishes a $25 million annual tax credit cap to meet the increasing need for the incentives. The Innovation and Small Business Act also increases accessibility to the Small Business Innovation Research (“SBIR”) and Small Business Technology Transfer (STTR) programs by broadening the residency requirements and allowing companies more time to relocate their employees to Alabama. The bill sets the Innovating Alabama program’s sunset as July 31, 2028.

The last bill in the “Gameplan” is entitled the Transparency in Incentives Act. The bill would increase transparency by requiring the Department of Commerce to publish certain information about incentivized companies.  Specifically, Commerce would be required to publish the name of the company, the estimated capital investment, the number of jobs being created, the estimated hourly wage, and the estimated value of the incentives. Additionally, the report will estimate the 10 and 20-year return on the incentives to the State. For companies already incentivized under the Jobs Act, Commerce will be required to provide aggregated performance data.

All four bills are expected to be in committee next week.

Other Relevant Bills

Two bills that modestly cut income taxes for Alabamians passed the House unanimously yesterday. HB115 and HB116 by Rep. Danny Garrett would eliminate the lowest state income tax rate of 2% on taxable income not in excess of $500 and reduce the highest rate from 5% to 4.95% by one basis point a year over the next five years. The bills are expected to “cost” the state about $82.3 million annually once fully implemented.

Rep. Matt Simpson’s HB1, which adds mandatory minimum sentences for fentanyl possession and trafficking passed the Senate, and Governor Ivey quickly signed it into law.

Senator Garlan Gudger’s SB113, which requires health care facilities to establish policies that would ensure in-person visits under certain scenarios, also passed the House this week and now awaits the governor’s signature.

Education budget chairmen Rep. Danny Garrett and Senator Arthur Orr have both filed bills, HB250 and SB177, which would phase out the 4% state sales tax on groceries. The bills define food using the federal definition of eligible purchases from the SNAP/food stamp program. If passed, beginning on Sept. 1, the tax rate would be reduced to 3%. On Nov. 1, 2025, and on Nov. 1 of every odd-numbered year thereafter until the rate is 0, the tax rate will be reduced by 1%. However, since sales taxes are dedicated to the Education Trust Fund (ETF), the bills provide that the rate of the tax shall only be reduced if the growth in the ETF in the preceding two fiscal years was at least 5% more than the last odd-numbered fiscal year.

The Legislature will reconvene on April 11.

 

Bills our legislative team is currently tracking include:

Bill	Sponsors	Title	Last Action	Latest Version
AL 2023rs SB 11	Will Barfoot	Relating to the Alabama Uniform Trust Code; to amend Section 19-3B-414, Code of Alabama 1975, to further provide for the modification or termination of an uneconomic trust. (Judiciary)	House • Apr 06, 2023: Referred to Committee (Judiciary)	Introduced
AL 2023rs HB 47	Cynthia Almond	Relating to the Alabama Uniform Trust Code; to amend Section 19-3B-414, Code of Alabama 1975, to further provide for the modification or termination of an uneconomic trust.	House • Apr 05, 2023: Read Second Time in House of Origin	Introduced
AL 2023rs HB 164	Andy Whitt	Relating to public high schools; to require students to complete a personal financial literacy and money management course before graduation; to provide for the creation and administration of a financial literacy examination; and to require the reporting of a summary of examination results to the State Department of Education.	House • Apr 05, 2023: Read Second Time in House of Origin	Introduced
AL 2023rs HB 214	Chip Brown	Relating to building codes; to amend Section 27-2-39, Code of Alabama 1975, to provide for a portion of fees and taxes collected by the Department of Insurance to the Alabama Residential Building Code Fund; to designate Sections 34-14A-1 through 34-14A-20 as Article 1 of Chapter 14A of Title 34, Code of Alabama 1975; to amend Sections 34-14A-1, 34-14A-2, 34-14A-7, 34-14A-12, 34-14A-20, Code of Alabama 1975, to provide for the establishment of the Alabama Residential Building Code and its authority; to further provide for the practice of residential home building; to further provide for the duties of the Home Builders Licensure Board; to add Article 2, commencing with Section 34-14A-41, to Chapter 14A of Title 34, Code of Alabama 1975, to establish the Alabama Residential Building Code Division within the Home Builders Licensure Board and provide for its duties; to establish the Alabama Residential Building Code Fund in the State Treasury and provide for its administration; to add Article 6A, commencing of Section 41-9-175, to Chapter 9 of Title 41, Code of Alabama 1975, to establish the Alabama Residential Building Code Advisory Council and provide for its membership and duties; to amend Sections 41-23-80, 41-23-81, 41-23-82, 41-23-84, 41-23-85, Code of Alabama 1975, to provide for the change of the name of the Alabama Energy and Residential Codes Board to the Alabama Commercial Energy Code Board and further provide for the membership of the board; and to provide requirements for certain local building codes adopted or amended after a date certain. (Insurance)	House • Apr 05, 2023: Carry Over (Insurance)	Introduced
AL 2023rs SB 173	Sam Givhan	Relating to the State Treasurer; to create the Alabama Local Government Investment Pool Program within the Office of the State Treasurer to allow state and local public entities to deposit monies in an investment pool administered by the treasurer; to provide parameters for investments; to authorize the treasurer to take certain actions to administer the program; to establish the Alabama Local Government Investment Advisory Board and provide for its membership and duties; and to provide further for the Office of the State Treasurer’s travel expenses. (State Governmental Affairs) On the agenda • Senate State Governmental Affairs standing meeting Apr 12, 2023 01:00pm Finance and Taxation	Senate • Apr 05, 2023: Introduced and Referred (State Governmental Affairs)	Introduced
AL 2023rs SB 156	Chris Elliott	To add Chapter 9B to Title 41, Code of Alabama 1975, to establish the Occupational Licensing Boards Division in the office of the Secretary of State; to provide that the division is responsible for the oversight and regulation of certain occupational licensing boards; to provide for the appointment of an executive director, deputy directors, and the employment of staff, including investigators; to provide standards for determining fees; to provide for the appointment of members and the reimbursement of their expenses; to provide uniformity in the collection of fees and the deposit of monies received into the State General Fund. (County and Municipal Government)	Senate • Apr 04, 2023: Introduced and Referred (County and Municipal Government)	Introduced
AL 2023rs SB 136	Sam Givhan	Relating to building codes; to amend Section 27-2-39, Code of Alabama 1975, to provide for a portion of fees and taxes collected by the Department of Insurance to the Alabama Residential Building Code Fund; to designate Sections 34-14A-1 through 34-14A-20 as Article 1 of Chapter 14A of Title 34, Code of Alabama 1975; to amend Sections 34-14A-1, 34-14A-2, 34-14A-7, 34-14A-12, 34-14A-20, Code of Alabama 1975, to provide for the establishment of the Alabama Residential Building Code and its authority; to further provide for the practice of residential home building; to further provide for the duties of the Home Builders Licensure Board; to add Article 2, commencing with Section 34-14A-41, to Chapter 14A of Title 34, Code of Alabama 1975, to establish the Alabama Residential Building Code Division within the Home Builders Licensure Board and provide for its duties; to establish the Alabama Residential Building Code Fund in the State Treasury and provide for its administration; to add Article 6A, commencing of Section 41-9-175, to Chapter 9 of Title 41, Code of Alabama 1975, to establish the Alabama Residential Building Code Advisory Council and provide for its membership and duties; to amend Sections 41-23-80, 41-23-81, 41-23-82, 41-23-84, 41-23-85, Code of Alabama 1975, to provide for the change of the name of the Alabama Energy and Residential Codes Board to the Alabama Commercial Energy Code Board and further provide for the membership of the board; and to provide requirements for certain local building codes adopted or amended after a date certain. (Banking and Insurance)	Senate • Mar 23, 2023: Introduced and Referred (Banking and Insurance)	Introduced
AL 2023rs HB 49	Reed Ingram	Relating to the State Treasurer; to create the Alabama Local Government Investment Pool Program within the Office of the State Treasurer to allow state and local public entities to deposit monies in an investment pool administered by the treasurer; to provide parameters for investments; to authorize the treasurer to take certain actions to administer the program; to establish the Alabama Local Government Investment Advisory Board and provide for its membership and duties; and to provide further for the Office of the State Treasurer’s travel expenses.	House • Mar 22, 2023: Read Second Time in House of Origin	Introduced
AL 2023rs HB 58	Corley Ellis	Relating to insurance; to define lender-placed insurance on real property and provide a framework for regulating lender-placed insurance; to require separation between lenders and insurers and define unfair competitive practices in the sale, placement, solicitation, and negotiation of lender-placed insurance; to further provide for the term of the lender-placed insurance on real property and for the calculation of coverage and payment of premium; to provide for prohibited practices in the issuance of lender-placed insurance on real property; to require certain details of the insurance to be set forth in the policy or certificate of insurance; to require for the filing and approval by the Department of Insurance of the forms and rates to be charged for the insurance; to provide for the enforcement of the act and penalties for violations of the act; and to provide for judicial review of orders of the Commissioner of Insurance. (Insurance)	House • Mar 22, 2023: Carry Over (Insurance)	Introduced
AL 2023rs SB 125	Merika Coleman	Relating to credit and debit card fees; to provide that the calculation of any credit or debit card swipe fee may not include taxes and fees added on to the price of the goods or services purchased by the credit or debit card. (Banking and Insurance)	Senate • Mar 22, 2023: Introduced and Referred (Banking and Insurance)	Introduced
AL 2023rs HB 188	Chip Brown	Relating to public contracts; to prohibit the consideration of environmental, social, and governance (ESG) criteria when awarding a public contract; and to require a responsible bidder, as a condition of being awarded a public contract, to certify, under penalty of perjury, that its employees will not be subject to a personal ESG rating as a basis of hiring, firing, or evaluation. (State Government)	House • Mar 22, 2023: Introduced and Referred (State Government)	Introduced
AL 2023rs HB 181	Mack Butler	Relating to financial institutions; to amend Section 5-5A-43, Code of Alabama 1975, to prohibit financial institutions from disclosing certain customer financial records of firearms transactions with certain exceptions; to allow the Department of Finance to disqualify a financial institution from any selection process for state contracts for violation of this prohibition; and to provide civil penalties and criminal penalties for violation of the act. (Financial Services)	House • Mar 22, 2023: Introduced and Referred (Financial Services)	Introduced