Alabama legislators could extend state's Jobs Act, remove incentives cap

All or portions of the tax credit incentives within Alabama’s seven-year-old Jobs Act could be extended through 2028 with a higher cap on payouts, based on a proposal a legislative-appointed commission is mulling over.

The newly formed Joint Study Commission on Renewing Incentives, formed out of 2021 legislation, met recently to discuss the various components of the Jobs Act, which was initially created in 2015 and is slated to sunset next year.

At the commission’s meeting, held Aug. 16, Secretary of Commerce Greg Canfield said the incentives borne out of the legislation have bolstered Alabama’s economic development activity.

Speaking to a metric he described as a “return on incentives,” Canfield said, “The actual performance of the Jobs Act far exceeded our estimates in those real numbers.”

To date, the Jobs Act has netted $256.8 million in incentives, Canfield reported at the committee meeting, which outpaced the department’s benchmark of $164.6 million.

With the forthcoming sunset on the horizon, Canfield and other state officials are advocating not only to have it extended, but also looking to have the $350 million cap on the incentive payouts increased.

Canfield said the cap, if it were to continue, could stifle ongoing efforts to bring new companies and new job sectors into Alabama.

When asked what he thought would be an appropriate figure for the cap, Canfield was hesitant to offer up a hard and fast figure.

“We don’t really know. I wish I could tell you,” he said. “If I were to guess, it would be just a guess.”

But in the coming years, Canfield said more specific data concerning the incentives should come into sharper focus.

“We believe that there’s an equilibrium that we will eventually reach,” he said. “The number of new incentives that will be coming online, at some point, will equal the incentives that are coming offline as the incentive payouts and the project agreements are exhausted and terminated.”

Based on its structure, Canfield said the incentives offered through the Jobs Act have safeguards in place through a pay-as-you-go approach.

“We are not paying any incentives to a company that does not perform in the previous 12-month cycle,” Canfield said. “A company has to make the investment that they agreed to – that’s the first hurdle. They have to go into operation and commence operations by a date certain that’s also stipulated in the contract.”

Lt. Gov. Will Ainsworth, who chairs the Joint Study Commission on Renewing Incentives, acknowledged that some of the current provisions within the Jobs Act might be ripe for refinement in the next legislative session. But he also lauded the program’s performance.

“People are impressed with what’s going on here. Companies want to move here. We’re in a good spot,” Ainsworth said. “Obviously, there are some things that need to be tweaked.”

While there was resounding support for the Jobs Act’s performance at the committee meeting, state Sen. Bobby Singleton, D-Greensboro, said he would like to see more incentives in underserved communities.

“It’s OK to have it on the books, but what is the next step?” Singleton, who sits on the commission, said of previously announced efforts to allocate incentives in rural areas of the state. “I don’t want something to just be on the books that looks cute.”

The study commission is slated to have a report on its findings submitted by Jan. 31, as Alabama’s 2023 legislative session is in full swing.