Some representatives don’t support nonprofits giving the Bob Barker treatment to Alabama’s pets. Rep. Patricia Todd did her best to knock some sense into them before the bill finally passed.
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The Alabama House of Representatives debated posting the Ten Commandments in state buildings. The discussion got… interesting. Follow along as Kyle Whitmire and Tim Lockette covered the madness.
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The news of Huntsville landing a Remington gun-manufacturing plant was cause for state-wide celebration earlier this week. The plant is expected to hire 2,000 employees and create almost $90 million in state and local revenue by 2024.
The cost of luring Remington to Huntsville was $68.9 million in state and local incentives. A sizable price tag for sure, but still a profitable investment if it creates the expected $90 million in state and local revenue in 10 years. If Remington happens to renege on its expected hiring, the company will have to repay Huntsville’s incentives. It’s a pretty smart deal.
I like those numbers, and I like seeing the state and local governments working together successfully. But I also like crunching the numbers.
Since the Remington move may come at the cost of an upstate New York plant, many decided to rub it in New York Gov. Andrew Cuomo’s face. Cuomo, who said “extreme conservatives … have no place in the state of New York” last month, also signed the SAFE (Secure Ammunition and Firearms Enforcement Act) Act into law last year. Alabama Republicans, thus, saw the Remington announcement as proper punishment for Cuomo.
But Gov. Cuomo has made considerable local investments, and the different economic development agendas of Gov. Cuomo and Gov. Bentley are what interest me. It’s impossible, for now, to argue that one strategy trumps the other, but it’s helpful to compare them side by side.
The state of New York will invest $1 billion in the Buffalo region over the next ten years — modeled after the successful $1 billion investment in Albany‘s nanoscience industry. Those billion-dollar investments represent 1.1% of New York’s $90 billion annual budget.
Alabama’s investment — excluding local investment — in the Remington plant will be $54.22 million over ten years, which is about 0.72% of the state’s annual budget.
So despite the large discrepancy in total dollar figures, both investments hover around 1% of each state’s annual budget.
The theory behind each investment is what’s most different. Gov. Cuomo is investing in infrastructure and services to improve the Buffalo region in order to spur job creation and attraction. Gov. Bentley is investing in an out-of-state company to bring jobs to the North Alabama region in order to spur job creation and revenues.
Notice the slight difference? New York is investing locally; Alabama is investing in a corporation with the expectation that it, in return, invests locally. However, to Alabama’s benefit, Remington’s employment will be a tangible success indicator for its investment. The success of the Buffalo region will be much harder to attribute to New York’s investment.
New York’s similar investment in Albany certainly paid off, though. The state’s $1 billion soon attracted $6 billion in private investment — a 600% return on investment. Even Alabama’s most optimistic estimates for the Remington plant are a 285% return on investment in 20 years.
Again, I applaud Gov. Bentley et al. for securing 2,000 jobs for the state, and I sincerely hope that the Remington plant blows past all expectations and catalyzes the North Alabama economy.
But, if Alabama ever wants private investment to come calling without the need to write a check first, it must start investing locally. Dedicating 1% of the state’s annual budget over 10 years to one of the state’s regions is financially feasible and will create permanent results — not just a manufacturing plant.
Gov. Robert Bentley’s focus on Wilcox County, which cited as the poorest county in the country, has attracted media attention to the state’s portion of the Black Belt. Already, John Archibald and Alex Walsh of AL.com traveled to the area for a series on poverty.
Bentley mentioned Wilcox County’s poverty and economic stagnation to tout the state’s successful attraction of a Golden Dragon copper tubing plant and its 500 potential jobs. The $100 million plant will come at a cost of $200 million to the state — a prime example of corporate welfare that I wrote about a few weeks ago.
Bentley’s economic development strategy runs counter to the 21st Century strategies used by states that are performing better economically. South Carolina, which surpassed Alabama’s job totals last year despite an equally sized labor force, has shunned the very tools used by Alabama to draw Golden Dragon to Wilcox County.
“[Incentive packages and cheap land] served us well in the 20th century,” said Don Herriott of South Carolina’s Council on Competitiveness at the Public Affairs Research Council of Alabama annual meeting this week. If only Gov. Bentley was there to hear that. Oh wait, he was.
Wayne Flynt’s AL.com op-ed earlier this week recounts how Alabama has relied on the “incentive packages and cheap land” strategy since the late 1800s, but a 1967 report on Wilcox County specifically recommends against a “bringing in industry” strategy that Gov. Bentley so highly touted in his State of the State.
The 1967 report, which followed an investigation of racial firings in the county school system, looks at the county’s poor economy, segregated culture and underfunded schools. The report’s findings align perfectly with the economic and demographic trends in rural Southern areas as covered brilliantly in The Warmth of Other Suns.
In terms of economic development, even then, it was apparent that a new strategy was needed.
“The calculated policy of ‘bringing in industry,’ a refrain which the business associations chorus insistently, may be thoroughly questioned in Wilcox County, Alabama,” the report states on page 103. “In an area dependent upon land taxes, corporate exemption from taxation is poor policy. [Tax benefits and free infrastructure] granted to relocating industries generally in Alabama at this stage of development might better be used for developing public schools.”
The report notes that two industrial developments could create up to 1,800 jobs in the coming years (pages 78-79) — more than three times the potential of the present-day Golden Dragon Plant — but it’s obvious in hindsight that they weren’t the long-term boon the county needed.
Bribing corporations to locate in Alabama hasn’t worked statewide since before 1900, hadn’t worked in Wilcox County by 1967 and since, and has been discarded as a strategy by more successful states. Maybe it’s time to rethink it already.
Three weeks after Gov. Robert Bentley delivered his State of the State address, critics and Alabama media members have started looking into Bentley’s job growth platform. Unsurprisingly, it’s shaky at best.
Up first, the renown Wayne Flynt. Flynt chronicles on AL.com how Alabama’s original economic development strategy was formed in 1875 and hasn’t changed much since. Flynt explains the thinking at the time, “Recruit low-wage, low-skill industry that will move plants to the lowest cost production site. After 1900, sweeten the pot with tax incentives, rebates, and job training.”
You’d think by now that the state would figure out that playbook has failed us for 100-plus years, but alas, Bentley wasted no time dusting it off and following it verbatim. As Flynt points out, this playbook relies primarily on the manufacturing sector. Yes, the industry that’s been shedding jobs since the mid-1900s and has evolved rapidly over the past two decades alone. It’s time for a new playbook, governor.
Want to see Alabama’s tax incentives for corporations? Too bad. Ty West of the Birmingham Business Journal looks at a study that ranks Alabama 44th “when it comes to transparency over economic development incentives.” The Good Jobs First study scored our state’s transparency as a 16 out of 500. The national average was 7 times that. So not only is the state’s economic growth strategy outdated, it’s also classified.
Gov. Bentley credits himself with 60,000 created jobs. Eh, more like 30,000. Brian Lyman of the Montgomery Advertiser contests Bentley’s numbers (60,000) with the U.S. Bureau of Labor Statistics (30,000). Then, Lyman deconstructs Bentley’s touted figures one by one. Unemployment numbers? Lower because of a shrinking work force. High-paying jobs? The manufacturing and leisure & hospitality have been the only sectors growing much during Bentley’s tenure. Bentley’s communications team defends his numbers in the article by citing an aging state population and a growing trucking industry, but they are just grasping at straws at this point.
You can’t forget the “future jobs” that Gov. Bentley has created, though. Yup, Bentley mentioned the “40-thousand new future jobs we’ve created” in his State of the State. Too bad Alabama’s unemployed can’t pay their bill with the “future income” from their “future jobs.” There isn’t even any “future” in those “future jobs,” seeing that they’ll be concentrated in the low-wage, low-skilled industries of the 20th century.
The snowstorm that shut down much of the Southeast this week raised many questions and concerns. Did public officials adequately prepare residents? How did meteorologists miss this? Does no city in the South own a salt truck?
All of these discussions are valid, but the one that interests me the most is how the South’s built environment contributed to the region’s shutdown. We planned our own demise by planning our communities for the car by zoning residential and commercial uses away from each other, and by locating schools away from the neighborhoods they serve through poor capital investment planning.
Once a sense of normalcy returned and the snow melted, some made the connection between the region’s inability to handle the snowstorm and its suburban sprawl.
Rebecca Burns, deputy editor of Atlanta Magazine, wrote the best piece I’ve seen so far. In the piece published by Politico, Burns points out how the Atlanta region’s auto-dominated culture and decision making failed it during the crisis. She didn’t make excuses for the region and tell those in the North to stop laughing, like an embarrassing Gizmodo column did. She placed responsibility on the public officials and residents who paved the road to their own troubles. Even though Burns was credited with being the first to make this connection, André Natta and I totally made this case on Twitter the day before.
Alex Walsh of AL.com looked at the commuting data in the Birmingham region to see if the high number of vehicles on the roads exacerbated the snowstorm’s effects. Walsh found that “while nearly one in three of the area’s workers has a job in or close to Birmingham city, fewer than one in five live there.” That statistic illustrates how critical vehicles are to the region’s workers and illustrates the high demand on the road connections between downtown and the suburbs.
Sweet Home Politics’ own Kindred Motes wrote how the snowstorm revealed the Birmingham region’s lack of mass transit. Although I don’t think a better bus system would have helped much this week, I do think that planning the Birmingham region around mass transit — called “transit-oriented development” — would have helped. Transit-oriented development concentrates mixed-use development within walking distance of transit stops, thereby creating walkability within neighborhoods and connecting them to the rest of the region.
Lastly, the political fragmentation that sprawl has created since the post-WWII period certainly didn’t help this week, as pointed out by Conor Sen on Business Insider. The Birmingham metro alone includes seven county governments and 87 local governments. One unified response would have been impossible with that many decision makers. Political fragmentation makes long-term decisions incredibly difficult as well. The Atlanta region voted down a ballot measure in 2012 that would have funded regional transit projections, and the Birmingham region voted down the Metropolitan Area Projects Strategy in 1992 that would have devoted funding to a regional transit system. The South has failed to grasp the sense of regionalism that the Northeast has capitalized on.
So, even though Gov. Bentley has pled us not to play the “blame game,” I think we should at least have a conversation of what went wrong and how to be better prepared — especially in terms of our built envirionemnt.
I’m a terrible cheerleader. When any of my homes — Birmingham, Alabama and the University of Alabama — do something admirable or achieve something great, I pass on the cheering duties to those that do it best. Then, I make sure spread their excitement. I tend to respond to something by analyzing and critiquing that it’s not the most perfect decision or achievement. I’m like Todd Marinovich’s dad for the state.
So, I realized yesterday that I haven’t written a positive piece for this site since its launched. I’ve criticized the state’s limited home rule for municipalities, the state’s refusal to fund local mass transit, and Gov. Bentley’s economic development strategy. I put a lot of time researching the history of those topics and proposing alternatives, but the stances and tone of those pieces had to come across as negative.
And that stinks, because I’m a positive-ish person. My Twitter profile even describes me as “passionately optimistic,” and how could such an authoritative source be wrong?
To prove that I can point out positive things happening in the state and even positive things done by the state government, let me quit stalling and do just that.
The state passed its own historic preservation tax credits in May 2013 that, when paired with federal historic preservation tax credits, will help finance historic rehabilitation projects throughout the state. And my goodness, the $20 million program is already on its way to financing projects in Birmingham, Mobile, Tuscaloosa, Montgomery and Anniston.
“The projects are expected to generate more than 2,300 new jobs and add $70 million in new salaries over the next three years, officials project,” AL.com’s Michael Tomberlin reports.
Some projects are even preparing themselves already to apply for next year’s funding.
After much begging and pleading from local organizations and historic preservationists, this is how we all felt when this went through and when its success has become apparent:
As a land use and vacant property nerd, I needed to fan myself when Gov. Bentley signed 2013 legislation that authorized local governments to establish their own land bank. I’ve explained them more in detail for a AL.com piece last year, but a land bank is a tool for a community and affected neighbors to transform vacant and tax-delinquent properties into opportunities.
Removing blight and returning properties to tax-paying status improves both a city’s quality of life and its financial situation. Birmingham and the state’s other major cities lobbied for the legislation, and Birmingham has been working on establishing its own since the legislation was enacted.
I don’t smile much, but I could be seen doing something to this effect when I first read the news last year:
The House Democrats announced their 2014 legislative agenda today, a month after the House Republicans announced theirs. The Democrats’ agenda has three priorities: job creation and retention, education and ethics.
“It’s about schools and it’s about jobs,” House Minority leader Craig Ford (D-Gadsden) said. “Today, Democrats are offering real solutions that will help create jobs, protect your tax dollars and give our public schools the support they need to be successful.”
Democrats also plan to propose legislation that would require elected officials who resign in the middle of their terms to pay for the special elections to fill their seats. The proposal intends to address the recent succession of elected officials resigning before their term expired. The bill would make exceptions for elected officials who resign for health reasons and for federal or state appointments.
“When you are elected to office, you take an oath to serve the people you represent for your entire term,” said Rep. Merika Coleman-Evans (D-Birmingham), who is sponsoring the bill. “That ought to mean something. Public office is meant to be a service, not a stepping stone to a high-paying lobbying or ‘consulting’ job.”
The jobs package proposed by House Democrats includes funding for vocational and workforce development training and instituting clawback provisions on corporate tax incentives.
The Job Creation and Taxpayer Protection Act, sponsored by Rep. Greg Burdine (D-Florence), would require businesses to commit to creating a number of jobs before receiving a tax incentive or subsidy from the state. Businesses would be required to honor those job commitments within five years of receiving the subsidy or be required to pay back all or part of the incentive received. The business would also be required to stay in the state and maintain the committed employment level for a minimum of five years.
“When done the right way, corporate tax incentives are an incredibly successful tool we have to recruit business. But we have a responsibility to protect the taxpayers and make sure that the incentives the state offers actually create jobs that last and pay a livable wage,” Burdine said.
The Workforce Development and Training Act, sponsored by Rep. Barbara Boyd (D-Anniston), would allow the Alabama Public School and College Authority to sell and assume $20 million in bonds to help fund the Department of Post-Secondary Education’s workforce development training program. The program conducts surveys of local businesses and the regional workforce development councils to determine specific training needs. They then develop a training program tailored to meet the needs of local businesses.
“There are thousands of skilled labor jobs becoming available in Alabama, but we have to give our people the training to do these jobs,” Boyd said. “This bill will directly help existing businesses expand and create thousands of jobs, while also making Alabama more attractive to other businesses and industries looking to locate here.”
Democrats plan to sponsor legislation to provide additional funding for dual enrollment scholarships as well. The bill would eliminate an unnecessary, state-funded liability insurance program for educators and reallocate the money set aside for that program into the dual enrollment program. Most educators already receive liability coverage through their local school boards and their professional associations like the Alabama Education Association.
“Last year, we had $4 million in requests for scholarships for dual enrollment, but we could only give out about $2 million,” said Rep. Thomas Jackson (D-Thomasville) the bill’s sponsor. “Dual enrollment increases the graduation rate and college enrollment rate. It gives kids a chance to get a head start on their career or their college degree, and creates opportunities for kids who otherwise would not have had those opportunities.”
Democrats are also proposing legislation that would require the state to give preference to Alabama-based businesses when awarding state and public works contracts.
“Our state government needs to do business with Alabama employers as much as possible,” said the bill’s sponsor, Rep. Joe Hubbard (D-Montgomery).
A package of education bills introduced by the Democrats would repeal the Accountability Act and Rolling Reserve Act, create a state lottery, provide educators, state employees and retirees with a 6% pay increase and provide funding to close the $100 million hole in Medicaid.
“Increasing the state’s tobacco tax by $1 will generate up to $230 million dollars each year for the state,” Hubbard said. “That money can fill the hole in Medicaid and provide enough funding for the pay raises for state employees and retirees.”
Democrats expect the Education Trust Fund to be able to afford a 6% increase for educators and retirees without needing to raise additional revenue.
The lottery, proposed by Rep. Ford, is estimated to generate $250 million each year for education. The funding would be used to provide a resource officer in every public school, which is estimated to cost $50 million. The rest of the revenue would be used to provide scholarships for students who maintain an A/B average.
Ford is introducing legislation that would repeal the Alabama Accountability Act and reallocate the remaining funding back into the Education Trust Fund for the Alabama Math, Science and Technology Initiative.
In addition to repealing the Accountability Act, Democrats are seeking to repeal the Rolling Reserve Act, citing the governor’s proposed budget as evidence that the act needed to be repealed.
“The leadership in Montgomery has never lived by the ‘Rolling Reserve Act.’ Every year they have used accounting tricks to get around it. It needs to be repealed, plain and simple,” Ford said.
1) Alabama First Act
Priority will be given to state-based businesses when awarding government and public works contracts
2) Job Creation and Taxpayer Protection Act
Requires job commitments from businesses before they can receive tax incentives or subsidies. Requires clawback provisions if job commitments are not fulfilled within five years. Requires business to stay in the state and maintain committed employment levels for five years.
3) Workforce Development and Training Act
Allows the Alabama Public School and College Authority to sell and assume $20 million in bonds to help fund the Department of Post-Secondary Education’s workforce development training program.
4) Create a line item in the ETF for the state’s dual enrollment program
Would put $5 million minimum per year for next five years into the program. Would provide for the line item by repealing the teacher liability insurance program created in 2013.
1) Repeal the Accountability Act and put the remaining funds into the Alabama Math, Science and Technology Initiative.
2) 6% pay raises for educators, state employees and retirees.
2a) $1 Cigarette tax increase to shore up the $100 million hole in Medicaid and provide for the pay raises for state employees and retirees.
3) Create a state lottery to fund scholarships for students who maintain an A/B average and to put a resource officer in every public school in the state.
4) Repeal the Rolling Reserve Act.
1) Any elected official who resigns mid-term will be required to pay for the special election to fill their seat unless they resign due to health reasons or because they were appointed or elected to state or federal office.