Alabama’s economic development history is full of high-profile deals that cost state residents hundreds of millions of dollars. Automakers such as Toyota-Mazda and Hyundai have received Alabama’s lavish subsidies, as have other manufacturing industries such as steel. But Alabama’s remarkable tax giveaways have not brought the state broad prosperity; indeed, its poverty rates remain consistently high and its regressive tax structures means poorer residents pay a higher portion of their income on basic living expenses.
Alabama offers a diverse array of subsidies that reduce or eliminate almost all major business taxes. Those tax-based subsidies replaced Alabama’s previous practice of using industrial revenue bonds to help companies finance new projects.
A good feature in the state’s problematic use of subsidies is that Alabama does not allow school taxes to be abated.
A mixture of agencies is responsible for running the programs: the Alabama Department of Revenue manages tax-based programs; the Alabama Department of Commerce manages grants and rebates; a division of the Commerce Department, AIED, manages training programs; the Alabama Industrial Development Authority approves development grants, such as those for site preparation.
None of those agencies disclose recipient-specific subsidy data. The only information on companies benefiting from those lucrative deals is available through investigative journalism. Birmingham, in contrast to the glaring lack of transparency in the state, has a good disclosure under the GASB 77 rule. Besides program costs, it also lists which companies benefit from local subsidies.
Alabama also provides only limited and fragmented data on how much subsidy programs cost the state. Some data is included under GASB 77 rule in the state’s Annual Comprehensive Financial Reports, some in the Tax Expenditure Reports and some in the state budget.
The state tax-based subsidies are evaluated every four years, but a big drawback is that the evaluations are done by the very agencies that administer the programs. The reports are posted to the Alabama Legislature website (under LSA<fiscal division< Economic Tax Incentive). Those reports, however, have little value and include mostly aggregate program information.