Historic Tax Credit Necessary for Alabama’s Economic Growth

By Slade Blackwell

 

This past week, the Alabama Legislature met for the twenty-first and twenty-second days of the 2016 regular legislative session. Despite current political distractions in Montgomery, the Legislature has had a productive session. In fact, last week the Senate passed by a 32-1 vote a robust $6.3 billion education budget for fiscal year 2017 that includes a 4% pay raise for K-12 teachers and personnel and increases Pre-K funding by $16 million.

From my vantage point, one of the most important pieces of legislation still pending a vote is the Historic Tax Credit extension.

The Historic Tax Credit is a vital economic incentive tool for rehabilitating and developing historic structures. Since its passage in 2013, fifty-two different preservation projects –including work on the Redmont Hotel, the Empire Building, and Lyric Theater in Birmingham – have been made possible because of the tax credit.

But it is important to note the Historic Tax Credit has a statewide economic impact. Construction projects in Huntsville, Anniston, Mobile, Dothan, Tuscumbia, and Montgomery have all been aided by the credit.

The Alabama Historical Commission authorized a study by Novogradac, a national accounting firm that specializes in historic tax credits, to examine the economic impact of the Historic Tax Credit. Novogradac found that the tax credit is responsible for 2,133 direct construction jobs and 1,373 operational-phase jobs over the past three years. Further, the study projects that for every one dollar the state invests in the tax credit, nearly four dollars will be paid in state and local taxes over the next twenty years.

When it was first passed in 2013, the Historic Tax Credit was designed to expire in January of 2016. Policy makers, smartly, wanted an opportunity to weigh the economic benefit of the credit after a few years. As an aside, I believe nearly all tax credits and deductions should have similar sunset provisions. Too often, a deduction or credit is created to incentivize a particular, momentary need that may not last beyond a certain time.

It is clear, however, that the Historic Tax Credit is continuing to provide economic incentives necessary to spur to the re-development and preservation of historic structures across Alabama.

Unfortunately, the effort to extend the tax credit for an additional seven years is currently held up by political posturing. This is a disgrace. People are fed up with how politicians are acting in Montgomery. Legislators must put good policy and economic growth ahead of petty grievances.

The extension of the Historic Tax Credit is an opportunity to get something done for the good of the state and keep our economy growing.

I urge my fellow legislators to end the political gamesmanship and extend the Historic Tax Credit. There are only a few legislative days left in the session and hundreds of construction jobs and dozens of preservation and re-development projects across Alabama depend on the extension of this credit.

Slade Blackwell represents Jefferson, Shelby, and Talladega Counties in the Alabama Senate. He is Chairman of the Banking and Insurance Committee. Follow him on Twitter: @SladeBlackwell