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Economic development exemption passes House overwhelmingly

By TODD STACY and CAROLINE BECK, Alabama Daily News

MONTGOMERY – A bill to exempt economic developers from state ethics rules governing lobbyists passed the Alabama House of Representatives overwhelmingly Thursday. The vote was 94-4, with three abstentions.

The legislation is seen as essential by the state’s economic development community, which argues that treating site selectors like lobbyists and requiring them to publicly disclose their clients will result in Alabama missing out on the next Mercedes, Honda or Mazda-Toyota type projects.

In 2017, an Ethics Commission draft advisory opinion stated that economic development professionals should be required to register as lobbyists under the Ethics Code. The Commission voted to delay an official ruling on the matter and allow the Legislature time to clarify the law.

Last year, after much debate, lawmakers passed an economic development exemption but set it to expire in one year. House Bill 289, sponsored by Rep. Alan Baker, R-Brewton, would make that exemption permanent.

“If our economic developers were required to register as lobbyists, that would require them to disclose who their clients are, compromising confidentiality, which is a part of almost any agreement with projects in our state for businesses,” Baker said.

Rep. Phillip Pettus, R-Green Hill, called it a “great bill” that solved a potential problem for the recruiting industry.

“If you’re one of these companies that is looking to locate here or expand or whatever, you don’t want anybody to know about it,” he said. “You don’t want the competition to know, or even another plant that could lose jobs.”

Pettus said the local economic development community advocated for the bill.

“Oh yes, they’re all for it. We’ve got Mazda-Toyota building nearby and we are hoping to get some spinoff suppliers, so this is very timely for us.”

Rep. Randy Wood, R-Anniston, said other states would use the public disclosure requirement against Alabama.

“Actually, as I heard it, I think the Carolinas were two states that were hoping we wouldn’t pass it because it would give them a little advantage when it comes to businesses coming to their states instead of ours,” he said. “Now we’ve leveled the playing field.”

Dubbed the “Safe Harbor Act,” the legislation states “an individual acting as an economic development professional is not a lobbyist,” unless and until they seek incentives from the Legislature. The bill defines an economic development professional as individuals seeking to advance “specific, good faith economic development or trade promotion projects… for a business, chamber of commerce… a city, a county,” or state agency.

Last year’s one-year reprieve was the subject of intense debate, with critics saying it would open up the door for corruption and allow public officials to claim they were economic developers to avoid ethics requirements. Baker’s bill specifically states that elected officials, including legislators, are not to be considered economic developers and thus exempt from ethics requirements under the law.

With only four “nay” votes, much of last year’s criticism has waned. However, some lawmakers were still not convinced the legislation is necessary.

“What do we have in black and white that shows there is economic growth going on in the state thanks to the bill?” asked Rep. Mary Moore, D-Birmingham, during debate on the House floor.  “There are some areas of the state where it is poverty ridden and very few economic developments are coming in there.

“We have far too many counties that have been at a standstill.  We haven’t had any development to make those lives better.”

Jim Searcy, Executive Director of the Economic Development Association of Alabama said none of the dire predictions or rampant corruption from last year’s debate have come true.

“They haven’t come to pass simply because none of the assertions we heard in the last legislative session were based in fact,” Searcy said.

Baker, the bill sponsor, fielded questions and comments from fellow lawmakers for two hours of debate.

“[The bill] simply affirms the posture that our economic developers are what they have been in the past,” Baker said. “That they stay on that same framework which does not require them to register as lobbyists and allows them to conduct their activities at a competitive level with other states.”

Asked what changed from last year to this year, House Speaker Mac McCutcheon said lawmakers became informed about the details of a complex issue.

“I think what changed now was an opportunity to educate the members on the real issues,” the Speaker said. “Last year, at one point in the House their were some propaganda fliers on the House floor there were some news media reports coming out that were not factual. And because of that, there was a lot of confusion. So I think that between last year and this year, there has been a lot of study and education gone into the issue.”

Alabama Daily News reporter Mary Sell contributed to this report.

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