Ivey uses emergency proclamation to expand incentives and fix tax issue

By MARY SELL, Alabama Daily News

Governor Kay Ivey on Friday extended the expiration in 2020 of some major economic incentives used by the state to attract business and clarified that Alabamians will not have to pay taxes on certain benefits they have received. under the CARES Act.

Through an emergency proclamation, Ivey addressed, temporarily, two of the main reasons some lawmakers and lobby groups wanted the Legislative Assembly to meet for a special session this year. This month it became clear that a special session, which is expected to be called by Ivey, would not take place.

“In coordination with the Alabama Legislature, we are delighted to address the items that have been delayed due to COVID-19,” Ivey said in a written statement. “This action is a short-term solution until these points can be considered by the entire legislative branch in the 2021 regular session. In the meantime, the people of Alabama need clear advice.” before filing their 2020 taxes. Therefore, the state will not collect taxes from individuals or businesses that have received benefits from the CARES Act, as these benefits were designed to help our citizens survive the pressure pandemic on the economy. It is both my intention and the will of the legislature to ensure that CARES Act payments extend their full value to those who need them most. “

Several legislators plan legislation to clarify the tax issue, Alabama Daily News previously reported. The legislature adjourned in May without passing a bill to clarify that federal relief funds are not to be treated as taxable income.

The Ivey Proclamation directs the state revenue commissioner to amend tax return forms and instructions to ensure citizens and businesses will not have to pay state taxes on benefits of the CARES Act, such as tax credits, prepayments and loan forgiveness. Benefits are already exempt from federal taxes.

“Gov. Ivey consulted with legislative leaders before issuing the executive order and included our input in the final draft, ”Speaker Mac McCutcheon told Alabama Daily News. “The power to codify the tax exemption rests with the legislature, but the issuance of the decree now allows families to plan their expenses and finances, which is especially important during the Christmas gifting season. I anticipate that the legislature will devote much of its future work to building the state’s economy and continuing to provide Alabama families with the jobs and opportunities they need. “

State Senator Greg Reed, R-Jasper, who was recently selected by the Republican majority to serve as Senate Speaker Pro Tem, said the unique nature of the circumstances warranted extraordinary actions by the governor .

“The Governor has expressed to members of the Legislative Assembly that she understands that these matters are a legislative prerogative. However, we can all agree that we are living in an unprecedented time that requires unprecedented solutions, ”said Reed. “These issues will be a top priority for the Senate as we enter the next legislative session. “

Meanwhile, the Alabama Jobs Credit and Investment Credit, which expires at the end of the year, and the lesser-known but also used Growing Alabama Credit, which ended on September 30, were a major concern of heads of state and economic developers.

“The Alabama Jobs Act and Growing Alabama tax credits are critical to the success of Alabama’s economy, and we’ve seen great return on investment across our state,” Ivey said. “The state is currently negotiating potential economic projects that depend on the availability of these tax credit programs, and without today’s extension, we stand to lose nearly $ 3 billion in direct capital investment and over 7,000 new direct jobs.

But some wondered if Ivey single-handedly could expand tax credits, essentially changing state law, or the potential precedent that action would set. Ivey used emergency powers to change other state laws during the pandemic, including open meeting requirements. The incentive situation is slightly different, however, as companies could close deals under the extension that Ivey issued, but not collect the incentives for years after the pandemic emergency is over. And in the case of the Growing Alabama Credit, Ivey is reviving a law that expired two months ago.

“I will leave it to the governor to defend the constitutionality of his actions,” Senator Chris Elliott, R-Daphne said Friday. Elliott had pleaded for a special session. He said he supported the goals behind Ivey’s actions, but said lawmakers will need to act in February to ensure the constitutionality of laws going forward.

Ivey’s press secretary, Gina Maiola, said authority emanates from the Emergency Management Act gives the governor, during the existence of a declared state of emergency, the power to execute and to exercise “the functions, powers and duties necessary to promote and secure the security and protection of the civilian population.

“Extending incentives for economic development is a valid exercise of this power for at least two reasons,” Maiola wrote in an email. “First, it helps promote jobs and other investments in Alabama at a time when, due to the pandemic, they are needed most. Second, the pandemic has prevented the Legislature from fully and safely considering extending expiration dates during its regular session. This temporary measure will restore the ability of the Legislative Assembly to fully and safely consider these cost-effective programs during the 2021 regular session. ”

Senator Greg Albritton, R-Range, said lawmakers will need to address these issues early in the next session.

“I appreciate the governor’s efforts to try to protect the state and the citizens, but I am not prepared to hand over power to any executive department,” said Albritton, chairman of the Senate General Fund budget committee.

The 2021 legislative session of lawmakers begins on February 2.

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