Why? Not because the program isn’t profitable to the state.
In fact, a study by preeminent CPA and consulting firm, Novogradac & Co. issued in January, indicates that the HTC program has been responsible for over 2,100 direct construction jobs, 1,370 permanent jobs, $384 million in investment in the State of Alabama.
Highlights of the study include:
- The Alabama Historic Rehabilitation Tax Credit is responsible for 2,133 direct construction jobs and 1,373 operational-phase jobs. The operation jobs are expected to grow over time.
- Projects utilizing the Alabama HRTC can be considered anchor tenants for several development districts, and provide significant “halo effects” in downtown areas.
- A model of the program’s tax impact demonstrates that for every one dollar of tax credit allocation the state invests in the program, $3.90 is returned to state/local tax collections over a 20-year period.
- The modeled tax impacts demonstrate that by 2019, the State of Alabama will break even on its current investment of $60 million in tax credit allocation.
- According to the Alabama Department of Revenue, $630,281 of tax credits were claimed in the 2014 tax year out of the $2,249,101 of tax credits authorized through tax credit certificates issued by the Alabama Historical Commission for projects completed in the 2014 tax year.
(Read full study here: here)
Senator Marsh says he is holding up the bill because his Senators can’t budget. Does the Senator really expect Alabama voters to believe that? Can’t the Senate understand the simple conservatism of budgeting each year as if all outstanding tax credits will be claimed, thereby allowing the State Treasury to be pleasantly surprised with un-budgeted revenue in any year when less than the full amount of outstanding credits are claimed? Maybe the Senate thinks it needs to find a way to spend every possible cent of tax dollars that should be set aside for tomorrow. It would seem by Senator Marsh’s arguments that it already has done so in prior years. Either way, that simply isn’t true to the fiscally conservative values the GOP majority claim to espouse.
Perhaps there are other, politically undisclosed reasons for holding up this widely supported and job-creating legislation (which, by the way, passed the House this month by an huge margin of 91-4). The votes to pass the bill are there in the Senate, which is ready to act…when it is given the chance. Senator Marsh, for his part, has not allowed any action on the bill the since being engrossed by the House.
“Historic rehabilitation tax credits are not ‘welfare for the wealthy’ as some detractors have alleged. Far from it. In fact, HTC’s actually enable projects that have long odds or would never otherwise have a shot. Expiration of the Alabama Historic Rehabilitation Tax Credit will actually return historic preservation in Alabama to being exclusively the domain of the wealthy – or the State Treasury itself.” – Brandon Hill, President of Fusion Advisory Services
The assertion that no HTCs ave been claimed to date is false. Further, there is plenty of data to show the expected timing of project completion and likely claims of the credits. In fact, much of this data has been collected, in part, by my firm as well as other project sponsors and industry leaders and submitted to the Alabama Historical Commission. Even more data was collected by Novogradac & Co. in the performance of their study. Why is this data not good enough for Senator Marsh? If his budget arguments are in earnest, then why can’t the Senate budget using common sense?
“So much for grassroots, Main Street type, projects in non-metro Alabama cities like the courthouse square in Monroeville, the St. James Hotel in Selma, the Cannon Building in Fayette, the Josephine Hotel in Union Springs, and the Hunt House in Livingston. These communities have long awaited a program like this to accomplish their restoration and heritage tourism goals. If Senator Marsh gets his way, it looks like these communities will be waiting a lot longer for this job-creating investment” – Brandon Hill, President of Fusion Advisory Services
Senator Marsh, here’s a free budget lesson: It would be simplest and most conservative to simply assume at the start of each budget year that all outstanding credits could be claimed. Proceed from there. (Hint: it’s the same way you balance a checkbook).
Don’t allow the Senate to put the state in an artificial bind by spending tax dollars that are effectively claimed by tax credit reservations. These aren’t bad checks the State of Alabama can’t cash. Commissioner Magee and the good people in her office at the Department of Revenue are doing a fine job of keeping track. We’ve written the checks already, we know how much they are for, and we know that the return on investment (390% in dollars, and countless jobs) is worth it.
Dear Senate: Balance the checkbook.