By Rep. Patricia Todd

JOBS, JOBS, JOBS ... that seems to be the common answer for all of our state financial needs. But are we following best practices in economic development? Do the taxpayers know how much it costs them to recruit a business to Alabama?

The answer to both questions is NO.

I serve on the state Education Budget committee in the Alabama House. This committee reviews most of the tax incentives provided for economic development, including any tax exemptions on sales and income taxes.

All of the economic development incentives supporters will tell you that they will bring more money to the state than is provided in tax incentives, making the case that this is an investment in our future revenues that will be received from additional income taxes and sales taxes paid by new employees of the business.

This is not unique to Alabama; every state uses the same model to recruit businesses to locate in state. Competition between states is intense – pitting states against each other to pony up more tax incentives than the competitive state. The only winners are the businesses. Some call this "corporate welfare."

I believe there is a better way to recruit new businesses and encourage expansion of current Alabama-based companies. It is a simple concept that many other states are reviewing or enacting due to the lack of state funding for economic development.

The first step is to develop a dedicated revenue source to fund recruitment/expansion. After all, if it will pay for itself in time, why not make the investment? Why not take a percentage of the increase in taxes paid by employees and companies benefiting from economic development incentives and develop a special fund to provide financing for future projects? This could also be used as an accountability measure.

The second step is to develop a system to report economic incentive projects to the legislature and taxpayers. I have sponsored such a bill for the past couple of years and cannot get any traction for passing the legislation. The legislation would require annual reporting from the Executive Branch on all expenditures. Since I understand the concern for protecting confidentiality, I would ask for a report with cumulative totals that would include: total incentives by type; number of new jobs created; date of return on investment.

The legislature passes dozens of bills every year aimed at recruiting new businesses to Alabama or to encourage expansion of a current business. During my eight-year tenure as a legislature I have only received one report back from an industry that benefited from a tax incentive. Only one.

Legislators do not know the true cost of any incentive. The Legislative Fiscal Office tries their best to estimate the hit to the budget, but it is only a guess. None of the bills have the return on investment date. None.

Alabamians deserve better. You deserve to know how every penny of your taxes are spent and how effective the incentives were in creating job growth.

Democrat Patricia Todd represents District 54 in the Alabama House of Representatives.