An Article by AABC Board of Director Ron Gilbert

Special to The Star

Bills to offer incentives for economic development have been on a fast track in the opening days of the 2012 Alabama legislative session.

The days of offering millions of dollars in cash incentives to lure industries to our state have passed as the state’s coffers have been drained by the Great Recession.

In the absence of those funds, the Legislature has had to look at other ways to offer incentives in an effort to create new jobs. In the first meetings days, we’ve seen approval of bills that allow companies to retain employees’ income-tax deductions to pay for expansion or new construction, to extend existing tax credits for up to four years for certain new or expanding companies, and to allow private companies to use prison labor provided that no private-sector jobs are lost.

States are in fierce competition to land jobs in these rough economic times, and this environment may dictate that these types of measures are necessary?to make Alabama competitive with our sister states.?But, I’m reminded of the words of a friend: “If we could incentivize our way out of poverty, Alabama workers should have the highest earnings in the U.S.”

For years, we’ve made investments in the development of a diverse economy, and we’ve reaped benefits from those investments. But Alabama’s median household income, when adjusted for inflation, has been stagnant for years, even falling in recent years.

And that begs the question of whether we’ve made comparable investments in our neighbors to allow them to benefit from these economic development efforts.

A recent report from the Corporation for Enterprise Development, “The Assets & Opportunity Scorecard,” suggests that Alabama has not focused as much attention on making sure that our families are economically secure as we have on providing tax breaks and incentives to corporations. The scorecard assesses the 50 states and the District Columbia on 101 outcome-and-policy measures to describe how well residents are doing and what we can do to help them build and protect assets.

Alabama is ranked 49th, and we’re one of only five states that received an overall score of F. While our neighboring states in the Southeast fared more poorly than other parts of the nation, only Georgia ranked worse than Alabama.

In addition to looking at Alabama’s poverty rate of more than 18 percent, the scorecard also found that 64 percent of Alabama households are liquid-asset poor — they lack the resources to meet emergency needs. Other factors that led to Alabama’s low score:?62 percent of Alabama consumers have sub-prime credit, 33 percent are in low-wage jobs, and rankings of 49th and 50th, respectively, for 8th-grade math and reading proficiency.

These and a multitude of other factors impact the abilities of families to withstand rough times, and they also impact what is perhaps the strongest measure of economic security — the ability to acquire and maintain assets that can be handed down to future generations.

The scorecard makes suggestions for Alabama’s policy-makers.

We need to increase and protect incomes and savings for working families.

We could do this by providing tax credits to working families that allow them to build assets, just as we provide credits to multinational corporations.

We can leverage limited state dollars to invest in Individual Development Accounts that match the savings of low- and moderate-income workers to acquire a home, pursue post-secondary education or start a business.

We can protect families by limiting predatory credit practices by prohibiting or capping the interest rates of payday loans and auto-title pawns.

We can prioritize K-12 education, with an emphasis on increasing math and reading proficiency as well as high school graduation rates.

And we can increase access to a college education by creating incentives for college savings.

If the opening days of this session are an indication of the priorities of this Legislature, then once again it may be working families who come up short at the end of the day. As this legislative session proceeds, we’ll be hearing more about job creation and we’ll be hearing more about cuts to programs that low- to moderate-income families depend upon. We must understand that building a strong economy for our state requires investments not just in corporations, but also in our fellow citizens.

Let’s call on our policy-makers to search for that balance that will build and strengthen both our economy and our families.

Ron Gilbert ([email protected]) ?is the executive director of the Alabama Association of the Community Action Agencies, a network of local agencies working to alleviate conditions of poverty in all sixty-seven counties.

© 2012