Paying cash for jobs

Staff

Published Monday, February 24, 2003

Alabama Attorney General Bill Pryor gave municipalities around the state the green light to open up the checkbooks and spend away to entice companies to come to town.

In response to a request sent to Pryor several weeks ago by Troy Mayor Jimmy Lunsford, Pryor's opinion, issued Friday, allows cities to use tax dollars in order to woo corporations. According to Pryor's opinion, the attempt to lure, for example, Hyundai suppliers, could legally allow cities to pay companies cash, give land and cover costs of training employees.

"The City of Troy may contract with a foreign corporation to provide $2 million over a five-year period if the municipality determines a public interest is served," wrote Pryor.

Pryor further states that Troy would be legally able to give a $2 million "training allowance" to a foreign company over a period, given the same stipulations about serving "public interest."

Finally, the opinion states that a city, such as Troy, could enter into "a no-cost lease for nominal consideration if the title is not conveyed for a period of time and if the city determines that a public purpose is served."

"I'm shocked," Lunsford said. "I think they've completely shredded Sections 93 and 94 of the Alabama Constitution. I don't think it's the right thing to do."

Lunsford said the ability to pay such sums to corporations did not mean that Troy's money would soon be used in a bidding war to recruit companies.

"This doesn't affect our ability to compete with cities like Luverne for suppliers because we're not going to do it," he said.

Lunsford had previously made similar comments in anticipation of the ruling, which he hoped would put an end to the pitting of small towns against each other. Lunsford has condemned the practice, used during the solicitation of suppliers for the new Hyundai plant, of companies telling towns about the lucrative offers allegedly extended by other towns, in an attempt to drive up the size of inducement packages.

Lunsford has indicated that the city will not be issuing blank checks to companies in order to lure them to Troy, no matter what other municipalities do.

Sections 93 and 94 of the Alabama Constitution deal with the ability of municipalities and counties to give public funds to private entities. Pryor cited those sections in his opinion.

"Section 94 of the Constitution of Alabama, as amended by Amendments 112 and 558, prohibits a municipality or county from expending public funds for the benefit of a private person, corporation or association," Pryor wrote.

However, Pryor opined that Section 94 allows such donations "if it is for a public purpose." Pryor said the legislative body of the municipality itself would be the determiner of whether or not the funds were used for such a purpose.

Stephen Stetson can be reached at stephen.stetson @troymessenger.com.

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