State discusses Hyundai incentives
Alabama Finance Director Henry Mabry has laid out the details of the $234 million incentive plan used to lure Hyundai’s first American manufacturing plant to Alabama.
In one simple equation, Mabry reduced the impact of such a plan into terms everyone could understand. For every one of the expected 2,000 jobs created by Hyundai’s arrival cost $117,317. It’s a price well worth the cost according to some lawmakers.
"In the long run the incentives will be paid back in the way of spinoff companies that will bring hundreds or thousands of additional jobs," said State Sen. Bill Armistead. "It will be well worth it, but it is easy to get sticker shock off the initial reports."
In his report, Mabry noted most of the money came way of Alabama taxpayers. State taxes account for 51 percent of the package and
government fund 37 percent of the total amount. The remaining 12 percent is paid by private companies.
In fact, this package is slightly less on average than the plan given to Mercedes in 1993. That package broke down to an estimated $168,000 for each initial job created.
Local and state economic officials estimate about 4,000 more jobs will be created in surrounding areas to support the plant’s presence. On Tuesday, Gov. Don Siegelman said as many as 20 suppliers could spring up in a 100-mile radius of the new Hyundai facility.
Last week, Troy Mayor Jimmy Lunsford said the city had pledged offer tax incentives to potential spinoff industries interested in located in Troy. He said the industries would have to make a minimum $2 million investment in the community to qualify for the incentives. But, he added, an auto
manufacturing supplier who made a preliminary site visit to Troy on Monday was considering a $35 million investment. "Obviously, we would seek state help with that," he said.
The state’s incentive package provides $82 million Hyundai won’t have to pay in corporate income taxes over the next 20 years, Mabry reported.
An additional $18 million will be provided by private companies for electricity, a railroad line, natural gas and telecommunications.
According to Associated Press reports on Thursday, all the money contracted out for work on the Hyundai site will be competitively awarded.
Not all projects will go through a traditional competitive bid process.