Local agencies in front line against terror

Published 12:00 am Saturday, May 3, 2003

Alabama’s current fiscal crisis is well known and widely reported. We face serious deficits in education and general fund budgets that are chronicled almost daily by the state’s news media.

There is another serious crisis in Alabama, and it has a direct relationship to ourstate’s financial problems. It is a crisis in the state’s vital manufacturing sector which has been a cornerstone of Alabama’s economic and job base for more than a century. This crisis is not so widely recognized or discussed, but its potential consequences should be of concern to all Alabamians.

We are losing high-paying and high-tech manufacturing jobs at an alarming rate.According to the U. S. Department of Labor & Statistics, Alabama has suffered a 17 percent decline in manufacturing jobs since 1995. More than 75,000 jobs have disappeared. These are often the highest paying jobs in our state’s workforce, jobs that can pay $50,000 or more and provide excellent benefits as well. Our job loss record is the second worst in the Southeast region, trailing only Mississippi by a small amount.

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This is yet another statistical ranking for our state that brings concern rather than pride.

How are this manufacturing crisis and the state’s revenue shortfalls related? Unfortunately, an answer lies in some even more disturbing statistics. From 1998 to 2002, the decline in these good jobs drove Alabama’s median household income down by more than $3,100. This compares to a drop in median income in the entire Southeast region of only $175, and a decline nationally of only $69.

Concurrently, and not surprisingly, the loss of manufacturing jobs and the sharp decline in median income have resulted in a sharp gross individual income tax receipts of almost 2 percent in 2002, following average growth of 7 percent between 1995 and 2000.

Unless we can stop the bleeding in our manufacturing sector, we will find it even harder to stop the bleeding in our education and general fund budgets. Nobody is more concerned about the state’s fiscal crisis than the state’s manufacturers.

They have an obvious vested interest in good public education n the source of the skilled, high-tech workforce necessary to remain globally competitive n as well as in the roads, docks and other infrastructure elements required for efficient movement of raw materials and finished products.

MANUFACTURE Alabama and its more than 350 member companies have made it clear that they are ready, willing and able to work with the Riley Administration, the Alabama Legislature and other stakeholders to find solutions to these financial problems. Like many others involved in the discussions, including our governor, we believe any tax reform initiatives must be accompanied by real accountability in state spending and by meaningful changes in the budgeting process.

More specifically, MANUFACTURE Alabama is adamant that any tax reform steps include the elements of fairness, simplicity and neutrality for the state’s various business sectors. In other words, tax hikes should be spread evenly among all taxpayers, without unfairly targeting any one taxpaying group, be it businesses or individuals.

We all remember the fable about the goose that laid golden eggs. Like all cliches, it gained that status because of its applicable truths. That fable applies aptly to the current condition of Alabama’s manufacturers, who in a time of financial distress for many business segments have clearly been devastated to a degree beyond those in service, retail and other industry segments. Manufacturing traditionally is more capital intensive and enjoys smaller profit margins than other business groups.

All businesses and all jobs are important to our state, obviously, but as we’ve noted, not all jobs pay as well as those in mills and factories. Further, we hope that by now there is agreement that a service economy alone cannot sustain the financial health of a state or a nation. Alabama’s manufacturers and their employees have worked hard to achieve and maintain competitiveness in a very tough global economy, where we must compete with nations and producers unconcerned with decent wages, safe working conditions or environmental responsibility. Our efforts have included vast financial investments in modern, high-tech plant and equipment, and the training and skill of our world-class workforce.

Surely, these efforts should be supported — and not hindered – by our public policies. Capital investments are possible in great part through the tax exemptions and – incentives which wisely have been made available to existing and new manufacturers wanting to do business in Alabama. Unfortunately, these same wise exemptions and incentives too often are seen as the easy targets of so-called &uot;tax reform.&uot;

MANUFACTURE Alabama urges our governor and members of the Alabama Senate and House to resist any temptation to change these vital and sound tax policies.

Along those lines, a specific threat of great concern to manufacturers has been circulating in Montgomery during the early days of the legislative session. It involves our state’s participation in a national initiative to bring some standardization and streamlining to sales tax rates and procedures from state to state.

A disturbing element of this initiative involves steep increases in the sales and use tax rates which manufacturers would pay on machinery and equipment. That proposal, if enacted, would unfairly single out n and would further devastate n members of our state’s manufacturing sector. Further, it would place a much higher tax burden on manufacturers here than in most neighboring states, and would therefore be counterproductive to Alabama’s economic development efforts.

We will oppose such a proposal with all of our strength. We hope anyone else who cares about the proud legacy and the future importance of manufacturing in Alabama will oppose it along with us.

It would be nothing short of shameful if the efforts of our member firms to keep Alabama’s manufacturing community viable, and to save the jobs of hard-working Alabamians, were to be negated by bad tax policy enacted by our own elected officials!

There are much better solutions than that to our fiscal problems. We are committed to helping find them. But please, let’s not kill any more golden geese.

George Clark is a former member of the Alabama House of Representatives and is president of MANUFACTURE Alabama in Montgomery. He can be reached at 334-386-3000.