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Panel approves steel plant incentives

By Bob Johnson
Associated Press Writer

MONTGOMERY — An Alabama House committee took the first step Tuesday toward increasing the incentives and tax breaks the state is offering to lure a massive new steel plant to south Alabama.

The House Education Appropriations Committee voted unanimously for a bill that would give large employers a 10-year break on paying utility taxes, an enhanced 20-year break on property taxes that don't go to education and an income tax credit for 30 years.

The income tax credit would allow the German steelmaker to repay the cost of building the $2.9 billion plant.

The sponsor of the bill, Rep. Richard Lindsey, D-Centre, said he hopes this package will be the final push required to encourage ThyssenKrupp AG to locate their plant near the Mobile County-Washington County line.

The company is also considering a site in Louisiana in St. James Parish along the Mississippi River between Baton Rouge and New Orleans.

The competition has set off something of a bidding war between the two states.

The Alabama Legislature in a special session in February approved a $400 million increase in the state's bonding authority to attract new businesses.

State voters must approve that measure in a June 5 referendum.

The Louisiana Legislature last year approved a $300 million package of incentives to help lure the steel plant and
Gov. Kathleen Blanco has said she will ask lawmakers to add another $100 million to that fund.

"I think the state has done everything it can do to attract the plant. We are in a very competitive position, but it remains to be seen what decision will be made," said Lindsey, who is also chairman of the committee that approved the bill Tuesday. The bill now goes to the full House, which could debate the measure as early as Thursday, Lindsey said.

Alabama Gov. Bob Riley and south Alabama legislators met after the committee meeting with ThyssenKrupp AG representatives and assured them the bill would pass the Legislature.

Riley's communications director, Jeff Emerson, said the governor supports the bill and believes it will give the state another tool to help recruit large industries, not just the steel plant.

Committee members said they feel the extra incentives would improve the state's position to land the giant plant, which is expected to employ 2,700.

"All in all, I feel very positive about this situation," said Rep. Mac Gipson, R-Prattville.

The incentives in Lindsey's bill would apply to any new company locating in the state that would invest at least $2.5 million and employ 2,000 or more workers.

Alabama Revenue Commission Tom Surtees said the bill also contains provisions to ensure that the state receives the proper income tax withholdings from plant employees and from the hundreds of workers that will be needed to build the giant installation. The bill would penalize new workers at large plants who claim too many dependents.

A key element of the new bill is the 10-year break on paying taxes on the use of electricity and natural gas. It is expected that the modern plant would be one of the largest users of electricity in Alabama and that the break on the utility tax would save the company millions of dollars.

Louisiana officials are also trying to lower the energy costs for the plant and are working with Entergy Corp. on a plan to offer the company a lower rate on electricity because Louisiana's utility rates are higher than those charged by Alabama Power Co.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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