FISCAL NOTE

House Bill 473 as introduced creates the Alabama Rural, Agribusiness, and Opportunity Zone Jobs Act which establishes a credit against the state insurance premium tax or financial institution excise tax for tax years beginning on or after January 1, 2023 for investments in growth funds that make investments in growth businesses located in growth zones in Alabama. These credits are non-refundable and may not be sold or transferred to any other entity other than an affiliate. In addition, these credits cannot be used until the third calendar year after investment, can only be used in an amount up to 20% of the earned tax credit in any taxable year of the investor, and may be carried forward for five years.

The credits allowed in the bill are capped at $9,000,000 annually, including any credits that may be carried forward. These tax credits will reduce the insurance premium tax or financial institution excise tax receipts to the State General Fund in an amount equal to the credits used in any fiscal year, which will in turn be dependent upon the number and size of investments in growth funds in the state.

Further, this bill will increase the administrative obligations of the Alabama Department of Commerce to issue a tax credit certificate, administer the program, and establish the necessary rules for the establishment of growth funds in the state, which will be partially offset by the $20,000 fee for each applicant filing, $5,000 fee for each annual renewal, and a $500 fee for an opinion request. This bill requires the department to revoke a tax credit certificate if the growth fund does not invest all of its allocation in the first 12 months or fails to maintain growth investments until six years after the closing date for all investments in the fund.

Additionally, this bill provides that the Department of Commerce will: (1) verify that all investment fund applicants are licensed as a rural business investment company as defined by the U.S. Department of Agriculture or a small business investment company as defined by the U.S. Small Business Investment Program; (2) verify that the investment companies have invested at least $100,000,000 in non-public companies located in non-metropolitan counties; and (3) report to the Legislature pursuant to Section 40-1-50, beginning in 2023 with an assessment of the incentives allowed in this bill.