The Alabama Growth Alliance, a public-private partnership dedicated to advancing the state’s economic priorities, has endorsed the creation of the Alabama Development Fund to provide a source of sustainable funding for economic development without increasing taxes or cutting existing programs, Alabama Commerce Secretary Ellen McNair announced.

McNair said the Alabama Development Fund would allow the state to remain competitive by providing new funding for rural development, international business development offices, global marketing, new quality-of-place initiatives and infrastructure improvement programs without affecting the state budget.

The Alabama Growth Alliance, a panel of 15 leaders from the state’s public and private sectors led by Gov. Kay Ivey, voted Wednesday to support the Alabama Development Fund initiative, which requires action by the Legislature to become activated.

“With the Catalyst strategic economic development plan now in place, it is important to identify a sustainable source of new funding to fully implement this bold new strategy,” McNair said. “The creation of the Alabama Development Fund will represent a creative, responsible solution that doesn’t involve raising taxes or slashing programs.”

The Alabama Development Fund initiative would generate self-sustaining funding by retaining a small portion of sales and property taxes that are abated in future qualified economic development projects.

Commerce Secretary Ellen McNair greets Gov. Kay Ivey after a meeting of the Alabama Growth Alliance, which endorsed the creation of the Alabama Development Fund to support economic development. (Hal Yeager / Governor’s Office)

These tax collections would slightly reduce incentives extended in these projects while simultaneously generating substantial new resources for Alabama’s strategic economic development efforts with no burden for taxpayers.

“This plan is an investment in the long-term economic prosperity of the state and aligns perfectly with other growth strategies we have adopted to keep Alabama moving forward at a time when competition for job-creating projects is intensifying,” said state Sen. April Weaver, a sponsor of legislation that would establish the Alabama Development Fund.

The Legislature, whose 2025 session started Tuesday, must modify existing abatement laws to enable these tax collections for the initiative to become operational. The Department of Revenue would receive the money and deposit it directly into the Alabama Development Fund.

The changes would apply only to new economic development projects receiving abatements and would not affect projects that have already received abatements.

“The Alabama Development Fund will allow us to benefit from our successes in economic development by providing reliable funding for new programs that will assist business-recruitment and job-creation efforts across the state,” said state Rep. Andy Whitt, another sponsor of the legislation. “It’s essential that we remain competitive in this realm and take the next step to outperform our Southeastern neighbors.”

The Alabama Growth Alliance, chaired by Ivey and co-chaired by McNair, adopted its first set of priorities in December. The group was formed under legislation that served as a cornerstone of the governor’s “Working for Alabama” package of economic growth policies.

This story originally appeared on the Alabama Department of Commerce’s Made in Alabama website.