September 6, 2011

State of Alabama
Press Release: Alabama Department of Commerce

School Taxes Demonstrate ThyssenKrupp's Value to Mobile County

Published: Saturday, September 03, 2011

Update of the construction of the ThyssenKrupp Steel plant in Calvert, Ala.
The investment in the massive ThyssenKrupp steel complex is beginning to pay off in the form of property tax revenue for Mobile County schools.

The payoff from the ThyssenKrupp AG steel plant is rolling in.

A massive investment — totaling more than $1 billion — by state and local governments has already paid off in nearly 2,000 permanent new jobs and a $5 billion complex in north Mobile County.

But because much of the incentives package that lured the German corporation to Alabama consisted of tax breaks, and because construction of such a large-scale project takes years, other benefits are only now becoming apparent.

The Mobile County Public School System got a pleasant surprise when officials learned that ThyssenKrupp will be billed for $19 million in property tax for the system this year — twice as much as they had budgeted. With the economy continuing in poor shape, falling tax revenue has hurt school systems statewide in the past few years.

The ThyssenKrupp property taxes do not constitute a windfall for the school system. Rather, they’re part of the return on investment.

ThyssenKrupp expects to employ 2,700 people eventually. Dividing the entire incentive package by that number yields a cost per job of more than $400,000, which sounds astronomical. But if projections by the Mobile Area Chamber of Commerce and ThyssenKrupp are correct, the corporation has already invested some $900 million in payroll and spending with companies in Alabama, not counting the school taxes.

For Mobile County schools, one immediate benefit is that step raises will be granted after all to nonteaching employees, who otherwise might have been denied.

When state and local governments recruit large-scale industrial prospects — the ones that will build plants worth millions or billions of dollars and hire thousands of employees — critics complain about the cost per job and about how tax dollars are spent on outside companies instead of existing businesses that have already committed to locating and growing in Alabama.

In hard times, Alabama may not be able to make the large-scale investments it has in the past. But a strong economic policy should recognize the value of both nurturing existing businesses and the high-dollar industrial prospect. Each will pay off for taxpayers in the long run.

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