In response to the challenges of low labor force participation rates, the Alabama Legislature has introduced the Working for Alabama legislative package. This initiative began in 2019 when Lieutenant Governor Will Ainsworth established the Commission on 21st Century Workforce to address local workforce concerns. The continuation of such efforts was the release of the Alabama Workforce Development Plan in January 2024, which proposed a series of reforms aimed at revitalizing the state's workforce.

On May 9, 2024, Governor Kay Ivey signed the Working for Alabama package into law. This comprehensive set of legislation includes six key facets aimed at implementing crucial workforce reforms:

• The Alabama Workforce Transformation Act
• Childcare Tax Credit Legislation
• The Alabama Workforce Pathways Act
• The Alabama Growth Alliance Act
• The Alabama Workforce Housing Tax Credit Act
• Research and Development Corridor Legislation

Each is discussed below.

The Alabama Workforce Transformation Act

Effective Date: October 1, 2024 | Implementation Deadline: No later than October 1, 2025

The Alabama Workforce Transformation Act aims to modernize and streamline the State's workforce development efforts. Key provisions include:

• Renaming the Alabama Department of Labor to the “Alabama Department of Workforce,” with a corresponding rebranding of the Secretary of Labor to the “Secretary of Workforce.”
• Assigning the Department of Workforce the responsibility of collecting and publishing workforce participation data and cooperating with federal programs such as Workforce and Labor Market Information Grants to States and the Work Opportunity Tax Credit.
• Establishing the Alabama Workforce Board, which will be responsible for proposing workforce initiatives, advising officials, drafting the State’s Strategic Workforce Plan, developing accountability metrics, and serving as the State Workforce Development Board for federal Workforce Innovation and Opportunity Act purposes. The board will consist of 40 members appointed by the Governor, with an executive committee of seven members.
• Streamlining state workforce initiatives by consolidating various programs under the Department of Workforce, including the Alabama Office of Apprenticeship, the Alabama Committee on Credentialing and Career Pathways, and more.

Childcare Tax Credit Legislation

Effective Date: January 1, 2025 - December 31, 2027

This critical legislation aims to support employers and childcare facilities through tax credits:

• For-profit business employers may apply to the Alabama Department of Revenue to receive a tax credit equal to 75% of expenses related to constructing, maintaining, and operating childcare facilities or payments made to such facilities for employees’ children. Small businesses (i.e., businesses with less than twenty-five employees) may receive a credit equal to 100% of these expenses.
• For the purposes of this legislation, the term “employees” includes part-time employees, as well as independent contractors engaged by the business, but does not include employees whose annual wages exceed $80,000.
• The employer tax credit is capped at $600,000 per year per employer. The employer tax credit program overall is capped at $15 million in 2025, $17.5 million in 2026, and $20 million in 2027. The legislation sets aside 25% of these amounts for small businesses or employers that are headquartered in rural areas.
• Childcare facilities serving children in the Department of Human Resources’ Child Care Subsidy Program can receive a tax credit based on the quality rating, with a cap of $25,000 per facility and an overall program cap of $5 million annually.
• The Department of Human Resources is authorized to make grants to nonprofit childcare providers.

The Alabama Workforce Pathways Act

Effective Date: October 1, 2024

This Act focuses on enhancing educational pathways to better prepare students for the workforce. Highlights include:

• Directing the Alabama Board of Education to create a Workforce Pathways diploma, which allows students to count career and technical education courses towards graduation requirements. Moreover, while Alabama K-12 diplomas normally require four math credits and four science credits, the Workforce Pathways diploma will require only two math credits and two science credits.
• Authorizing the Alabama Board of Education to seek state funding for career and technical education centers, aiming to make these centers accessible from every public high school.
• Establishing the Alabama Short-Term Credential Program to grant scholarships for students seeking in-demand career training at community colleges, subject to state funding availability.

The Alabama Growth Alliance Act

Effective Date: October 1, 2024

The Alabama Growth Alliance Act seeks to foster a public-private partnership to support economic development. Key components include:

• Establishing the Alabama Growth Alliance (the Alliance) as a public corporation tasked with providing input on economic development, evaluating incentives, and making grants.
• Allowing the Alliance to enter into contracts, invest, and make grants to support state economic development with an annual report to the Alabama Legislature.
• Including both ex officio members (e.g., government officials) and private sector representatives on the Alliance’s board.

The Alabama Workforce Housing Tax Credit

Effective Date: October 1, 2024 (first taxable year: 2025)

Similar to legislation implemented in 29 other states, this Act introduces a state tax credit to support workforce housing development. Important details include:

• The Alabama Housing Finance Agency is responsible for granting $50 million in credits each year to qualified projects. These credits will be allocated at a rate of $5 million annually over 10 years. There is an annual statewide cap of $5 million for the credit, with individual projects capped at $2 million and a portion reserved for rural projects.
• Eligibility for the tax credit is tied to projects qualifying for federal low-income housing tax credits, with preference given to multifamily housing and projects in prioritized rural locations. Project applications that commit to furnishing a children’s activity center or subsidizing after-school care for residents will also receive preference.
• The credit can be claimed for ten years, with the ability to carry forward unused credits.

Research and Development Corridor Legislation

Effective Date: May 9, 2024

This legislation facilitates the creation of research and development corridors as public, nonprofit corporations, with the following notable provisions:

• Authorizing municipalities to establish research and development corridors as public, nonprofit corporations, each governed by a board of directors appointed by the municipalities.
• Empowering corridors to acquire and convey property, enter contracts, invest in projects, and issue financial obligations.
• Exempting corridors from various taxes and state usury and competitive bid laws, with provisions for additional terms and limitations imposed by municipalities.

The Working for Alabama legislative efforts represent a comprehensive strategy to enhance Alabama’s workforce participation, educational pathways, economic development, and support for families and communities. By implementing these reforms, Alabama aims to create a robust and dynamic workforce ready to meet the challenges of the 21st Century.