Committee adopts substitute to clarify contractor business-license rules, gives favorable report

The County and Municipal Government Committee adopted a substitute to Senate Bill 304 and gave the bill a favorable report after a public hearing that included industry proponents and municipal opposition.

Trace Saar of the Alabama Associated General Contractors testified the bill would codify a framework to prevent contractors from being double taxed by home and project municipalities: project cities could charge business licenses on project receipts while home cities would allow a deduction for amounts paid in project cities. "What we are only asking is to pay what is fair in each municipality that we have a project," Trace Saar said.

Baker Allen, director of governmental affairs for the Alabama League of Municipalities, opposed the bill and urged more time to study fiscal impacts, saying municipal license fees fund infrastructure and debt service and that revenue declines could be significant. He offered an example in which a municipality headquartered where a contractor makes most revenue might currently collect gross receipts differently.

Skip, representing a road builders association, and other industry witnesses said the measure would prevent cases in which contractors pay large license fees in their hometowns and smaller fees in project cities without ability to deduct. Committee members asked clarifying questions about which occupations would be excluded or included in the substitute; the chair summarized the substitute as excluding engineers and land surveyors while adding certain construction-related trades such as electrical, refrigeration and plumbing work.

After questions and discussion, the committee adopted the substitute and, using the previous roll, reported the bill favorably.