The News & Observer

Raleigh, N.C.

March 24, 1995

Alabama seeks way to pay hefty Mercedes-Benz bill
State scrambles to come up with $42 million

Staff and wire reports

Copyright © 1995, The News & Observer

MONTGOMERY, Ala. - In the fall of 1993, North Carolina was in the hunt for the big one: Mercedes-Benz.

The big one got away. Now, it appears that landing the Mercedes-Benz plant was more expensive for Alabama than most people here thought.

Just ask Alabama Gov. Fob James, whose administration is trying to figure out how to pay the German automaker up to $42.6 million by April 1 under the incentives package created by former Gov. Jim Folsom.

"We are looking at millions and millions and millions of dollars that were committed with no provision to produce that revenue," said Chris Bence, a spokesman for James.

"We will come up with a solution, but it sure has been tough. Now, exactly what that solution will be, I don't know," Bence said.

Rep. Bill Fuller, chairman of the House Ways and Means Committee, said this year's General Fund budget already is $3 million to $4 million in the red. James is expected to ask for changes in the General Fund budget to give additional money to prisons.

Fuller said there has been no mention in budget hearings as to how the state will pay the German automaker.

The amount Mercedes will ask for is uncertain. The state agreed to pay the company the amount it had spent on plant construction at its Tuscaloosa County site as of April 1 =D0 up to $42.6 million. It also agreed to pay $30 million for construction of a training building and $60 million to train workers, with a schedule for payments unclear.

The Folsom administration used the lucrative incentives package to get Mercedes to pick the Alabama site over other competing states for its first U.S. assembly plant, which will produce a kind of sport-utility vehicle that it calls an all-activity vehicle.

Tar Heel officials had tried to sell Mercedes on a 1,100-acre tract in Mebane, just west of Orange County. North Carolina's incentives package was estimated at $109 million - about one-third to one-fifth the Alabama package.

Bence said the Folsom administration made no plans to pay the Mercedes bill.

"It was kind of like the Scarlett O'Hara syndrome took effect: We'll worry about that tomorrow," Bence said.

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Copyright © 1995, The News & Observer.

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