Alabama's economy had a lot to do with the making of the 1901 constitution.

   Alabama's "Big Mules" - the ruling elite of large landowners and Birmingham-area industrialists - were terrified by the rising populist tide of the time, especially the advances enjoyed by blacks. They were determined to maintain control over their greatest assets: low taxes and a cheap, compliant work force.

   Education "ruined a good field hand." So the Big Mule-friendly members of the 1901 Constitutional Convention lowered the state property tax used mainly to fund schools.

   Convention delegates reaffirmed strict limits on public borrowing and local taxing authority as a way of keeping the state - and cities and counties - from spending money (since much of it would come from their pockets). And they kept political power concentrated in Montgomery, where Big Mule influence was greatest.

   They also endorsed, through inaction, such industry-friendly practices as the use of child and convict labor. Finally, to snuff the electoral muscle of blacks and poor whites, delegates imposed a host of racist and class-connected voting requirements.

   The resulting document was a capitalist tool for an economy that thrived on the sweat of the uneducated poor; it strengthened the position and pocketbooks of big employers and farmers, while keeping down those who actually planted the fields and dug coal and iron ore.

   But that was a century ago.

   Today, Alabama must compete globally to secure the complex industries of a new century. The effort is one of Gov. Don Siegelman's top priorities. Unfortunately, Alabama is hamstrung by an aged constitution that weighs on its evolving economy like a soggy blanket. Here's how:

   Economic developers know that what cutting-edge industries need most is an abundant, educated and trainable work force. Communities that can provide the workers get the jobs.

   Alabama's constitution, with its strict limits on state and local property taxes, severely restricts the ability of many communities to raise the money needed to adequately educate their children. And no tinkering will improve the situation.

   While education is a long-term challenge, the state and local communities also must be able to move quickly to put together incentives packages when major companies come calling.

   Unfortunately, the constitution ties leaders' hands by limiting local autonomy and locking in state dollars for specific programs. As a result, Alabama has had to scramble to find the money to pay for incentives. To help lure Mercedes-Benz, the state begged the Retirement Systems of Alabama to put up cash for incentives. To draw Honda, the state borrowed and persuaded area cities and counties to contribute.

   Because the constitution restricts the ability to raise state and local revenues, communities haven't been able to build the infrastructure companies look for when seeking plant sites. Crumbling roads and lack of utility and telecommunications links in many areas are a disadvantage when recruiting industries. The constitution is partly to blame.

   Indeed, Alabama's constitution expressly forbids cities and counties from engaging in practices that are fundamental to economic develop ment efforts in other states. For example, it prohibits cities and counties from loaning or providing public dollars, or transferring publicly held assets, to private industries as part of an incentives deal. It also prevents cities and counties from pooling resources to lure industry. The constitution also makes it difficult to structure payroll tax abatements as part of an incentives package. Payroll tax abatements were part of the package that helped persuade Nissan to pick Mississippi for a new plant, instead of Alabama.

   Some cities and counties have gotten around some of the prohibitions by getting the Legislature, and voters, to approve local constitutional amendments. Still, many communities remain hogtied.

   There are other indirect ways the constitution can chill economic development.

   For example, Alabama's much-amended constitution creates a patchwork of laws and regulations - some in the constitution, some in the statute books - that can be confusing to out-of-state industries. On tax issues alone, the constitution contains more than 200 amendments establishing specific local taxes, providing tax exemptions and creating special taxing districts, among other items.

   Also, many companies look beyond labor matters, taxes and incentives to quality-of-life issues before making a final decision on where to put a new plant. They examine, for example, housing costs and cultural attractions, recreation and health facilities, and airline connections.

   Alabama's constitution defines us as a low-tax, low-services state. Translation: Alabama has little money for parks, the arts and other amenities that can help a company attract and keep talented workers.

   Sure, low taxes and utility rates and modest housing costs are big pluses for industry. But for many high-tech, high-paying companies, the kind the state is trying so hard to attract, the lack of attractive extras can be a big drawback.

   Granted, Alabama has had real success in bringing in some big companies, despite its outdated constitution. And it will likely score some other big names in coming years. The benefits of those industrial coups are measured in new jobs, in the growth in tax revenues, in the turnover of new dollars in communities.

   But how many companies has the state lost - and how many never even gave us a thought - because of disadvantages that are rooted in our constitution?

   Unfortunately, that figure is incalculable.

Next: Daybreak in Alabama

Reprinted with Permission from The Birmingham News