Governor Ivey Issues Proclamation Providing Covid-19 Liability Protections for Businesses
On May 8, Governor Kay Ivey issued a supplemental state of emergency proclamation, referred to as the Safe Harbor Proclamation, providing certain liability protections to businesses, health care providers and other entities. Thanks to Governor Ivey’s leadership, Alabama is the first state in the nation to provide safe harbor protections from civil liability and the costly expense of lawsuits associated with COVID-19. These protections will cover those entities that comply with or reasonably attempt to comply with applicable public health guidance issued by the Governor or the Alabama State Health Officer.
“BCA applauds Governor Ivey for taking this important step to stand up for Alabama jobs. As we all navigate this unprecedented time, this order adds much-needed clarity and reassurance,” said BCA president and CEO Katie Britt. “Our state’s businesses, workers and families will benefit as a result.”
The provisions and protections provided by this executive proclamation are only valid and active while the State COVID-19 public health emergency is still in effect. This means that, in order to establish a long-term solution to this critical issue, the Alabama Legislature will need to pass legislation in a potential, upcoming special session.
Legislature Approves Budgets and Coronavirus Aid Spending Plan Before Adjourning Sine Die
The Alabama Legislature returned on May 4 for its first legislative working day since March 12. This extended recess was due to the COVID-19 pandemic which caused the legislature’s return to be anything other than business as usual. With the regular session officially coming to an end on May 18, lawmakers used the limited time frame to only focus on the budgets, budget-related items, and local bills.
One of the major topics of discussion during the legislature’s return to Montgomery was the spending of the $1.8 billion in federal coronavirus relief money. This was funding provided by the CARES Act which passed Congress in late March. The funding comes with stipulations that it must be spent on expenses incurred due to the COVID-19 pandemic and it must be spent by December 30, 2020, or it goes back to the U.S. Treasury. On May 14, Governor Ivey sent an executive amendment to SB 161, the General Fund Budget supplemental appropriations bill, which outlined a spending plan for the $1.8 billion in federal aid. On May 18, the Senate and House both concurred with the governor’s proposal.
According to the governor’s plan, the coronavirus aid will be spent as follows:
- Up to $300 million to reimburse state agencies for expenses directly related to the pandemic
- Up to $250 million to reimburse local governments for expenses directly related to the pandemic
- Up to $250 million to support delivery of health care and related services to citizens because of the pandemic
- Up to $300 million to support citizens, businesses, and nonprofit and faith-based organizations directly impacted by the pandemic
- Up to $53 million for reimbursement of equipment and infrastructure necessary for remote work and public access to functions of state government directly impacted by the pandemic, including the Legislature
- Up to $300 million for expenses related to technology and infrastructure for remote instruction and distance learning
- Up to $200 million for reimbursement of costs necessary to address the pandemic by the Department of Corrections
- Up to $10 million for reimbursement of costs necessary to ensure access to courts during the pandemic
- $5 million to reimburse the General Fund for supplemental appropriations to the Alabama Department of Public health during the pandemic
- Up to $118 million for any other lawful purpose approved by the federal government
The legislature also passed scaled back versions of the General Fund budget and the Education Trust Fund budget, as well as a bond program to be used for capital improvements at public K-12 schools, two-year colleges and four-year universities. Both budget and the school bond bill were signed by Governor Ivey on May 18. Below is a brief breakdown of each of those three pieces of legislation.
- Education Trust Fund Budget – HB 187, the state’s FY 2021 education budget, is the largest ETF budget ever at $7.2 billion and was about $90 million more than the FY 2020 budget. However, it was significantly reduced from the original budget proposed due to the negative impact of the coronavirus pandemic. Below are some notable items included in the ETF budget:
- $427 million for community colleges – a $10.4 million increase
- $126 million for the voluntary pre-K program – a $3 million increase
- $38 million increase for universities and colleges with each institution receiving at least 2% more than this year
- General Fund Budget – SB 157, the state’s FY 2021 general fund budget, totals $2.4 billion in appropriations and represents a $169 million increase over FY 2020 but is $171 million less than the pre-pandemic proposed budget. Below are some notable details included in the General Fund budget:
- Retention of the $4 million FY 2020 increase for the Alabama Department of Environmental Management
- Retention of the $35 million in the State Road and Bridge Fund that had been diverted to the court system in past years
- $18 million to establish three mental health crisis centers
- $544 million for the Department of Corrections – a $23 million increase
- School Bond Issue – SB 242, authorizes the issuance of $1.25 billion in bonds to be used for capital improvements at public K-12 schools, two-year colleges and four-year universities. Terms of repayment would be approximately $80 million per year over a 20-year period. Below are notable details on how the proceeds will be distributed:
- $912 million to K-12 public schools
- $218 million to public universities
- $120 million to community colleges
Despite Coronavirus-Interrupted Session, Business Community Still Sees Success
The 2020 Legislative Regular Session was anything but ordinary. Prior to recessing for the legislative spring break in early March, the House and Senate had completed twelve of its thirty legislative working days allowed within a regular session. Little did they know at the time that not a single piece of legislation would move again until May 4 as COVID-19 derailed the 2020 regular session. As the regular session’s 105-calendar-day time frame inched closer to expiring, the legislature decided to meet and fulfill its constitutional duty of passing the budgets for the next year.
With more than half of the regular session spoiled by the coronavirus outbreak, many important issues were left on the table. Issues such as COVID-related safe harbor protections for businesses, prison reform, protecting critical infrastructure, decreasing the state corporate income tax rate, and numerous economic and tax incentives that were being considered for creation or reauthorization. Many public officials have stated that they anticipate returning for one or multiple special sessions later in the year which would create the possibility for some of these issues to be considered by the legislature. However, that will depend on if they are within the scope of the special session call issued by the governor.
The list of bills below provides greater detail into the legislation that was supported, opposed, or monitored by BCA during the legislative session and gives the final status of each bill.
- HB 140 – by Rep. Alan Baker (R-Brewton), was a BCA priority bill which clarifies existing law and the definition of “cover” as it relates to alternative cover for solid waste landfills. The EPA and ADEM have adopted rules allowing the use of alternative cover to permit Alabama landfills to use other means of daily cover on city, county, and private landfills. Prior to the rule, the daily cover required was six inches of earth each day which is extremely costly in terms of both money and space. This legislation takes this currently regulated practice and places it into law in Alabama. This bill was signed into law on March 11.
- HB 158 – by Rep. Paul Lee (R-Dothan), prohibits private auditing or collecting firms working on behalf of state or local governments from recovering certain costs from a taxpayer. These prohibited costs will include travel expenses, auditing or collecting-related costs, salary or personnel-related expenses, or professional services fees. This bill was signed into law on March 11.
- SB 157 – by Rep. Greg Albritton (R-Atmore), is the state’s General Fund budget. This included a BCA legislative priority which was to maintain adequate funding for the Alabama Department of Environmental Management which resulted in retaining the $4 million increase ADEM received in the FY 2020 budget. SB 157 also included the retention of the $35 million in the State Road and Bridge Fund that had been diverted to the court system in past years but was shifted back over in 2019 as a part of the Rebuild Alabama plan. This bill was signed into law on May 18.
- SB 45 – by Sen. Cam Ward (R-Alabaster), would further provide for the crime of unauthorized entry of a critical infrastructure by prohibiting the operation of an unmanned aircraft system, or drone, to photographically or electronically record a critical infrastructure except under certain conditions. SB 45 passed the Senate by a vote of 28-3 but did not receive committee action in the House due to the coronavirus-shortened session.
- HB 341 – by Rep. Nathaniel Ledbetter (R-Rainsville), would establish mental health service coordinators in public schools and require each local board of education to employ at least one mental health service coordinator in its jurisdiction. This bill passed the House chamber by a vote of 102-0 and was poised to pass the Senate as well; however, due to the shortened session, it failed to receive committee action in the Senate.
- SB 330 – by Sen. Arthur Orr (R-Decatur), would provide civil immunity for covered entities operating in Alabama from certain claims and damages claimed by individuals who allege they contracted or were exposed to COVID-19. Exceptions to this immunity would exist if the covered entity acted with wanton, reckless, willful or intentional misconduct and such misconduct must be proven under a “clear and convincing” evidentiary standard. This bill received Senate committee approval but stalled thereafter. SB 330 received broad support from the business community and other groups. BCA is in favor of this piece of legislation being included in a future special session in 2020 in order to provide businesses with much-needed safe harbor protections from COVID-19 related lawsuits.
- SB 250 and HB 353 – by Sen. Dan Roberts (R-Mountain Brook) and Rep. Danny Garrett (R-Trussville), would reduce the corporate income tax and financial institution excise tax rates from 6.5% to 4.75%, while simultaneously repealing the federal income tax deduction. These bills would also convert the existing double-weighted sales factor apportionment formula that most corporations use to a single sales factor. A public hearing was held by the Senate Finance and Taxation Education Committee to discuss this legislation, but a vote was not taken. This bill did not receive any further committee action in the Senate.
- HB 109 – by Rep. Danny Garrett (R-Trussville) known as the Alabama Research and Development Act, would implement a research and development tax credit for qualified research conducted in Alabama. This R&D tax credit would be limited to $25 million for research and development expenses in a calendar year and no eligible company could claim more than 20 percent of the credits in a single tax year. The bill did not receive committee action in the House.
- HB 351 – by Rep. Danny Garrett (R-Trussville), would update definitions and correct references to the Secretary of Labor and would specify that a departmental employee perform certain inspections. This bill would also conform language relating to unemployment compensation benefit years beginning on or after July 2, 2006. This bill passed the House by a vote of 105-0, received Senate committee approval, but did not receive action on the Senate floor.
- HB 77 – by Rep. Wes Kitchens (R-Arab), would require employers and state agencies to use the same specified guidelines to determine whether a worker is to be classified as an employee or independent contractor. This will require state government agencies to use a uniformed set of criteria that will mirror the federal government criteria. This will provide businesses with clear and consistent guidelines when classifying employees. BCA worked with other groups to strengthen the legislation; however, the shortened session kept HB 77 from advancing once the legislation had been finalized.
- SB 322 – by Sen. Cam Ward (R-Alabaster), is a priority bill for BCA and would amend a law passed last year regarding call centers that decide to relocate. This bill would require only call centers that have received economic development incentives from the state to notify the Secretary of the Alabama Department of Commerce of plans to relocate its operations. This bill would also limit the amount of civil penalties assessed under the previous law. This legislation was filed in the Senate on the last legislative day prior to the coronavirus pandemic hitting Alabama.
- SB 107 – by Sen. Arthur Orr (R-Decatur), would require businesses of any size to submit an affidavit to the Secretary of State proving they use E-Verify in accordance with federal immigration regulations. This would need to be submitted to the Secretary of State’s Office before a business could receive a business license or permit from a county or municipality. It would also make it a crime to submit a false or misleading affidavit. This legislation passed out of Senate committee but failed to receive action on the Senate floor.
- SB 236 and HB 345 – by Sen. Tom Butler (R-Madison) and Rep. Ron Johnson (R-Sylacauga), would prohibit pharmacy benefits managers and health benefit plans from transferring and sharing certain patient information with certain affiliates of the pharmacy benefits manager. This bill would also prohibit a health benefit plan from requiring an insured to obtain pharmacist services, including prescription drugs, exclusively from a mail-order pharmaceutical distributor or affiliated pharmacy. If enacted, this legislation would result in increased drug costs for employers, employees and the state. These bills failed to receive committee action in their respective chambers.
- HB 93 – by Rep. Ron Johnson (R-Sylacauga), would enact the Digital Fair Repair Act. This would provide for the repair of digital electronic equipment by persons other than the manufacturer or an authorized repair provider of the manufacturer. This bill would require an original equipment manufacturer to make parts available, for purposes of diagnosis, maintenance, or repair, to any independent repair provider. This legislation failed to receive committee action in the House.
- HB 266 – by Rep. Shane Stringer (R-Citronelle), would prohibit health benefit plans, life insurers, and long-term care insurers from using an individual’s genetic information to determine insurance rates. This legislation failed to receive committee action in the House.
Other Bills of Interest
- SB 165 – by Sen. Tim Melson (R-Florence), known as the Compassion Act, would authorize the use of medical marijuana in Alabama by requiring patients to obtain a medical marijuana card from a doctor to treat certain medical conditions included in the legislation. A priority of BCA’s was to ensure the business community was protected from civil liability and worker’s compensation isn’t negatively impacted in this legislation. A business-friendly amendment was added to the legislation in committee which provides business protection provisions and worker’s compensation provisions in order to ensure the potential law does not expose the business community to additional civil liability. SB 165 passed the Senate floor by a vote of 22-10 but did not receive committee action in the House.
- SB 172 – by Sen. Arthur Orr (R-Decatur), would allow wireless providers to install small-cell wireless facilities on existing poles, or install new poles on the right-of-way of a government entity. This bill has passed the Senate chamber and received committee approval in the House, but did not receive action on the House floor.
- SB 216 – by Sen. Tom Whatley (R-Auburn), would allow for the purchase of construction materials and supplies for highway, road and bridge projects to be exempted from sales and use taxes. Currently, a licensed contractor that enters into a contract with a government entity to undertake a project does not have to pay sales and use tax on construction materials and supplies for that project. The current law pertains to all construction contracts entered into by government entities, with the exclusion of highway, road and bridge projects. SB 216 would remove that exclusion. This legislation did not receive committee action in the Senate.