Capital Briefing for Week 1 of the 2017 Session

The 2017 regular legislative session began Tuesday with the Business Council of Alabama working on job creation, infrastructure improvement, education support, legal and regulatory reform, health-care industry stability, and tax and insurance fairness.

“Companies and industries have poured over $24 billion of investment into Alabama, in our people and in the belief that their products will be made best when they are Made in Alabama,” Governor Bentley said in his State of the State address.

The BCA this week released Perspective ’17, a guide to the BCA’s 2017 business agenda, a restatement of our purpose, dedication to our members, and events planned this year.

“The new year promises opportunities in the legislative and regulatory arenas both in Montgomery and Washington, D.C., where a new day and attitude is manifesting itself in growing economic confidence,” BCA 2017 Chairman Jeff Coleman and BCA President and CEO William J. Canary said.

“We pick up where we left off from the 2016 session that included important business issues such as infrastructure improvement, working against combined income reporting for tax purposes, protecting businesses against unwarranted and unfair regulations and policies, expensive projects that single out business taxpayers, and reforming lawsuit lending practices that are detrimental to a modern business model,” they said.

BCA’s 2017 State Legislative Agenda is online here.

Maynard Cooper & Gale has created an excellent legislative preview.

Alabama Republican senators released their “Strengthen Alabama” agenda and the House Republican Caucus released its “Alabama Proud” agenda.

Alabama Senate Democrats also released their agenda.

The House and Senate will reconvene for the third legislative day on Tuesday.

House Speaker McCutcheon Inaugurates 2017 BCA Tuesday Briefings
House Speaker Mac McCutcheon began his first full legislative session as speaker at BCA’s first “Tuesday Briefing” of the 2017 legislative session. The briefings take place each Tuesday morning during regular legislative sessions. Tuesday’s briefing was sponsored by Alabama Power Co.

Speaker McCutcheon, R-Monrovia, outlined a few issues that will be addressed during the next 15 weeks of the session that must end on or before May 22. “You have a pro-business, friendly Legislature, especially in the House,” he said.

Budgets are Introduced
Governor Bentley’s Education Trust Fund budget for 2017-18 contains proposed funding for BCA-backed projects: the budget proposes only level funding of $29. 5 million for the Alabama Math, Science and Technology Initiative; $40.8 million for the Alabama Reading Initiative but $87.3 million for pre-K, a $20 million increase. The BCA supports an increase for AMSTI and ARI. The budget proposes $91.5 million for Veteran Affairs Scholarships, a $25 million increase that would negatively affect four-year institutions should that amount remain in the budget.

The governor’s General Fund budget can be accessed here.

Governor Bentley seeks an $800 million bond issue for four new state prisons to address a probable federal court mandate to solve prison overcrowding.


Medicaid Stability Remains a Key Session Issue

The BCA remains involved in discussions regarding Medicaid, a combined federal-state, $6.3 billion program, that gets 40 percent of the $1.8 billion General Fund budget. Lawmakers seek to reform it in a way that will still provide the best service with the dollars available. In budget hearings, Medicaid Commissioner Stephanie Azar said the agency needs $869 million for next fiscal year. Of that, $764 million will have to come from the General Fund.

Medicaid can be affected by how the Medicaid program and health care financing are reformed in Washington, D.C. A block grant proposal has problems for Alabama if there are cost overruns at the state level, overruns the state would have to cover. There is the recurring issue of Regional Care Organizations that are designed to significantly improve patient health care delivery. The BCA remains engaged because medicine and the health care industry are among Alabama’s most significant job creators, service providers, and economic engines.


Employee Benefit Choice Threatened

SB 164 by Sen. Tom Whatley, R-Auburn, would mandate that certain small- and medium-size employers include insurance coverage for applied behavior analysis therapy. This bill was assigned to the Senate Banking and Insurance Committee.

The BCA fully supports the rights of employers to make choices for their businesses, including decisions about what treatments are included under the health care programs they provide to their workforce. SB 164 specifically targets small- and medium-size employers. This bill would require that employers with more than 50 employees to include additional benefits for children up to age nine, including applied behavioral therapy (ABA) insurance.

Currently, these “large group” employers have the ability to choose annually whether or not they want this treatment as part of their benefit plans. SB 164 removes their choice. Large self-insured employers and public-benefit programs are exempted from this legislation.

This mandate would apply only to a small percentage of children in the state and restrict the coverage to children covered under employee sponsored health care plans.

Also, this legislation would force coverage of a benefit that cannot be accessed due to the lack of providers in the state. There are currently no licensed Board Certified Behavior Analysts, a therapist that performs Applied Behavioral Therapies, in Alabama.

Additionally, the cost of this benefit will be quickly passed to employers and will be reflected in premiums.

Sen. Gerald Allen, R-Cottondale, introduced SB 57 that would include administration of an Applied Behavior Analysis program in order to provide ABA Intervention to children with autism which would be funded through the Education Trust Fund.

In the Senate Health Committee, SB 57 was carried over at the call of the chair while negotiations continue.


Data Breach Differences to be Worked Out on Senate Floor

SB 91 by Sen. Arthur Orr, R-Decatur, would establish the Alabama Information Protection Act of 2017, requiring businesses to notify consumers and the Attorney General’s Office if a data breach occurs that contains sensitive personally identifying information affecting more than 1,000 Alabama residents.

The Senate Judiciary Committee voting 9-0 favorably reported the bill. Committee Chairman Sen. Cam Ward, R-Alabaster, said because the bill has so many moving parts, he asked for a substitute to be offered on the Senate floor.

SB 91 would also allow the Attorney General to impose civil penalties of up to $50,000 on businesses that do not comply with the act. Government entities are also required to report data breaches, but they are exempt from any fines.

Sen. Orr has introduced similar bills in the previous two legislative sessions, and he has worked with the business community to address some of our concerns with the legislation. Concerns still remain, however, about language in the bill that states “a violation of this act is a deceptive trade practice,” as a recent federal court decision expanded class-action liability under Alabama’s Deceptive Trade Practices Act.

The BCA will continue to work with Sen. Orr on this legislation to ensure that the business community is not unfairly punished for the criminal actions of third-party data thieves.


Lawsuit Lending Reform Remains a BCA Priority

BCA President and CEO William J. Canary co-authored an opinion piece with the president of the U.S. Chamber of Commerce’s Institute for Legal Reform, Lisa Rickard, on the continuing harm caused by the lawsuit lending industry.

“Victims are targeted with a ‘quick cash’ loan in exchange for sharing any lawsuit award not only with their lawyer, but also with these third-party funders. Lawsuit lenders are bold and unscrupulous opportunists, charging fees and interest rates that often exceed 100 percent of the money they provide to plaintiffs up front.”

“This practice is doing real damage to Alabama’s justice system. Not only does it foster more lawsuits, it also raises the costs of litigation. Perhaps most troubling is how these loans can change plaintiffs’ behavior. Because the fees and interest charged by their lawsuit lender can, in effect, put them into debt, plaintiffs face tremendous financial pressure to turn down reasonable settlements and keep litigation going, hoping they will somehow win an award that lets them at least break even.”

The BCA and ILR will continue to advocate for reforming the lawsuit lending industry in the 2017 regular session, including subjecting lawsuit lenders to licensure and consumer lending regulations that are already in force in Alabama.


Tax Increase Disguised as Mandatory Combined Reporting Reintroduced

The BCA again will oppose SB 67, Mandatory Unitary Combined Reporting legislation sponsored by Sen. Linda Coleman-Madison, D-Birmingham.

Combined reporting hinders economic development and job retention, creates confusion in the tax code, and is costly for business and the state itself. In reality, MUCR is nothing more than a tax increase.

“The Business Council of Alabama and Alabama’s economic development community have consistently and actively opposed Mandatory Unitary Combined Reporting as an arbitrary tax increase on business that will negatively impact Alabama business’s ability to provide quality, high-paying jobs for our citizens,” the BCA’s Canary said. “It is simply a power grab that would greatly expand the bureaucracy and authority of the Alabama Department of Revenue.”

The fiction is that it targets only out-of-state corporations. “The truth is, combined reporting unfairly targets companies in Alabama that provide thousands of quality jobs,” Canary said.



HB 97 by Rep. Terri Collins, R-Decatur, and SB 153 by Sen. Bobby Singleton, D-Greensboro, would establish the Alabama Network of Statewide Workforce and Education-Related Statistics to collect and protect data relating to education and workforce outcomes.

Health Care

SB 85 by Sen. Trip Pittman, R-Daphne, relating to criminal penalties for Medicaid fraud, would extend criminal liability to business entities, establish a six-year statute of limitations, and add a “knowingly” mens rea element.

Judicial and Legal Reform

HB 74 by Rep. Chris England, D-Tuscaloosa, regarding non-discrimination, would create protected classes of individuals and provide a civil cause of action against employers and public establishments.

SB 1 by Sen. Phil Williams, R-Rainbow City, would impose requirements on any establishment that maintains public restrooms regarding the gender of the persons admitted and create a civil penalty and cause of action for violations.

SB 78 by Sen. Ward, R-Alabaster, would extend the statute of limitations under the Alabama Deceptive Trade Practices Act from one year to four years.

SB 152 by Sen. Arthur Orr, R-Decatur, is a constitutional amendment that would allow the Legislature to stipulate six-person juries for misdemeanor and civil cases.

Tax and Fiscal Policy

HB 26 by Rep. Juandalynn Givan, D-Birmingham, would increase the state minimum wage to 10 dollars per hour and create a schedule for subsequent increases.

HB 46 by Rep. Rod Scott, D-Fairfield, and SB 128 by Sen. Tim Melson, R-Florence, would align the Alabama business privilege tax due date with the federal income tax due date and make further changes to tax preparers and ADOR’s Taxpayer Advocate position.

HB 83 by Rep. Scott, and SB 86 by Sen. Pittman, would allow for a faster distribution of the local share of the simplified seller use tax and make public the list of participating businesses, among other changes.

HB 181 by Rep. Nathaniel Ledbetter, R-Rainsville, would create a $20,000 tax exemption for tangible business personal property for businesses with 75 or fewer employees.

SB 109 by Sen. Paul Sanford, R-Huntsville, would limit the 2 percent discount under the simplified seller use tax to $400 per month.

SB 151 by Sen. Whatley, relates to the expansion of municipal providers of telecommunications services.

SB 160 by Sen. Singleton would restrict a recipient of economic development incentives from having temporary employees constitute more than 5 percent of its workforce and provide penalties for violation.


Attorney General Strange is Appointed to The U.S. Senate

Governor Robert Bentley on Thursday appointed Attorney General Luther Strange to the U.S. Senate from Alabama to fill the remaining unexpired term of U.S. Senator Jeff Sessions who was sworn in Thursday as U.S. Attorney General. “I am greatly honored and humbled to accept the appointment to Alabama’s Senate seat vacated by Senator Jeff Sessions,” Strange said.

(A complete report is in today’s Washington Briefing.)


Alabama Senate Confirms Former BCA Senior Staffer to Auburn University Board

The Alabama Senate voting 28-0 on Thursday confirmed former Business Council of Alabama senior staffer Quentin Riggins of Trussville to the Auburn University Board of Trustees. Riggins is Alabama Power Co.’s senior vice president for Governmental and Corporate Affairs.

Riggins was the BCA’s senior vice president of Governmental Affairs from 2004-2010.

The Montgomery native played football for Auburn University from 1986-89 and was the Auburn University football network’s sideline reporter for 25 years.


House Democrats Elect New Minority Leader

House Democrats on Wednesday elected State Rep. Anthony Daniels, D-Huntsville, House Minority Leader, making him Alabama’s first African-American minority leader. Rep. Daniels is co-owner of a dental practice with his dentist wife.

“We congratulate Representative Daniels for his election to this important post in the Alabama House of Representatives,” BCA President and CEO William J. Canary said. “Representative Daniels received business support in the 2014 election cycle from a newly drawn district. He is a small businessman, job creator, and as such is the lifeblood and backbone of our nation’s economy.”

In the last session, Daniels successfully sponsored the 21st Century Manufacturing Act and the “Growler Bill” that boosts the brewing economy.