Capital Briefing for Week 10 of the 2017 Session

As the Legislature turned the corner on the two-thirds mark of the session, the 10th week began with the Business Council of Alabama’s Tuesday briefing featuring House Majority Leader Rep. Nathaniel Ledbetter, R-Rainsville.

Rep. Ledbetter said the Legislature will eventually renew its attempt to pass infrastructure investment legislation. “It’s disappointing we didn’t get it approved,” Rep. Ledbetter, R-Rainsville, said of HB 487, the much-needed infrastructure investment bill that was favorably reported from committee but stalled on the House floor.

The Education Trust Fund budget advanced and tweaks were being made to the state military veterans’ scholarship program.

Governor Ivey appointed a new chief justice of Alabama.

Through Day 21 of the session, the House has introduced 576 bills and the Senate 406. The House and Senate return to Montgomery on Tuesday, May 2, to continue in regular session.


2017-18 Education Trust Fund Budget Goes to House

The House could vote on the proposed Education Trust Fund budget for 2017-18 on Tuesday. The House Ways and Means Committee this week favorably reported the budget bill, SB 129 sponsored by Sen. Arthur Orr, R-Decatur.

The bill would appropriate $6.4 billion, about $90 million more than was appropriated to this year’s ETF budget. It would include $22 million more for the Foundation Program, an increase of $12 million from the Senate-passed version. This would fund 152 more teacher units in grades four, five, and six.

The House committee reduced the Senate-proposed appropriation to pre-Kindergarten from $15 million to $13.5 million, but it increased the appropriation to the Alabama Community College System for dual enrollment by $1 million, increased workforce development funding by $2.75 million, and increased Advanced Placement by $200,000, National Board Certification by $200,000, agribusiness education by $42,000, and teacher professional development by $1 million.

The proposed budget would level-fund public employees’ health insurance, fully fund retirement, and level-fund teacher mentoring at $3 million.

The committee also favorably reported Sen. Orr’s SB 308. It’s a supplemental appropriation of $5 million this fiscal year to the veterans’ scholarship program, which is being modified due to fears that it is becoming an open-ended appropriation.

Committee Acts on Veterans’ Scholarship Bill

The House Ways and Means Committee on Thursday favorably reported SB 315 by Sen. Gerald Dial, R-Lineville, a proposed retooling of the veterans’ scholarship program. SB 315 would cap annual appropriations and benefits, increase the disability eligibility requirement, require recipients to have lived in the state for two years or to have filed a state income tax return for at least 10 years, and limit benefits paid to dependents under the Alabama G.I. Dependent Scholarship Program to the cost of in-state tuition only.

The bill also would cap the rate of tuition paid to equal the rate of the Department of Defense Tuition Assistance Cap, require eligible participating dependents to maintain a minimum 2.0 grade point average, and require state educational benefits to be applied only after all other resources have been exhausted.

Additionally, this bill would amend the Alabama National Guard Education Assistance Program (ANGEAP) to increase the cap on the assistance provided to eligible active members of the Guard from $2,000 to $4,800 per semester and remove the per-semester spending limit.

It would also use ANGEAP funds to pay the costs of tuition and fees while enrolled in a high school dual enrollment program at a community or technical college and waives tuition fees not covered by federal tuition assistance funds or the ANGEAP.


Irrigation Tax Credit Bills Progress

The House voting 97-1 on Thursday passed HB 387 by Rep. Donnie Chesteen, R-Geneva. It’s a tax credit for certain irrigation investment. The bill would allow a tax credit of up to $10,000, or 10 percent, of the irrigation investment to be capped at $50,000.

Rep. Chesteen said Alabama has less than 150,000 acres under irrigation but must compete agriculturally with neighboring states that have more than 1 million acres under irrigation.

Sen. Orr has SB 257, the Senate version that is on the House calendar.


Bill Would Streamline Regulations for Transportation Network Companies

Currently, companies like Uber can only operate in 11 cities in Alabama due to a patchwork of local labor laws. HB 283 by Rep. David Faulkner, R-Birmingham, and SB 271 by Sen. Bobby Singleton, D-Greensboro, would establish the regulatory framework for the operation of Transportation Network Companies (TNCs) in the State of Alabama, as 42 states across the country have done. There are more than 400 municipalities in Alabama, and the current patchwork of conflicting regulations means some residents can get rides when they need them but others cannot.

“It’s time for Alabama to bring certainty to consumers with a statewide ridesharing framework,” said Rep. Faulkner. “Access to new technologies and affordable rides should not be limited to those who live in the biggest cities, and this bill will give all of our residents the transportation options they deserve. The current patchwork of inconsistent regulations is unsustainable, which is why Alabama should not go another year without passing uniform ridesharing laws.”

HB 283 requires thorough background screening standards for TNC drivers and contains consumer protection provisions to strengthen the community of riders and drivers in Alabama. Any city may opt out of allowing TNCs to operate in its jurisdiction. It also would establish a fee structure that would provide a stream of revenue to local governments.

“It’s confusing to have different rules and requirements for Uber in each community,” said Auburn Uber driver-partner Charlie Saliba. “I’m often asked by both riders and fellow drivers if Uber is allowed to operate in neighboring areas. Driving with Uber helps me ensure students and residents have a safe ride when they need it – and that shouldn’t stop at the city limits.”

BCA has been a long-time supporter of streamlining regulations and providing consistency for businesses to operate in Alabama. HB 283 is a commonsense approach that benefits businesses, consumers, and the entrepreneurs who work with TNCs and local governments.


Governor Ivey Names New Tax Tribunal Judge

Governor Kay Ivey on Wednesday named a new chief judge of the Alabama Tax Tribunal effective May 1. Governor Ivey named Montgomery tax attorney and former Alabama Department of Revenue attorney Jeff Patterson to succeed Chief Judge William Thompson who officially retires April 30.

Jobs Act Improvement Advances

The Senate Finance and Taxation General Fund Committee favorably reported SB 373 by Sen. Trip Pittman, R-Daphne, the update to the Alabama Jobs Act. If it becomes law, it will exclude from the cap the incentives provided to “megaprojects” of at least 500 employee positions or making capital investments of at least $100 million. The aggregate cap now on megaprojects is $850 million. Excluding megaprojects from the $850 million cap could result in additional projects qualifying for the Jobs Act incentives until Dec. 31, 2023.

Rep. Alan Baker, R-Brewton, introduced HB 574, the House version, on Thursday. The BCA along with the economic development community and the the Alabama Department of Commerce support this proposal.

Gas Tax Referendum Legislation Reported Out of Committee

The Senate State Government Committee this week favorably reported SB 386 by Sen. Orr, on a vote of 8-0. It would authorize counties to conduct referendums to increase the local gas tax by up to 5 cents per gallon. This bill would allow a county commission to call for a local referendum to authorize the commission to levy an excise tax on gasoline or motor fuel for specific road and bridge projects.

Rep. Arnold Mooney, R-Birmingham, on Tuesday introduced HB 564, the House companion to SB 386. It was assigned to the Transportation Utilities & Infrastructure Committee. According to the Alabama Department of Revenue, 27 counties and about 320 municipalities have local gas taxes. Most of them are 1 or 2 cents, with some as much as 6 cents.


Education and Workforce Development

HB 558 by Rep. Barry Moore, R-Enterprise, that would repeal Alabama’s College and Career-Ready Standards, was introduced Tuesday, but the lateness of the bill’s introduction and its controversial subject matter makes it unlikely it will be taken up in committee this session.


Sen. Pittman’s SB 367 was carried over another week in committee in order to provide time to continue working on a substitute. As introduced, SB 367 would create the Medicaid False Claims Act. It would authorize a civil penalty and treble damages against persons found guilty in civil court of defrauding the Alabama Medicaid program.

SB 406 by Sen. Tom Whatley, R-Auburn, is a Senate version of the engrossed HB 284, Rep. Jim Patterson’s bill relating to mandated health coverage of certain autism therapies. This bill was introduced on Thursday.

Judicial and Legal Reform

SB 119 by Sen. Whatley would provide for the expungement of criminal records for youthful offenders. The Senate Judiciary Committee favorably reported the bill on Wednesday.

Labor and Employment

SB 196 by Sen. Orr would expand the type of activity related to workers’ compensation fraud that is subject to criminal penalties, authorize an award of civil damages for persons injured by an individual’s fraudulent claim, allow the immediate termination of compensation payments upon a determination of fraud, and provide for the repayment of fraudulently obtained benefits with interest to employers and carriers. The House State Government Committee favorably reported the bill on Wednesday.

Tax and Fiscal Policy

HB 553 by Rep. Phil Williams, R-Monrovia, would place substantial new requirements on any employer who currently does business with a state or local government or receives a grant or tax incentive. These new requirements include reporting out-of-state relocation of any operation or facility, substantial civil penalties for failing to report relocation, prohibiting future tax incentives for relocating companies, and requiring a relocating employer to remit the unamortized value of any previously-received grants or tax incentives. This bill was introduced on Tuesday.

HB 554 by Rep. Williams would repeal the Entertainment Industry Incentive Act of 2009. The bill was introduced on Tuesday.

HB 570 also by Rep. Williams would repeal the Alabama New Markets Development Act. This bill was introduced on Thursday.

SB 405 by Sen. Bill Hightower, R-Mobile, is a proposed constitutional amendment that would require any tax incentive enacted after 2018 to expire within five years unless reauthorized by the Legislature. This bill was introduced on Thursday.


BCA Applauds Appointment of Chief Justice Lyn Stuart

Business Council of Alabama President and CEO William J. Canary issued a statement following Governor Kay Ivey’s appointment of Associate Justice Lyn Stuart as Chief Justice of Alabama:

“Chief Justice Stuart has a proven track record of being fair and impartial in her 16 years of service on the high court,” said Canary. “No individual has served as chief justice with such outstanding credentials. Clearly, she is ready to serve on day one. Her commitment to the rule of law and conservative judicial philosophy is second to none, and I applaud Governor Ivey for making this appointment.”

Governor Ivey made the appointment after the resignation of Chief Justice Roy Moore.

“Chief Justice Stuart has served with honor and integrity on the high court for more than 16 years,” Governor Ivey said. “I look forward to working with her as she now leads the judicial branch of state government.”

Chief Justice Stuart, the first Republican female chief justice in Alabama’s history, is a native of Atmore. She graduated from Auburn University and received her law degree from the University of Alabama. A former district and circuit judge, she has been elected three times to the Alabama Supreme Court and has served as acting chief justice since May 2016.

Reapportionment Bills Are Introduced

Under existing law, districts for members of the Alabama Senate and state House were redrawn following the 2010 decennial census. A three-judge federal court declared at least 12 of those districts unconstitutional.

Bills introduced this week would redraw the districts pursuant to the federal court decision for the purposes of electing the members of the House and Senate in the 2018 general election. Rep. Randy Davis, R-Daphne, introduced the House version and Sen. Dial introduced the Senate bill.

Graduation Rate Data Error Explained

Alabama Superintendent of Education Michael Sentance told state board of education members this week that the release of inaccurate graduation rate data had not been properly vetted with local school districts.

Sentance told board members at a work session that he was “astonished” that the inaccurate data was published, particularly given the importance that graduation numbers be absolutely right after federal officials said Alabama had artificially inflated graduation rates in recent years, reported.

Sentance took responsibility, saying he assumed that protocols followed in previous years had been followed this year. However, when the data are corrected, graduation rates for 2016 might ultimately rise.

Tony Thacker, director of the department’s research and technology area, said corrections could make a big difference for some local school districts, which will now have 15 days to check data before a public release. Sentance could not say when corrected graduation rates could be released.

Eric Mackey, executive director of the School Superintendents of Alabama, said two valedictorians from the class of 2016 were shown as other than graduating, for example.

Sentance also said he is seeking a waiver from the U.S. Department of Education for school year 2018 testing assessments and seeks to create Alabama’s own assessment.