Capital Briefing for Week 12 of the 2017 Session

With the 2017 Legislature having completed its 12th week, the tempo and end-of-session tactics increased as both bodies head to the potential May 22 finale.

The House slowed activity for two days with the reading of HB 571, the House legislative district reapportionment bill, but the bill was passed on Thursday. The Senate district reapportionment bill is on the House calendar.

The Senate non-concurred with the House-passed Education Trust Fund budget and formed a conference committee. The House concurred with the conference committee report on the Senate-originated General Fund bill and sent it to the governor for consideration.

Meanwhile, the House autism insurance mandate bill was favorably reported by a Senate committee and could receive floor action next week.

Governor Ivey appointed Vernon Barnett as Commissioner of the Alabama Department of Revenue this week.

Thursday was the last day a bill could be introduced in the House or Senate and have a chance of passage. Through day 26 of the session, the House has introduced 603 bills and the Senate 422. The House and Senate return on Tuesday for what is expected to be the last week of the regular session.


ETF Goes to Conference

The Senate voted 27-1 on Tuesday to non-concur with the House version of the proposed $6.4 billion, 2017-18 Education Trust Fund budget, SB 129 by Sen. Arthur Orr, R-Decatur, and appointed a conference committee.

Senate conferees are Sens. Orr, Del Marsh, R-Anniston, and Quinton Ross, D-Montgomery. House conference committee members appointed this week were Rep. Bill Poole, R-Tuscaloosa, Rep. Rod Scott, D-Fairfield, and Rep. Mark Tuggle, R-Alexander City.

SB 129 would appropriate $6.4 billion from the ETF for public education beginning Oct. 1. Many of the items in the proposed budget are good for the business community:

An increase of $22 million from the House version for the Foundation Program, enabling Alabama to add 152 more teacher units in grades four, five, and six; an increase for Alabama’s pre-kindergarten program of $13.5 million, to $78 million – the Senate seeks $15 million more for pre-K; increases in the appropriation to the Alabama Community College System for dual enrollment of $1 million; of $2.75 million for workforce development; $200,000 to Advanced Placement; $200,000 to National Board Certification; $42,000 to agribusiness education; and $1 million for teacher professional development.

The proposed budget would level-fund public employees’ health insurance, add $8 million to fully fund teacher retirement, and level-fund teacher mentoring at $3 million. Four-year colleges and universities would be level-funded primarily because the cost of a veterans’ scholarship program will increase by $35 million next year.

Senate Passes Supplemental Appropriation Bill

The Senate voting 25-0 on Thursday passed SB 307 by Sen. Orr. It was assigned to the House Ways and Means Education Committee.

SB 307 is a supplemental appropriation of $15 million to this year’s college and university budgets allowing them to purchase education technology and equipment. The bill also would appropriate $41.3 million for repairs or deferred maintenance of facilities, classroom instructional support, insuring facilities, transportation, or the acquisition or purchase of education technology and equipment, or both, at public schools. Expenditures would require prior approval of the State Superintendent of Education.

ACCRS Repeal Bill Advances

SB 415 by Sen. Harri Anne Smith, I-Slocum, would repeal the Alabama College and Career-Ready Standards and require the State Board of Education to replace the ACCRS with previous standards in place for math and for English language arts beginning with the 2017-18 school year, and update the math standards and English language arts standards with new standards beginning in the 2018-19 school-year.

The bill received a favorable report Wednesday by the Senate Education and Youth Committee and was subject to listing on the Senate calendar.

The Business Council of Alabama, the Business Education Alliance, Alabama GRIT, and education groups have opposed numerous attempts by the Legislature to usurp the authority of the State Board of Education and weaken Alabama’s education standards, which SB 415 would do.

Jessica Hammonds, who leads Alabama GRIT, a coalition of educators, parents, and business and military leaders, spoke in opposition to SB 415 at the committee hearing.


Autism Insurance Mandate Leaves Senate Committee with Expanded Coverage in Place

The Senate Finance and Taxation General Fund Committee on Wednesday voting 14-2 favorably reported HB 284, the mandated autism insurance coverage bill by Rep. Jim Patterson, R-Meridianville. Senator Tom Whatley, R-Auburn, is the Senate sponsor. In committee the bill was primarily handled by Sen. Cam Ward, R-Alabaster. A Senate vote is expected on Wednesday.

Sen. Trip Pittman, R-Montrose, the committee chairman, offered a substitute bill that would limit the insurance mandate to large employers and exempt small business and government plans. After the substitute version failed, Sen. Pittman amended HB 284 to clarify protection for small businesses and cap autism therapies to age 16. He said his goal is to protect public money and he noted that the state’s largest insurer, Blue Cross and Blue Shield of Alabama, is offering to cover autism therapies in exchange for an age cap.

“One of the great ironies of this is we want to mandate an insurance company to do something they will do on their own,” he said. “It’s going to cost the taxpayers tens of millions of dollars. I would rather sine die (end the session) than to allow the bill to pass in current form. The state would be saving tens of millions of dollars.”

The Alabama House passed the bill 100-0 in April. BCBS said it plans to cover the therapies at policy holder renewal dates beginning in January for those 16 and younger, if the mandate is dropped, and plans to offer something similar to Rep. Patterson’s bill with employers making the choice to offer it to employees.

Rep. Patterson’s original legislation initially would have mandated limited coverage for only two of 10 children and exclude children on Medicaid, All-Kids, and of public education employees and state employees.

Amendments were added to include Medicaid, the Public Education Employees Health Insurance Program (PEEHIP) and the State Employees Health Insurance Program (SEHIP) for autism coverage. “We can’t leave those children behind because they’re on Medicaid,” said Sen. Linda Coleman-Madison, D-Birmingham.

The BCA has consistently raised cost concerns as this insurance mandate would directly impact the ability of employers to provide health insurance to employees. The Legislative Fiscal Office has yet to provide any cost estimates of the impact of HB 284 to taxpayers.

Senate Committee Approves Medicaid Fraud Bill

The Senate Finance and Taxation General Fund Committee voting 9-1-1 on Thursday favorably reported SB 367, the Medicaid False Claims Act, by Sen. Pittman. It would authorize civil penalties against persons making false claims or persons who commit fraud against the Alabama Medicaid Agency. Civil penalties would range between $5,500 and $11,000.

Two weeks ago, the BCA testified at the public hearing on SB 367 and raised numerous concerns regarding the increased liability risks to Alabama job creators. In other states, the creation of a state Medicaid False Claims Act has resulted in increased litigation and has opened the door for plaintiffs’ attorneys to sue businesses on behalf of the state.

Senator Pittman had considered various alternatives but moved SB 367 out of committee as introduced. However, he indicated he did not expect this bill to pass.


Senate Reapportionment Bill Advances, House Bill Finally Passes

The House Constitution, Campaigns and Elections Committee favorably reported SB 403, the Senate district reapportionment bill by Sen. Gerald Dial, R-Lineville, sending it to the full House.

The 537-page House district reapportionment bill, HB 571 by Rep. Randy Davis, R-Daphne, was read at length for two legislative days as a stalling tactic but was passed Thursday 70-30 on a vote largely along party lines. Democrats who went to court to successfully overturn the 2012 reapportionment plan voted against the bill.

The bills would redraw Senate and House districts following a federal three-judge panel declaring certain districts unconstitutional.


Senate Unemployment Revision Bill Hits House Calendar

The House Commerce and Small Business Committee favorably reported SB 188 by Sen. Orr and sent it to the House where it was carried over on the calendar on Tuesday.

SB 188 would reduce the maximum number of weeks that unemployment compensation benefits are payable, from 26 weeks to 14 weeks, or to 20 weeks, depending upon the average unemployment rate, beginning Jan. 1, 2018. In addition, this bill would raise the weekly benefit amount from $265 to $275 also beginning Jan. 1. This will save the Unemployment Compensation Trust Fund for benefit payments funded by employer contributions by approximately $56.2 million.

Eligible recipients would be entitled to an additional five weeks after all regular benefits have been exhausted if enrolled in and making satisfactory progress in a job-training or certification program approved by the Alabama Department of Labor. Each approved training program would prepare individuals for entry into a high wage, high demand occupation.

‘Ban the Box’ Bill Advances

The Senate on Thursday voting 17-9 passed SB 200 by Sen. Ross. It would prohibit State of Alabama employers from asking whether a job applicant has a criminal record prior to offering a conditional job offer. The bill goes to the House in the waning days of the session.

The bill, called “Ban the Box,” would prohibit the State of Alabama, its agencies, and its political subdivisions from inquiring about an applicant’s conviction history, with exceptions such as applying for a law enforcement job and the Alabama Securities Commission, prior to the conditional offer of a job.

Committee Advances Uber Bill

The Senate Tourism and Marketing Committee on Wednesday favorably reported HB 283, the Transportation Network Companies bill commonly called the Uber bill. The House on Tuesday passed the bill 62-7.

The bill by Rep. David Faulkner, R-Birmingham, would establish the regulatory framework under the Alabama Public Service Commission for the operation of Transportation Network Companies.


Historic Renovation Tax Credit Law Nears Final Passage

The Senate on Tuesday passed HB 345, the historic buildings renovation tax credit bill by Rep. Victor Gaston, R-Mobile, by a vote of 31-0. Because it was substituted, it was returned to the House.

HB 345 includes language that would require a historic structure to be at least 60 years of age to qualify for the credit, with 40 percent of credits being reserved for the first six months of each year for rural counties. The old law expired in 2016 and this bill seeks to extend the tax credit for historic building renovations through 2022 while applying caps on the total tax credits to be claimed.

2017-18 General Fund Budget Goes to Governor

The House on Thursday approved the conference committee report for the $1.8 billion General Fund budget for next fiscal year, sending it to the governor for consideration. Combined with federal and local funds of $13.8 billion, next year’s total spending bill for general government will be $15.6 billion.

The Senate approved the conference committee version of HB 155 by Rep. Steve Clouse, R-Ozark, last week.

Alabama Jobs Act to Be Updated

After House passage Tuesday by a vote of 100-1-1, the Senate Finance and Taxation General Fund Committee on Wednesday favorably HB 574, the revised Alabama Jobs Act by Rep. Alan Baker, R-Brewton. The bill would revise the existing Alabama Jobs Act, which provides certain incentives and credits to qualifying economic development projects. The current law caps the balance of outstanding incentives at $850 million and limits the incentives to qualifying projects for which agreements have not been executed on or before Dec. 31, 2019.

The bill would continue the eligibility for incentives to projects by one year, to Dec. 31, 2020, and would instead cap outstanding incentives at $300 million per year, unless the Legislature by joint resolution or action of both houses votes to allow additional jobs act incentives.


Governor Ivey Appoints Vernon Barnett as Commissioner of Revenue

Governor Kay Ivey has appointed Montgomery attorney Vernon Barnett as commissioner of the Alabama Department of Revenue to succeed Commissioner Julie Magee whose resignation was accepted May 5. He will begin his new duties on May 22.

“I have appointed Vernon Barnett as Commissioner of Revenue because he shares my commitment to integrity and honesty in government,” Governor Ivey said in a statement. “I am confident that Vernon has the necessary skills and experience to lead the Department of Revenue.”

Barnett joins the Department of Revenue from the Alabama Department of Environmental Management, where he has served as executive counsel since 2011. At ADEM, he served as a senior advisor to the director. Barnett has also managed ADEM’s relationship with the state Legislature.

Prior to joining ADEM, from 2006 to 2011, he was the chief deputy commissioner of the Alabama Department of Corrections. He has previously served as deputy solicitor general and assistant division chief in the Alabama Attorney General’s Office.

“The Alabama Department of Revenue is vital to state government,” Governor Ivey said. “The Department ensures that citizens are treated fairly and that all tax dollars are accounted for. Citizens must have confidence in their government, and that starts with the Commissioner of Revenue. This is the people’s business, and being transparent is my goal.”

Barnett said he has enjoyed working at ADEM for the past six years and is looking forward to the next phase of his career leading the Department of Revenue.

“I am thankful to Governor Ivey for the trust she has placed in me; I look forward to working with her to restore the confidence of the people in state government,” Barnett said. “I am also excited to join with the dedicated employees in the Revenue Department as we seek to properly collect and account for the monies entrusted to us by the people of Alabama.”

Barnett is a graduate of Vanderbilt University and the University of Alabama School of Law. He is a member of the Alabama State Bar Association and the Alabama State Bar Leadership Forum, where he was recognized as one of the top young lawyers in the state for 2005-2006.

Judge Rules on Alabama’s Workers’ Compensation Law

BCA labor and employment and judicial and legal reform committee members were advised this week that Alabama’s workers’ compensation statute was ruled unconstitutional by a Jefferson County Circuit Court Judge. Because one or more provisions were found unconstitutional, the entire act is nullified.

Circuit Judge Pat Ballard found two provisions of the law, the $220-a-week cap in compensation and the 15 percent cap on attorney’s fees, unconstitutional. The BCA team is evaluating this ruling and its impact on Alabama’s job creators. Judge Ballard stayed his order 120 days so the Alabama Legislature can correct it, due to what he called the “magnitude” of the ruling.

If left unchallenged, it has dire implications for both workers and employers in Alabama. The longstanding workers’ compensation system is a vital compact that automatically provides relief to injured workers without the need for expensive, time-consuming litigation. By disrupting that compact, this ruling could create a feeding frenzy for plaintiffs’ attorneys against employers.

Our goal at the BCA remains making Alabama the best place in America to do business. We will be actively involved in bringing clarity to our workers’ compensation law. Please see the attached court order for more information on the ruling.

The ruling in the case of Nora Clower vs. CVS Caremark was in a lawsuit filed in 2013 for a plaintiff who said she had injured her back on the job and was entitled to workers’ compensation benefits.

Lawyers said the $220 a week in compensation for a disability wasn’t enough and had not kept up with inflation. The plaintiff’s attorneys also argued that the 15 percent cap on attorney’s fees isn’t enough, either, and it “fails to afford due process of the law.”