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Capital Briefing for Week 13 of the 2017 Session: Sine Die

Politics dominated the 2017 session of the Alabama Legislature that adjourned Sine Die on Friday.

The session that saw the resignation of the governor included passage of an autism medical insurance coverage mandate that will cost businesses and policyholders millions of dollars a year and, by design, will leave Alabama’s most vulnerable children out of the picture.

The BCA has consistently raised cost concerns as this insurance mandate will directly impact the ability of employers to provide health insurance to employees. The Legislative Fiscal Office did not provide a cost estimate of the impact of the mandate bill while lawmakers were considering it.

“The Business Council of Alabama continues to remind lawmakers that mandates are not free. It is a tax on those with health insurance,” BCA President and CEO William Canary said in a statement. “Because this mandate remains unfunded, government plans have been delayed, meaning 60 percent of the children who most need this coverage financially are delayed from obtaining ABA therapy in the immediate future – unfunded and cruel.”

Three significant pro-business bills did pass, including the Franchise Business Protection Act, renewal of the Historic Tax Credit, and an update to the Alabama Jobs Act to allow for the pursuit of additional mega-projects.

Governor Kay Ivey joined the BCA and the Alliance for Alabama’s Infrastructure in celebrating national Infrastructure Week and proclaimed last week Infrastructure Week in Alabama.

The governor signed both state budgets and Senate and House redistricting plans.

During the session, lawmakers introduced 608 House bills and 422 Senate bills. A total of 300 bills, including local ones and agency sunset bills, were passed.
The Legislature next meets in regular session on Jan. 9, 2018.


EDUCATION

Governor Signs $6.4 Billion Education Budget

Governor Kay Ivey on Friday signed the $6.4 billion, 2017-18 Education Trust Fund budget, SB 129 by Sen. Arthur Orr, R-Decatur.

SB 129 appropriates $6.4 billion from the ETF for public education beginning Oct. 1. The ETF appropriation is $90 million more than this year.

Many of the items in the budget will be good for the business community. It contains an increase for the Foundation Program, enabling Alabama to add 152 more teacher units in grades four, five, and six, and an increase for Alabama’s pre-kindergarten program of $13 million, to $77.5 million. It increases the appropriation to the Alabama Community College System for dual enrollment by $1 million, by $2.75 million for workforce development, an additional $200,000 to Advanced Placement and $200,000 to National Board Certification, $42,000 to agribusiness education, and, $1 million for teacher professional development.

The $13 million expansion of Alabama’s First Class Pre-K program will enable 1,800 more 4-year-olds to enroll in the upcoming school year.

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. The budget includes a $325,000 appropriation for teacher scholarships for rising junior and senior college students in a teacher prep school who would be willing to teach in math, science, or special education for a guaranteed period of time. The Alabama Commission on Higher Education will manage the program.

Four-year colleges and universities would be level-funded primarily because of $26 million being appropriated to the veterans’ scholarship program.

Veterans Scholarship Changes Go to Governor

Lawmakers changed a scholarship program for disabled veterans’ dependents due to the growing open-ended appropriation potential and sent the bill to the governor on Thursday.

SB 315 by Sen. Gerald Dial, R-Lineville, makes changes to the scholarship program in an attempt to rein in costs.

In next year’s budget, the Department of Veterans Affairs will receive an increase of $26.5 million, to $94 million. The bill increases the required disability rating for veterans from 20 percent to 40 percent but grandfathers in dependents of currently qualified 20 percent disabled veterans until July 31, 2023.

SB 315 will cap new scholarships at $250 per credit hour, the same as the Department of Defense Tuition Assistance Cap. Books and fees paid per semester will be capped at $1,000, but first-time applicants first will have to apply for federal assistance such as Pell Grants.

“It says you’ll use this scholarship as a last resort, not a first resort,” Dial told the Decatur Daily.

In the last three years, 7,982 scholarships have been awarded. Children, stepchildren, spouses or widows of qualified veterans can receive up to 10 semesters at any Alabama state-supported college or university.

Supplemental Appropriation Bills Pass

SB 308 by Sen. Orr passed the House 104-0 on Friday with a technical amendment and went back to the Senate that voted 24-0 to concur. It went to Governor Ivey’s office for consideration. SB 308 appropriates $5 million to the Department of Veterans’ Affairs to support this year’s Student Financial Aid Program budget item.

But SB 307 also by Orr, a supplemental appropriation bill, was passed by the House in substitute form and when it was returned to the Senate it did not get final consideration. SB 307 would have appropriated $15 million to this year’s college and university budgets allowing them to buy education technology and equipment. The bill would have appropriated $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 city and county public schools.

Scholarship Support Legislation Fails

SB 123 by Sen. Del Marsh, R-Anniston, would have updated the Accountability Act of 2013 concerning the tax credit scholarship program and tax credits for contributions made to scholarship granting organizations. The House defeated the bill by a vote of 28-59 on Friday.

Sen. Marsh said he wanted to increase support for scholarship granting organizations in order to reverse a recent decline in support for scholarships. The bill would have allowed an increase in using gross receipts tax credits to support scholarships.

ACCRS Repeal Bill Dies

SB 415 by Sen. Harri Anne Smith, I-Slocum, that would have repealed the Alabama College and Career-Ready Standards, was postponed indefinitely on Thursday, killing it for the session.

The bill was opposed by the BCA and others because it would have required 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 BCA, 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.


ENVIRONMENT AND ENERGY

Bill Could Boost Irrigation Use and Grow Agribusiness

The House on Thursday voting 103-1 passed SB 257 by Sen. Orr but amended it so it was returned to the Senate where it was approved and sent to Governor Ivey. Sen. Orr sponsored the bill to encourage and expand irrigation in Alabama in order to help agribusiness. He said neighboring states have multiple times the acreage under irrigation that Alabama does and as a result Alabama agriculture is less productive and competitive.

SB 257 provides for an alternative income tax credit in addition to the income tax credit provided for irrigation equipment, fuel conversions, and reservoirs that is equal to 10 percent of the accrued cost of qualified irrigation equipment and the cost of constructing a qualified reservoir, not to exceed $50,000 in any tax year. The tax credit can be carried forward five years from the taxable year the qualified irrigation system or reservoir was placed in service but cannot exceed the taxpayer’s Alabama income tax liability.

The income tax credit authorized by this bill will expire in five years and be repealed effective Dec. 31, 2022, unless extended. Recipients will have to file annual reports with the Department of Revenue.


HEALTH

Governor Signs Autism Insurance Mandate

The Legislature sent the costly autism coverage mandate bill to Governor Ivey but not before making some political changes that will, by design, eliminate tens of thousands of Alabama’s most needy children from autism insurance coverage.

The Legislature, not knowing the cost to small businesses and medical insurance ratepayers, stripped control amendments from the bill, HB 284 by Rep. Jim Patterson, R-Meridianville, but denied inclusion for children on Medicaid, and children of public employees and public education employees, until after Dec. 31, 2018.

This is after the 2018 elections when adding millions of dollars of spending to public budgets such as an already underfunded Medicaid could have been an issue had the Legislature required immediate coverage for taxpayer-supported insurance plans.

The autism mandate forces private businesses of 51 to 100 employees to offer autism coverage to their employees of as much as $580,000 in cumulative costs per child needing treatment through age 18.

Amendments had been added to include Medicaid, the Public Education Employees Health Insurance Program (PEEHIP) and the State Employees Health Insurance Program (SEHIP) for autism coverage.

But the Senate stripped those public insurance provisions from the bill and postponed implementation of coverage for Medicaid, ALL Kids, PEEHIP, and SEIB until Dec. 31, 2018.

Bill supporter Sen. Cam Ward, R-Alabaster, said public insurance plans cannot be burdened by the unknown cost to taxpayers because the state General Fund budget had already been passed and it was too late to amend it. However, the private sector is expected to begin covering these costs on Oct. 1, 2017.

The BCA has consistently raised cost concerns as this insurance mandate would directly impact the ability of employers to provide health insurance to employees.
Governor Ivey signed the bill on Friday. It takes effect for companies with between 51 and 100 employees, or 20 percent of the children with autism, on Oct. 1.

Medicaid Fraud Bill Indefinitely Postponed

SB 367, the Medicaid False Claims Act, by Sen. Trip Pittman, R-Montrose, was indefinitely postponed. It would have authorized civil penalties against persons making false claims or persons who commit fraud against the Alabama Medicaid Agency.

The BCA testified at a 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.


JUDICIAL AND LEGAL REFORM

Prison Reform Bill Fails

The prison construction bill, SB 302 by Sen. Cam Ward, R-Alabaster, died on the House calendar. “It’s dead, because you were probably going to have cloture on it anyway,” Sen. Ward declared.

The bill would have authorized up to $850 million for three men’s prisons, a women’s prison, and renovation of some existing facilities. Because the bill was in response to a potential federal court takeover of the state prison system, failure of the bill could mean a special legislative session will have to be called.

House and Senate Reapportionment Bills Are Passed

The House passed SB 403, the Senate district reapportionment bill by Sen. Gerald Dial, R-Linesville, 71-32 on a party line vote on Thursday, and the Senate passed the House reapportionment bill, HB 571 by Rep. Randy Davis, R-Daphne, by a vote of 21-8 on Friday. Both bills were sent to the governor for consideration.

Democrats who went to court to successfully overturn the 2012 district plan voted against the bill that became necessary when a federal judge ruled earlier this year that the Legislature had to redraw three Senate districts and nine House districts before the 2018 primaries. Redrawing just 12 districts affected other districts as well.

Criminal Record Expungement Bill Sent to Governor

HB 279 by Rep. Alan Baker, R-Brewton, expands the law governing the expungement of criminal records to include all felony charges including violent offenses under certain conditions including malicious prosecution. The bill authorizes a person who has been charged with any felony offense to file a petition in the criminal division of the circuit court in the county in which the charges were filed to expunge records relating to the charge if the person has been found not guilty of the charge.

The bill passed 24-3 on Wednesday, and the House previously had passed it 99-0. It went to the governor’s office.

But a similar Senate criminal history expungement bill, SB 119 by Sen. Tom Whatley, R-Auburn, did not pass. It would have allowed for a youthful offender to have his or her criminal record expunged as currently allowed for adults under certain circumstances.

Crossover Voting Ban Approved

Alabama doesn’t have political party registration for voting purposes but now has a limited version with SB 108 by Sen. Tom Whatley, R-Auburn.

The bill, which went to Governor Ivey for consideration on Thursday, will prohibit crossover voting in party primary runoffs, ensuring that only those who choose to vote in either the Democratic or Republican primary can vote in the respective runoff.

The Alabama Republican Party sought the crossover ban.

“It protects the integrity of the election process and provides a clean Democratic primary and a clean Republican primary,” Sen. Whatley said. “This will keep Democrats in the Democratic runoff and Republicans in the Republican runoff. It will provide for two good candidates in the fall.”

The bill requires the Alabama Secretary of State’s Office to create rules and procedures to prohibit crossover voting.


LABOR AND EMPLOYMENT

Franchisee Business Protection Bill Passes

HB 390 by Rep. Jim Carns, R-Birmingham, received final passage Wednesday in the Senate by a vote of 26-0 and was sent to Governor Ivey for consideration. HB 390 protects the independence of franchisees and the continuing success of the franchise business model. The bill says franchisees, their employees, and independent contractors working for a franchisee are not deemed employees of the franchisor.

This bill was championed by business groups including the BCA, the U.S. Chamber of Commerce, the NFIB, and the Alabama Retail Association.

Senate Unemployment Revision Bill Dies on House Calendar

The House wouldn’t take up SB 188 by Sen. Orr on Friday, killing it for the session. SB 188 would have reduced the maximum number of weeks that unemployment compensation benefits are payable, from 26 weeks to 14 weeks, to a maximum of 20 weeks, depending upon the average unemployment rate, beginning Jan. 1, 2018.

In addition, this bill would have increased the weekly benefit amount from $265 to $275 also beginning Jan. 1. 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. This bill would have saved employers about $56.2 million.

Workers’ Compensation Regulations Eased for Non-Management Corporate Officers

HB 242 by Rep. Danny Garrett, R-Trussville, authorizes a corporate officer to remove himself or herself from workers’ compensation requirements by submitting a written workman’s compensation exemption request to the Alabama Department of Labor. The House passed the bill 98-0, the Senate passed it 26-0, and sent it to the governor’s office on Wednesday.

‘Ban the Box’ Bill Dies

The so-called “Ban the Box’ bill, SB 200 by Sen. Quinton Ross, D-Montgomery, did not get a second reading in the House and died for the session.

SB 200 would have prohibited State of Alabama employers from asking whether a job applicant has a criminal record prior to offering a conditional job offer. The bill would prohibit the state, its agencies and political subdivisions from inquiring about an applicant’s conviction history, with exceptions such as applying for a law enforcement job prior to the conditional offer of a job.

Uber Bill Stalled

HB 283, the Transportation Network Companies bill by Rep. David Faulkner, R-Birmingham, was on the Senate calendar on Friday but was carried over. The bill would have established the regulatory framework under the Alabama Public Service Commission for the operation of Transportation Network Companies.


TAX AND FISCAL POLICY

Historic Renovation Tax Credit Law Passes

The House this week approved Senate amendments to HB 345, the historic buildings renovation tax credit reauthorization bill by Rep. Victor Gaston, R-Mobile, and sent it to Governor Ivey for consideration. The House approved the Senate-amended bill voting 90-1-4 on Friday. The Senate previously approved the bill by a vote of 31-0.

The old law expired in 2016, and this bill will extend the tax credit for historic building renovations through 2022 while applying caps on the total tax credits to be claimed.

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 rural counties during the first six months of each year.

The BCA supported this bill.

Governor Signs 2017-18 General Fund Budget

The Legislature sent the $1.8 billion General Fund budget to the governor who signed it Friday. 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 conference committee version of HB 155 by Rep. Steve Clouse, R-Ozark, received final approval.

Governor Ivey Signs Alabama Jobs Act Update

Governor Ivey signed the extension of the Alabama Jobs Act on Thursday during a ceremony in the Old House Chamber. HB 574 by Rep. Alan Baker, R-Brewton, will extend eligibility for project incentives until Dec. 31, 2020.

After House passage by a vote of 100-1-1, the Senate voted 31-0 on Tuesday to send HB 574 to Governor Ivey. She said with the help of the Alabama Jobs Act the state is pursuing projects which could result in as many as 11,728 new jobs and $13.4 billion in capital investment.

The bill revises the existing Alabama Jobs Act that provides certain incentives and credits to qualifying economic development projects. The law caps the annual balance of outstanding incentives at $300 million, unless the Legislature by joint resolution or action of both houses votes to allow additional jobs act incentives. The law it replaces capped outstanding incentives at a total of $850 million over 10 years.

Recipients would have to meet requirements along the way instead of receiving the money up front.


OTHER NEWS

Judge Stays Workers’ Comp Order

A Jefferson County circuit judge has stayed his order in a worker’s compensation lawsuit until the Legislature can act, al.com reported. Circuit Judge Pat Ballard on May 8 found two provisions, the $220 a week cap in compensation and the 15 percent cap on attorneys’ fees, unconstitutional, but on Wednesday stayed his ruling.

His original order was stayed 120 days to allow the Legislature to act in light of the “magnitude” of the ruling but the Legislature adjourned before it could act. “No one argues the point that the legislature is equipped to make, answer, and provide a comprehensive solution which fairly protects current and future workers’ compensation claimants and their employers and insurers,” he wrote.

Al.com reported that under the current law, workers hurt while on the job are eligible for $220 a week in compensation for a disability once their condition has stabilized. Lawyers for the plaintiff argued that the law dated to 1987, and $220 per week was above minimum wage level and the poverty level at that time. However, living costs and wages far exceed that number now. Attorneys argued a similar cap would total just under $500 today.

The BCA will remain engaged in this issue to protect the business community and bring clarity to our workers’ compensation law.

About Dana Beyerle

Dana Beyerle
Director of Communications
(334) 240-8768 | Fax: (334) 241-5984
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