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Capital Briefing for Week 3 of the 2017 Session

The Business Council of Alabama continued to act on the business community’s legislative agenda during the third week of the 2017 Alabama legislative session. As of week three, House members have filed 316 bills and Senate members 245 bills. Of the 561 bills, 68 have passed their house of origin.

At this week’s Tuesday briefing, the House and Senate co-chairs of the Joint Legislative Task Force on Budget Reform updated Business Council of Alabama members on the progress of the committee created last year to study state budgeting and taxes and recommend efficiencies.

Task force co-chairs Sen. Clyde Chambliss, R-Prattville, and Rep. Danny Garrett, R-Trussville, said the task force is charged with looking at several potential areas, including un-earmarking, biennial budgeting, tax credits, deductions and exemptions, and zero-based budgeting.

The House and Senate return to session Tuesday for the seventh legislative day. The session must end on or before May 22.


EDUCATION

Senate Passes Expanded Tax Credit Bill to Boost Public School Scholarships

The Alabama Senate on Thursday approved SB 123 that would revise the Alabama Accountability Act and expand options for tax credits for donors to the AAA scholarship program. The vote was 17-15.

Bill sponsor Senate President Pro Tem Del Marsh, R-Anniston, said he wants more tax-credit options to boost donations to the scholarship program. Last year, donors claimed $19.9 million in income tax credits for donations to the scholarship granting organizations, down from $25.8 million in 2015 and below the $30 million cap, according to al.com. Marsh said the intent of his bill it to try to make sure students who receive scholarships under the AAA don’t lose them in subsequent years because funding falls short, al.com reported.

SB 123 would allow companies to receive a credit on their utility gross receipts tax for scholarship donations and would allow taxpayers and companies to claim larger portions of their tax liability as credits. Marsh’s bill does not affect the $30 million cap on annual tax credits. The bill keeps scholarships at $6,000, $8,000, or $10,000.

House Committee Holds Public Hearing on Charter School Law Updates

The House Education Policy Committee this week conducted a public hearing on HB 245 but did not vote.

HB 245 by Rep. Terri Collins, R-Decatur, would amend the amount of local tax revenue that a public charter school would be able to get based on the difference in the local tax revenue that would otherwise have been forwarded to the public charter school and the state required 10 mill match. Among other provisions, the bill would require state and local funds to be distributed to public charter schools monthly, instead of quarterly.

The purpose of HB245 is to give the governor, lieutenant governor, speaker, and Senate pro tem appointment authority for the Alabama Public Charter School Commission instead of the State Board of Education, allow their local revenue to be used for the state-required 10 mill match, and allow public charter schools to access to any local revenue beyond the 10 mill match.

Longitudinal Data System Bills BIR Vote Fails

House and Senate committees favorably reported bills to allow the Alabama Department of Labor to aggregate existing deidentified data from several measurements about school performance but SB 153 did not get sufficient procedural votes to be moved to the full Senate. The Senate Governmental Affairs Committee previously had favorably reported SB 153 by Sen. Bobby Singleton, D-Greensboro.

The House Education Policy Committee voting favorably last week to approve HB 97, with one amendment, by Rep. Collins.

Both bills would authorize the Department of Labor to aggregate education data for workforce training and curriculum guidance. Officials said that deidentified education data are not currently centralized for analysis.

As a recommendation of the Alabama Workforce Council, the BCA supports the creation of an Alabama Longitudinal Data System, which the bills would establish.

HEALTH CARE

House Version Autism Bill Introduced

Rep. Jim Patterson, R-Meridianville, this week introduced HB 284, a different version of SB 164 introduced two weeks ago by Sen. Tom Whatley, R-Auburn.

HB 284 like Sen. Whatley’s bill is an employer mandate requiring additional autism coverage for employer benefit plans. HB 284 is aimed at virtually all Alabama employers, both private and public. The bill requires employers to include unlimited autism spectrum disorder coverage for individuals of any age. It also includes public education and state employee health plans and county, city and public authority health care plans. The estimated cost just for the state’s education and state employee plans is more than $22 million annually.

House Committee Favorably Reports Medicaid Fraud Bill

The House Ways and Means General Fund Committee this week favorably reported SB 85 by Sen. Trip Pittman, R-Daphne. It would extend Medicaid fraud criminal liability to business entities, establish a six-year statute of limitations, and add a “knowingly” element. The Senate last week passed SB 85 on a 25-2 vote.

JUDICIAL AND LEGAL REFORM

Gun Rights Bill in Committee Next Wednesday

SB 24 by Sen. Gerald Allen, R-Cottondale, would make numerous substantial changes to Alabama’s gun laws. Among other changes, the bill would remove the requirement to obtain a concealed weapon permit in order to carry a pistol in the gun owner’s vehicle, and it would also remove the requirement for either a concealed weapon permit or property owner consent to carry a pistol on private property belonging to another person or business. The bill also would add further requirements for owners of restricted-access buildings or facilities to prevent firearms from entering or being on-site.

A public hearing on this bill is scheduled in the Senate Judiciary Committee on Wednesday.

Public Hearing Set for Prison Construction Bill

Also scheduled for a public hearing on Wednesday is SB 59 by Sen. Cam Ward, R-Alabaster. It is the governor’s prison construction bill that would authorize an $800 million bond issue to construct four new prisons.

LABOR AND EMPLOYMENT

Senate Committee Approves Workers’ Compensation and Unemployment Insurance Reforms

The Senate Fiscal Responsibility and Economic Development Committee this week voting 13-2 favorably reported SB 188 by Sen. Arthur Orr, R-Decatur. The bill would affect unemployment benefits. Currently, 26 weeks of unemployment benefits are the maximum available. SB 188 would change this to between 14 weeks and 20 weeks of benefits, depending on the state’s average unemployment rate. The bill was amended to increase the cap on weekly benefits from $265 to $275.

According to the fiscal note, the bill would decrease the obligations of the Unemployment Compensation Trust Fund for benefits payments that are funded by employer contributions by approximately $52.7 million.

Committee Favorably Reports Worker’s Compensation Bill

SB 196 also by Sen. Orr relating to workers’ compensation, was favorably reported by a vote of 13-0-1 Wednesday by the Senate Fiscal Responsibility and Economic Development Committee. It 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 bill was substituted in committee to address concerns from the Department of Labor, the hospital community, and trial lawyer groups.

TAX AND FISCAL POLICY

Faster Cash-Flow Bill Moves Through House

SB 86 by Sen. Pittman would require the Alabama Department of Revenue to distribute collections from the simplified sellers use tax to counties and municipalities monthly rather than quarterly. The bill would remove the six-month deferral restriction for eligible sellers and would simplify invoice language for tax transactions. The Senate previously passed the bill 28-0 and this week it received a unanimous favorable report from the House Ways and Means General Fund Committee.

Sales Tax Standardization Bills Are Filed

The Senate Finance and Taxation Committee on Wednesday carried over SB 120 by Sen. Ward, due to the fact the wrong bill was filed.
Two other bills have been filed this week to replace SB 120: SB 235 by Ward and the House companion, HB 290 by Rep. April Weaver, R-Alabaster.

These bills would standardize sales and use tax exemptions, codify existing case law regarding sales and use tax exemptions for gross receipts received by certain learned professionals, and clarify that gross proceeds of a party making sales of photographs and commissioned portraits are required to remit sales or use tax. The bills also would remove the use-tax exemption of religious magazines and publications.

OTHER BILLS OF INTEREST

Judicial and Legal Reform

HB 279 by Rep. Alan Baker, R-Brewton, would expand the list of crimes eligible for expungement from a criminal record to include violent felony offenses that an individual was charged with but found not guilty.

HB 280 by Rep. Juandalynn Givan, D-Birmingham, would “ban the box” on job applications for positions with state or local governments, delaying questions about an applicant’s criminal background until after a conditional job offer has been made. This is the companion bill to SB 200 by Sen. Quinton Ross, D-Montgomery.

HB 300 by Rep. Will Ainsworth, R-Guntersville, is a proposed constitutional amendment stating that no person may be elected to either house of the Legislature for more than two full terms.

HB 306 by Rep. Matt Fridy, R-Montevallo, would substantially increase the penalties for attorneys (or those they hire) who provide money or other consideration to encourage a person to bring legal action against another person or entity.

Tax and Fiscal Policy

SB 31 by Sen. Billy Beasley, D-Clayton, would exempt prescription drug sales from being included in gross receipts for business license tax purposes. The bill was favorably reported on a 13-1-1 vote.

SB 228 by Sen. Whatley would permit Class 6 municipalities that offer telecommunications services to provide those services throughout the county in which the municipality is located.

SB 232 by Sen. Hank Sanders, D-Selma, is a proposed constitutional amendment that would reduce the existing state deduction for federal income taxes paid on a sliding scale tied to adjusted gross income. The amendment would also remove the state sales tax on both food and over-the-counter drugs.

HB 302 by Rep. Tim Wadsworth, R-Arley, is a constitutional amendment asking voters to reduce the state corporate income tax statutory rate from 6.5 percent to 6 percent on corporate net income. The bill would require a super-majority vote in order to pass and then would have to be ratified by voters statewide. The bill was assigned to the House Economic Development Committee.

OTHER NEWS

House Members to Choose New Majority Leader

State Rep. Micky Hammon of Decatur is stepping down as majority leader of the Alabama House of Representatives. The announcement came after another Morgan County lawmaker publicly questioned his leadership.

Those running to replace Hammon are Rep. Nathaniel Ledbetter, R-Rainsville, Rep. Chris Pringle, R-Mobile, and Rep. Weaver. Vying for Vice Chair of the House Republican Caucus to replace Rep. Ed Henry, R-Hartselle, who recently resigned as vice chair, are Rep. Connie Rowe, R-Jasper, and Rep. Phillip Pettus, R-Killen.

Hammon has been majority leader since 2011.

“The Democrat Caucus elected a new minority leader earlier this month, and after serving in my role for the past six years, it is time for House Republicans to have new leadership as well,” Hammon said in a prepared statement following a Wednesday caucus meeting.

Governor Creates Grocery Sales Tax Study Group

Governor Robert Bentley on Tuesday signed Executive Order 28 creating the Alabama Grocery Tax Task Force that will review the 4 percent state sales tax on groceries and essential food products and recommend changes that ensure a fair and equitable tax structure while encouraging a healthier Alabama.

The task force will review the potential financial impacts to the state budgets and other direct and indirect economic impacts to the state’s economy and recommend how to repeal it. Its report is due by June 1, 2017.

About Dana Beyerle

Dana Beyerle
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