Capital Briefing for Week 6 of the 2017 Session

The Business Council of Alabama continued working on the business community’s legislative agenda during week six of the 2017 regular legislative session.

The two state budgets moved this week. The Alabama House passed a $15.6 billion General Fund budget that includes $1.84 billion in discretionary funding. And the Senate passed a $15 billion education budget that includes a discretionary appropriation of $6.4 billion from the Education Trust Fund. Both are for the fiscal year beginning Oct. 1. The Senate passed a scaled-down version of the Governor’s prison construction bill.

At Tuesday’s briefing, House Minority Leader Rep. Anthony Daniels, D-Huntsville, briefed attendees on his desire as Minority Leader to work across the aisle. His briefing was sponsored by the Business Education Alliance of Alabama.

The House and Senate are taking off for two weeks and will return to session on April 4.

An important public hearing on a Mandatory Unitary Combined Reporting bill that will hurt Alabama businesses is scheduled April 5 in the Senate Fiscal Responsibility and Economic Development Committee. BCA members are urged to contact the senators on the committee.


$6.4 Billion FY 2018 ETF Carried Over in Senate for Further Study

The Senate Finance and Taxation Education Committee on Wednesday approved the next fiscal year’s budget and it went to the full Senate on Thursday where several senators requested it be carried over for further review.

SB 129 by Sen. Arthur Orr, R-Decatur, would appropriate $6.4 billion from the ETF and another $8.6 billion in federal and other funds. The rolling reserve cap that prevents proration limits new money in the ETF to $90 million, but $24 million of that is earmarked for the Alabama G.I. Dependent Scholarship program.

The budget zeroed out money for the longitudinal data system that is vital to help Alabama’s education system create adequate scholastic and workforce training courses for future employees. The BCA supports creation of an LDS that the governor formed by executive order in 2015.

Sen. Orr’s budget recommends $15 million for voluntary pre-Kindergarten for 4-year-olds, but it’s $5 million less than the governor requested. Alabama School Readiness Alliance Executive Director Allison Muhlendorf said the $15 million would enable about 2,000 more 4-year-olds to enter the program, an enrollment increase of 14 percent, the Montgomery Advertiser reported.

The proposed budget would add about 150 new teachers in grades 4-6, but the Alabama Math, Science, and Technology Initiative and the Alabama Reading Initiative would be level funded. The budget would provide about $1.5 million to the Science in Motion program.

The Senate earmarked $4.9 million for Industry Certification Initiatives, formerly called Workforce Development, a $1.75 million increase for this important BCA-supported initiative.

Most other education functions will be level funded. “It’s a pretty lean year in the education budget,” Sen. Orr said.

Update for Disabled Veterans Scholarship Program Proposed

The Senate Finance and Taxation Education Committee favorably reported SB 315 by Sen. Gerald Dial, R-Lineville, and the Senate began debating a substitute on Thursday.

“We’re changing qualifications,” Sen. Dial said. “We are in no way diminishing the scholarships we’re (currently) providing to disabled veterans and their families. We’re addressing disabled benefits going forward after passage of this act.”

The bill would increase grants from $2,000 to $4,800 and increase the current disability qualification requirement from 20 percent to 40 percent. Sen. Dial said his substitute limits scholarships to the cost of tuition for two-year schools and the cost of tuition for a four-year school in the final two years. In addition, a qualified applicant must first accept other benefits if available and a recipient must maintain a minimum 2.0 grade point average.

“This is projected to save $5 million a year,” Sen. Dial said. “If we continue at the present rate, we are looking at in 10 more years a $200 million cost to the education budget.”

House Ways and Means Education Committee chairman, Rep. Bill Poole, R-Tuscaloosa, at the March 10 BCA Tuesday briefing, said the current disabled veterans program is an open-ended appropriation that needs retooling.

Charter School Updates Proposed

SB 300 by Senate President Pro Tem Del Marsh, R-Anniston, and HB 245 by Rep. Terri Collins, R-Decatur, would update the school choice and charter school law.

The bills would alter the law by:

Authorizing monthly payments to school systems; removing the Alabama State Board of Education from the cumbersome process of confirming appointments to the Alabama Public Charter School Commission; allowing the commission to hire an executive director in order to effectively maintain high-quality standards for charter schools and to hold charter schools accountable for both academic and financial performance; clarifying the role of the commission in overruling a local school system that denies a local charter school authorizer, which submits a quality application that meets the identified educational needs of the community;

Requiring the Alabama State Department of Education to decide on local authorizers by Sept. 1 of each year and requiring timelines to provide a full calendar year of planning for any approved applicant; allowing local school systems to state, but not require, a preference; requiring systems to provide formal notice of approval or denial of decisions within seven days, as opposed to the 30 days currently allowed; and, removing the prohibition against the commission approving a charter application in any system with a desegregation order.


Landfill Bill Approved by Committee

On Wednesday, the Senate County and Municipal Government Committee favorably reported SB 259 by Sen. Greg Albritton, R-Bay Minette. The House County and Municipal Government Committee favorably reported a substitute to HB 328 by Rep. Alan Baker, R-Brewton. They would remove the requirement that a new solid waste management facility or modification of a permit for an existing facility be evaluated by the regional planning and development commission.

The bills would require the approval for a new facility by a local governing body, and they would be subject to review by a circuit court. These bills are the result of a working group of stakeholders and legislators, which included the BCA.

ADEM Funding Slightly Increased

The proposed General Fund budget for 2017-18, HB 155 by Rep. Steve Clouse, R-Ozark, mostly would maintain the FY 2015-17 appropriation reductions to the Alabama Department of Environmental Management. The proposed budget would appropriate $575,000 to the ADEM’s Concentrated Animal Feed Operations program, an increase of $175,000 from the current year.

The BCA has been a consistent supporter of adequate state funding for ADEM in order to eliminate the need for continued fee increases imposed on the backs of Alabama’s regulated industries.


House Votes to Continue Nursing Home and Private Hospital Assessments

The House voted Tuesday to pass HB 347 and HB 348, both by Rep. Clouse, to extend the assessments on nursing home beds and private hospital net revenue, respectively. They went to the Senate.

HB 347 would extend by one year to Aug. 31, 2018, the current supplemental privilege assessment and the monthly surcharge on nursing home beds that is to expire Aug. 31. The vote was 101-0.

HB 348 would extend the 5.5 percent assessment on net patient revenue levied on all private hospitals until Sept. 30, 2018. It was to expire this Sept. 30. It passed by a vote of 103-0.


Prison Reform Debate Begins in Senate

The Senate on Thursday approved a reduced-cost prison replacement bill voting 23-11, mostly along party lines. SB 302 by Sen. Cam Ward, R-Alabaster, will give local communities the ability to build up to two new prisons, if they choose, to replace current ones that support local economies.

The Judiciary Committee favorably reported the bill, and the full Senate took it up. Sen. Ward tried a new tactic in the continuing debate over prison reform to ease overcrowding in the state’s prisons and avoid federal intervention.

SB 302 would authorize the Alabama Department of Corrections to enter into lease agreements with local public authorities to finance and construct regional prisons with local involvement required in two of them, the Decatur Daily reported.

One of the issues with other prison legislation is the Department of Corrections had not determined where state-built prisons would be located. Legislators from areas of the state where prisons currently are housed worry about the loss of hundreds of jobs and local services that support the prisons.

SB 302 also would cap the state’s bond issue authority at $350 million, which is well below the $775 million bonding authority in the first prison construction bill.

Expansive Gun Rights Bill Introduced in House

HB 414 by Rep. Isaac Whorton, R-Valley, would make a number of substantial changes to Alabama’s gun laws, including removing the concealed-weapon permit requirement to carry a pistol in a gun owner’s vehicle and 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. This bill would add further requirements for owners of restricted-access buildings or facilities to prevent firearms from entering or being on site.

This is a companion bill to SB 24 by Sen. Gerald Allen, R-Cottondale. SB 24 was amended in committee to keep the existing private property provisions in force.

Also introduced this week was HB 410 by Rep. Mack Butler, R-Rainbow City, which would substantially alter current gun laws regarding carrying in restricted access facilities, government buildings, on school and college campuses, and in hospital environments. The bill would increase duties and liabilities for a person or business that restricts firearms on private property that they own, control, or manage.


Bill Protects Franchise Businesses

The House Commerce and Small Business Committee favorably reported HB 390 by Rep. Jim Carns, R-Birmingham, on Tuesday.

The legislation called the Franchise Business Protection Act would protect franchise businesses from harmful National Labor Relations Board rulings. The BCA supports this legislation.

HB 390 provides that the following persons may not be deemed or construed to be employees of a franchisor: a franchisee, an employee of a franchisee, or an independent contractor working for a franchisee. The bill would apply to the enforcement or enactment of rules or ordinances by state agencies or local governmental bodies and to labor relations and collective bargaining.

The precedent set by the NLRB’s McDonald’s and Browning-Ferris decisions could now classify a franchisee and franchisee’s employees as being employees of the franchisor.

Although federal law broadly defines this issue, state legislatures still retain control over the standard by which state-level employment law is enforced. HB 390 clarifies the definition of the employment relationship and would help ensure that state enforcement agencies and state courts do not adopt the expansive new federal joint-employer standard in state actions.

“Uber” Bill the Subject of Public Hearing on Wednesday

HB 283 by Rep. David Faulkner, R-Birmingham, would streamline the existing patchwork of licensing and regulations that impact transportation network companies and their drivers such as Uber.

The bill would provide permitting through the Alabama Public Service Commission; require safety, transparency, background check, insurance coverage, and nondiscrimination policies; clarify that drivers are independent contractors; and prohibit local governments from imposing taxes or business license requirements on transportation networks or drivers. Municipalities would, however, be authorized to prohibit transportation network companies, drivers, and vehicles from operating within municipal corporate limits.

A lively public hearing on the bill was held in the House Commerce and Small Business Committee on Wednesday, but a vote was not taken.


Mandatory Unitary Combined Reporting Bill Set for April 5 Hearing

SB 67 by Sen. Linda Coleman-Madison, is scheduled for a vote in the Senate Fiscal Responsibility and Economic Development Committee on April 5 following a public hearing on the bill.

Members of the business association community are working to defeat this bill. The BCA and the business community have maintained long-standing opposition to MUCR.

“In reality, MUCR is nothing more than an arbitrary tax increase,” BCA President and CEO William J. Canary said. “It hinders economic development and job retention, creates confusion in the tax code, and is costly for business and Alabama government. It is simply a power grab that would greatly expand the bureaucracy and authority of the Alabama Department of Revenue. The notion by proponents that it only targets ‘out of state corporations’ is complete and utter fiction. The truth is combined reporting unfairly targets companies in Alabama that provide thousands of quality jobs.”

The BCA’s Tax and Fiscal Policy Committee strongly encourages members to contact FRED committee members and encourage them to vote no on SB 67.

Members of the committee and their contact information can be found here. Contact information for Sen. Coleman-Madison, D-Birmingham, is, 334-242-7864 or 205-254-2079.

Historic Tax Credit Bills Are Active This Session

SB 262 by Sen. Jabo Waggoner, R-Vestavia Hills, and HB 345 by Rep. Victor Gaston, R-Mobile, would restore and update the historic building renovation tax credit law.

Rep. Gaston’s HB 345 was in a House Ways and Means Education Committee public hearing this week. His bill differs from the substituted version of SB 262 that was previously favorably reported by the Senate Finance and Taxation Education Committee.

Rep. Gaston’s bill as introduced would authorize tax credits for qualified renovators of certified historic structures capped at $5 million for buildings and $50,000 for residences for a total of $20 million in tax credits a year beginning in fiscal year 2019 through fiscal year 2028 but not to exceed $200 million.

Sen. Waggoner’s substituted bill would reinstate the historic building renovation tax credit that expired in 2016 until Dec. 31, 2022. In addition, previous tax credit amounts would be grandfathered in and the tax credits would not be able to exceed $20 million in any one year. Credits would be capped at $100 million over the life of the law.

The BCA is a member of a coalition of business and community groups that support renewing the Historic Renovation Tax Credit. Stakeholders support the historic tax credit and are working to reach a broad consensus to address several concerns so that this economic development tool can be used once again to help revitalize Alabama communities.

House Sends 2017-18 General Fund Budget to Senate

The House voted 72-28 along party lines to pass HB 155 by Rep. Clouse, and send it to the Senate where it was assigned to the Finance and Taxation General Fund Committee.

The total General Fund operating budget as proposed by the House is $15.6 billion with most of the money coming from earmarked fees, federal funds, and taxes. The $1.84 billion General Fund discretionary appropriation includes a $20 million increase over this fiscal year’s appropriation for Medicaid, and $9.6 million for increased state contributions to the State Employees Insurance Board in lieu of a pay increase.

The conditional appropriation of $20 million for Medicaid would bring the agency’s proposed FY 2017-18 absolute and conditional appropriation to $805 million. This year’s Medicaid appropriation was $785 million, which includes money from the BP Deepwater Horizon oil spill settlement. The BP oil spill money ends next fiscal year. Lawmakers held back $97 million in anticipation that the state could face tougher fiscal times, the Associated Press reported.

Irrigation Tax Credit Bill Aired in Public Hearing

The House Ways and Means Education Committee on Wednesday conducted a public hearing on HB 387, an irrigation tax credit bill by Rep. Donnie Chesteen, R-Geneva, but did not vote. Rep. Chesteen said his bill will incentivize land owners to increase the number of irrigated acres in the state to help Alabama better compete with neighboring states.

HB 387 provides a tax credit for qualified farmers or any land owner who irrigate property. It provides for an alternative income tax credit in addition to the income tax credit provided for irrigation equipment, fuel conversions, and reservoirs by Act 2013-66.

The tax credit would be carried forward five years from the taxable year the qualified irrigation system or reservoir was placed in service but could not exceed the taxpayer’s Alabama income tax liability. The income tax credit authorized by the bill would expire in five years and be repealed effective Dec. 31, 2022.



SB 307 by Sen. Orr is a supplemental appropriation bill that would transfer $15 million money from the ETF Advancement and Technology Fund to public institutions of higher learning and $41 million to local school systems.

SB 308 by Sen. Orr is a supplemental appropriation bill that would transfer $5 million from the ETF to the Department of Veterans’ Affairs in the current fiscal year.

SB 314 by Sen. Dick Brewbaker, R-Pike Road, would establish a financial incentive program for elementary school principals who improve student achievement.


HB 404 by Rep. Jack D. Williams, R-Birmingham, would appropriate $3 million from the ETF to the Department of Mental Health in order to provide up to $40,000 per year of applied behavior analysis (ABA) to children up to age nine with autism. The bill would require the Departments of Education and Early Childhood Education to identify children diagnosed with autism.

Judicial and Legal Reform

HB 405 by Rep. Randy Wood, R-Anniston, would provide for notice requirements for automatic renewals of service contracts.

HB 412 by Rep. Chris Sells, R-Greenville, would require Alabama Senate confirmation for the heads of the following state agencies and departments: Transportation, Medicaid, Mental Health, Revenue, ALEA, Corrections, and Finance.

HB 422 by Rep. Paul Lee, R-Dothan, would provide that a municipal business license is not required for a person travelling through a municipality on business if the person is not operating a branch office or doing business in the municipality.

HB 424 by Rep. John Knight, D-Montgomery, and SB 334 by Sen. Rodger Smitherman, D-Birmingham, in response to a federal court decision, provide for the redrawing and reapportionment of House and Senate seats, respectively, by the 2018 general election.

Rep. Knight said on a Friday morning radio talk show that his bill is not the same plan entered in court.


Community College Board Appoints Jimmy H. Baker as Chancellor

The Alabama Community College System board of trustees voted this week to appoint acting chancellor and former state Finance Director Jimmy H. Baker as chancellor of the 24-school system effective April 1. Baker has served as acting chancellor for more than six months and will succeed Mark Heinrich, who retired after a prolonged complication with shingles kept him away from the job.

“Alabama has no greater asset than its community college system, and we are uniquely positioned to ensure our students have the skills they need to meet their goals,” Baker said. “We want to provide our students opportunities for success, whether they want to work toward a four-year degree, to get a good job, or to upgrade their skills.”

The system serves 185,000 students.

“Jimmy Baker has done a tremendous job of leading the system during the chancellor’s absence and has been far more than a place-holder,” said Al Thompson, the board’s vice chairman. “As we searched for a permanent replacement, we realized we could never find a chancellor who would be more experienced or prepared than Jimmy Baker.”

Baker began his K-12 education career as a teacher and coach at Daleville High School. He was named school superintendent in Daleville and superintendent for Coffee County. As assistant superintendent for finance in the Alabama State Department of Education, Baker oversaw all budgets and financial reports for the Department of Education, local school systems, and the community college system.

He was state finance director from 1995 to 1999 under Gov. Fob James when he developed and secured passage of the Foundation Program to allocate school funds more fairly. Baker has private sector experience as president of the brokerage firm George M. Wood & Co. He also managed large-scale real estate developments and operated several private partnership businesses, including a medical evacuation company.

New House Member Takes Seat

House Speaker Mac McCutcheon, R-Monrovia, administered the oath of office to state Rep. Rolanda Hollis, D-Birmingham, who took her seat as the newest member on Tuesday.

Rep. Hollis won a special election for House District 58 on March 7 to succeed former Rep. Oliver Robinson, D-Birmingham, who retired last year.

Rep. Hollis is a real estate broker who plans to focus on sewer rates in Jefferson County, prison reform and education. She was endorsed by FarmPAC, a political action committee of the Alabama Farmers Federation, and defeated two Democratic challengers with 62 percent of the vote.