Capital Briefing for Week 5 of the 2017 Session

The Business Council of Alabama continued working on the business community’s legislative agenda during the fifth week of the 2017 regular legislative session. The BCA’s action included testimony during a House Insurance Committee public hearing on a bill that would mandate expensive medical coverage to public and private health insurance plans.

A House committee favorably reported the 2017-18 General Fund and it’s expected the House will take it up next week. The Senate Judiciary Committee favorably reported a scaled-down version of the Governor’s prison construction bill while the House Judiciary Committee resumed its impeachment investigation of the Governor.

At Tuesday’s legislative briefing sponsored by Regions Financial Corp., Sen. Arthur Orr, R-Decatur, and Rep. Bill Poole, R-Tuscaloosa, chairs of the Senate Finance and Taxation Education Committee and House Ways and Means Education Committee, respectively, gave an update on the 2017-18 education budget.

As of week five, House members have filed 393 bills and Senate members 299 bills. Of the 692 bills, the House has passed 73 and the Senate 62. A total of 31 bills have passed both houses.

The House and Senate are scheduled to meet for three work days when they reconvene on Tuesday.


Solid Waste Bill Carried Over

HB 328 by Rep. Alan Baker, R-Brewton, was carried over Wednesday in the County and Municipal Government Committee after objections from the Association of County Commissions of Alabama. The bill was the result of a working group of stakeholders and legislators in which BCA participated.

Public Hearing on Non-Riparian Agricultural Water Use Bill

SB 255 by Sen. Orr was the subject of a public hearing on Wednesday in the Senate Agriculture, Conservation, and Forestry Committee, which did not vote. This bill would authorize certain owners of land that is non-contiguous to water sources to be able to use the water for agricultural irrigation. This bill would only apply to the Alabama, Tennessee, and Tombigbee rivers where the average water flow exceeds 8,000 cubic feet per second, enough to sustain withdrawals.

The bill outlines certain elements of the process that a non-contiguous land owner would have to follow in order to use water for agricultural irrigation as well as restrictions on the aggregate, non-contiguous, or non-riparian, use.

The BCA has maintained a longstanding policy that any changes to Alabama’s water laws and policies should be based on a demonstrated scientific need and substantiated by verifiable data.


Letter to BCA Members About Insurance Mandate Legislation

The House this week conducted a public hearing on HB 284, which would mandate most health insurance plans to include applied behavioral analysis therapies to individuals with autism. This hearing received a great deal of media attention, so I wanted to take this opportunity to provide additional information

Every year, health mandate bills are introduced in the Legislature, and every year the Business Council of Alabama explains to lawmakers the negative effects these mandates have on employer and employee costs. It is truly an unenviable position as our stance against health mandates is misconstrued as opposition against certain treatments or diseases. It certainly is easy – and convenient – to paint the business community’s opposition with a broad brush of being against autistic children receiving therapy.

The real issue when it comes to these types of public policy debates is who will pay for the service? If the Legislature is to insert itself into health care agreements, then it needs to be very clear about who is paying. It’s not insurance companies; it is all Alabamians with insurance who will bear the costs. Therefore, having an accurate and realistic understanding of costs and health outcomes is imperative.

Health coverage mandates for small- and medium-size businesses are particularly threatening because many times the mandate creates a line in the sand that determines whether a business can offer health insurance coverage at all. Companies already struggle to continue providing health insurance to employees due to ever-increasing costs.

In 2012, the Alabama Legislature passed the “Riley Ward Act” that expanded coverage of certain health benefits for children up to the age of nine with autism spectrum disorder. It increased the number of therapy visits for children under the age of nine to 100 visits per calendar year. It also requires benefit plans to offer coverage to employers with 50 or more employees for behavioral therapy benefits for children diagnosed with autism disorder. Employers have the option to purchase this coverage today; however, few can due to the prohibitively high cost of these plans.

It has been overlooked that in March of 2016 the governor appointed the Working Group on Children with Autism. This group of stakeholders was chaired by Department of Mental Health Commissioner Jim Perdue. This group met over a 10-month period to share information, collect data, and discuss potential solutions.

Recently, some have accused this group of being dominated by “business groups.” Nothing could be further from the truth. The Governor and Mental Health commissioner decided whom to appoint to this group, and each meeting was open to the public.

Those appointed by the governor to the working group were: Sen. Gerald Allen, R-Tuscaloosa; Michael Braun, Montgomery attorney and lobbyist for Autism Speaks; William J. Canary, president and CEO Business Council of Alabama; Rosemary Elebash, state director, National Federation of Independent Business; Mike O’Malley, executive director, Alabama Association of Health Plans; House Speaker Mac McCutcheon, R-Monrovia; Paige M. McKerchar, psychology department head, Jacksonville State University; Mental Health Commissioner Perdue; Robin Stone, vice president-government relations, Blue Cross-Blue Shield of Alabama; Hanes M. Swingle, professor of pediatrics, University of South Alabama Health System; and Sen. Cam Ward, R-Alabaster.

While not perfect, these meetings did reveal interesting facts but also left many questions unanswered, including autism population estimates and cost estimates. No hard numbers were provided at these meetings, and only at Wednesday’s public hearing were some numbers revealed that would inform this public policy discussion.

All that to say is there is a tremendous information void on this topic, and legislators are being asked to vote on a radical transformation in health policy whereby the Legislature dictates terms of health care agreements. It was also discussed that ABA therapy is one of many factors and treatments for autistic children.

The meetings are what led to a more targeted approach in the form of SB 57 by Sen. Gerald Allen that would include administration of an Applied Behavior Analysis Intervention to children with autism and be funded through the Education Trust Fund, and the BCA supports this bill.

It would cover ALL children up to age nine and would require an actuarial accounting of costs, utilization and health outcomes. This would allow for a much more informed public policy discussion on how best to serve children with autism while at the same time not hampering employers’ ability to provide affordable health care for employees. Unfortunately, SB 57 was quickly dismissed in the Senate and not given a fair hearing.

Instead, HB 284 by Rep. Patterson was forced to the forefront dismissing the months of work on this issue. HB 284 takes a broad approach without the information needed to guide this policy by covering not just children but people of all ages. It excludes children covered by All Kids and Medicaid. Here is an op-ed I published earlier this week on the bill.

There are alternatives to this proposal to help children. Children diagnosed with autism absolutely need access to care. That is what is important, not “insurance reform,” which is a catch phrase being used. Please note that the Business Council of Alabama has and will continue to be a part of meaningful discussions to find solutions to this issue.

– William J. Canary, president and CEO

Hospital and Nursing Home Assessments Would be Continued

HB 347 and HB 348, both by Rep. Steve Clouse, R-Ozark, were favorably reported Wednesday by the House Ways and Means General Fund Committee.

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

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.


Prison Construction Bond Issue Bill Advances

The Senate Judiciary Committee on Thursday voting 9-1 favorably reported a revised prison-construction bill that cuts the original proposal but would still allow the state to borrow hundreds of millions of dollars to build new prisons and renovate others.

SB 59 by Sen. Ward goes to the full Senate for consideration. Sen. Ward said new construction would increase system capacity to about 15,500 beds, enough to persuade a federal judge to resist federal intervention.

The bill would create an authority authorizing the purchase of property to lease to the state as a prison. The bill also would allow the authority to issue additional bonds in the amount of $775 million for renovation of existing prisons and building up to three new ones.

Alabama’s prisons house about 23,000 inmates, far beyond their design capacity of about 13,000. Overcrowding contributes to threats of violence against both inmates and prison staff.


Bill Introduced to Protect Franchise Businesses from Harmful NLRB Rulings

Rep. Jim Carns, R-Birmingham, on Thursday introduced HB 390, the Franchise Business Protection Act that would protect successful franchise business models from a series of damaging National Labor Relations Board decisions.

The BCA supports this legislation that would protect Alabama small businesses from serious harm. The bill was assigned to the Commerce and Small Business Committee.

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.

If left unchecked, these NLRB decisions could erode the traditional independence between small business owners and their franchise brands. Some franchisors may decide to exercise greater control over wages, hiring, and other aspects of employment, essentially making individuals who thought they owned their businesses little more than company employees.

Other franchisors may take a hands-off approach and no longer offer their franchisees valuable services and advice and lead to unions demanding the opportunity to bargain with the nationally branded company in any dispute with a local small business owner.

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 can help ensure that state enforcement agencies and state courts do not adopt the expansive new federal joint-employer standard in state actions.


House Committee Reports General Fund Budget

The House Ways and Means Committee, as outlined by Rep. Steve Clouse two weeks ago at the BCA’s Tuesday morning briefing, proposed an $805 million allocation for Medicaid next fiscal year, a $20 million increase over this fiscal year’s appropriation that received a one-time allocation from the BP Deepwater Horizon oil spill proceeds. This was contained in a substituted 2017-18 General Fund budget, HB 155 by Rep. Clouse, that received a favorable report on a voice vote.

Bill to Extend Economic Development Private Investment Tax Credits Reported

SB 253, the Alabama Rural Broadband Act sponsored by Sen. Clay Scofield, R-Guntersville, was substituted and favorably reported by a vote of 12-0 by the Senate Transportation and Energy Committee on Wednesday. The bill would extend the tax credits until 2025 when they would disappear.

Under existing law, the Alabama Renewal Act was designed to create new programs within the state for the growth of business and industry in Alabama by providing certain tax credits to encourage economic development. This bill would encourage accelerated private investment in broadband infrastructure through telecommunications companies, cable companies, and electric cooperatives in rural areas by amending the Alabama Renewal Act to provide a nonrefundable, transferable income tax credit equal to 10 percent of the investment in new qualified broadband telecommunications network facilities in rural areas, subject to a cap.

Bill to Phase Out State ABC Stores Progresses

The Senate Fiscal Responsibility and Economic Development favorably reported SB 260 by Sen. Orr by a vote of 10-3. If it becomes law, Alabama Alcoholic Beverage Control Board stores would be shuttered over a period of five years beginning next year. The ABC board would determine which stores to close at the rate of 20 percent per year. The state has about 170 liquor stores and hundreds of private retailers.

Historic Building Renovation Tax Credit Bill Advances

The Senate Finance and Taxation Education Committee this week voting 12-1 favorably reported a substituted SB 262 by Sen. Jabo Waggoner, R-Vestavia Hills, the historic building renovation tax credit bill. The 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. They would be capped at $100 million over the term of the law.

Sen. Orr offered the committee substitute and stakeholders in support of the Historic Tax Credit are working with Sen. Orr 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.

The BCA is a member of a coalition of business and community groups that support renewing the Historic Tax Credit.



The Education and Youth Affairs Committee voting 7-1 favorably reported SB 267 by Sen. Dick Brewbaker, R-Pike Road, that would require county superintendents who are currently elected to be appointed in the future. A similar bill, HB 350 by Rep. Steve McMillan, R-Gulf Shores, is in the House Education Policy Committee.

In the BCA’s 2017 State Legislative Agenda, the Education and Workforce Preparedness Committee included support for legislation requiring the appointment of local superintendents.

Of the 67 county schools systems in Alabama, 37 elect their superintendents and 30 superintendents are appointed. All 69 city school systems in Alabama have appointed superintendents. Alabama and Florida are the only two states that still elect superintendents. The Mississippi Legislature passed a law in 2016 requiring all local superintendents to be appointed.

HB 371 introduced by Rep. Randall Shedd, R-Cullman, is a proposed constitutional amendment to make the state superintendent of education an elected position.

Environment and Energy

HB 376 introduced by Rep. Will Ainsworth, R-Guntersville, would remove existing exclusions from regulation for certain privately-owned water systems that discharge directly to surface waters of the state. It was assigned to the Transportation, Utilities & Infrastructure Committee.

SB 257 by Sen. Orr would authorize an larger, alternative income tax credit for the purchase and installation of irrigation equipment. A substituted version passed out of the Senate Agriculture, Conservation, and Forestry Committee on Wednesday. HB 387 by Rep. Donnie Chesteen, R-Geneva, is the House version of this bill that was introduced this week.

Tax and Fiscal Policy

SB 89 also by Sen. Orr, a worker’s comp bill that would make changes to both coverage after age 65 and to the required window to seek treatment, was carried over after Wednesday’s public hearing in the Fiscal Responsibility and Economic Development Committee. The Alabama Association for Justice spoke in opposition and the committee’s chairman suggested mediation by the Alabama State Bar.

HB 362 by Rep. Elaine Beech, D-Chatom, would authorize a local referendum in Washington County that would empower the county commission to make specific increases in the gas tax, sales and use tax, and leasing tax.

HB 375 by Rep. Joe Lovvorn, R-Auburn, would permit Class 6 municipalities that offer telecommunications services to provide those services throughout the county in which the municipality is located.

SB 79 by Sen. Trip Pittman, R-Daphne, was sent to the governor for signature this week. It authorizes the Baldwin County Commission to increase the gas tax.

SB 128 by Sen. Tim Melson, R-Florence, was voted out of the Senate this week. It would align the Alabama business privilege tax due date with the federal income tax due date and make further changes for tax preparers and to ADOR’s Taxpayer Advocate position.

SB 271 by Sen. Bobby Singleton, D-Greensboro, would provide for regulation of transportation network companies, require permits issued by the Public Service Commission, and define municipal authority regarding the industry.