Capital Briefing for Week 8 of the 2017 Session

While politics has dominated Alabama the last several weeks, the Legislature’s business continued with the House and Senate advancing important business community initiatives.

But the all-important infrastructure investment modernization bill will have to wait to fight another day after several factors, including internal House politics, stopped the bill in its tracks.

The Alliance for Alabama’s Infrastructure sponsored Tuesday’s briefing and AAI Executive Director Drew Harrell introduced Senate Confirmations Committee Chairman Clay Scofield, R-Guntersville.

He discussed Alabama’s tumultuous week that saw Governor Bentley resign and Lt. Gov. Ivey take the oath of office as Alabama’s 54th governor.

With Governor Ivey’s succession to Bentley, Senate President Pro Tem Del Marsh, R-Anniston, became the presiding officer of the Senate.

“The Business Council of Alabama wishes Governor Kay Ivey success as governor of Alabama,” BCA President and CEO William J. Canary said. “We stand ready to assist her as our Governor in all ways possible.”

After the change in administration, the Alabama Department of Revenue cancelled a hearing on a proposal to tax streaming content. The BCA had informed the ADOR of its opposition to a proposal to tax streaming content such as movies.

Through Day 17 of the session, the House has introduced 510 bills and the Senate 372. The House and Senate return Tuesday, April 18, to continue the regular session that must end on or before May 22.


House Committee Votes Out Accountability Act Tweak

SB 123, the Accountability Act update by Sen. Marsh, was favorably reported by the House Ways and Means Education Committee on a voice vote. A controversial amendment by Rep. Craig Ford, D-Gadsden, was added in committee that would prohibit any child not in a failing school from receiving a tax credit if the child was zoned for a failing school and had already enrolled in a private school before receiving a credit. This amendment was added as a “transparency in reporting” measure and many members did not understand the intent. Since students must reapply every year for a scholarship, even if they have previously received one, this could potentially limit children from continuing in the scholarship program. Potentially, a student could receive a scholarship for a full school year but then be forced to return the next year to the school they chose to leave.

SB 123 would amend the Alabama Accountability Act of 2013 tax credit scholarship program by increasing the maximum income tax credit that individuals may claim for donations to a scholarship granting organization from $50,000 to $75,000, and from 50 percent to 75 percent of their tax liability, among other provisions. Sen. Marsh said the intent of his bill is to ensure students who receive scholarships under the AAA don’t lose them in subsequent years because funding falls short. Public school-choice advocates including the BCA support it while superintendents, the Alabama Education Association, and school boards oppose the legislation.


House Sends Solid Waste Siting Procedure Bill to Senate

The House on Tuesday voted 102-0 to send HB 328 by Rep. Alan Baker, R-Brewton, to the Senate. The bill would require a local governing body’s approval for siting a new solid waste management facility located within the jurisdiction of the governing body. The bill 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. An amendment was added to require the local governing body to act within 30 days after a public hearing to complete its review of the local solid waste management plan and decide whether to approve or disapprove the siting of a new solid waste management facility.

It’s the House version of SB 259 by Sen. Greg Albritton, R-Bay Minette, that was on the Senate calendar. The bills are the result of a working group of legislators and stakeholders including the BCA.

Agricultural Irrigation Measure Gets Senate Approval

The Senate voting 29-0 on Tuesday approved SB 257 by Sen. Arthur Orr, R-Decatur, that would authorize a larger, alternative income tax credit for the purchase and installation of irrigation equipment. Sen. Orr said Alabama’s farm acreage under irrigation lags that of Georgia and Mississippi. He said tax credits for irrigation equipment will increase the productive farm acreage in Alabama and encourage agriculture income growth.


House Committee Reports Costly Health Mandate Bill

The House Insurance Committee on Wednesday favorably reported an amended HB 284 by Rep. Jim Patterson, R-Meridianville, that would require all private health insurance policies offered in Alabama to cover autism therapies. Two amendments were added in committee. The first by Rep. Jack Williams, R-Vestavia, provides certain caps for the therapies’ cost – $40,000 for children up to the age of nine, $30,000 for children between the ages of 10-14, $20,000 for children between the ages of 15-19, and $10,000 for those age 19 and older. This amendment also includes language that if the total costs associated with the coverage of ABA therapies exceed 1 percent of a health benefit plan’s premiums charged and those cost would solely lead to an increase in average premiums charged of more than 1 percent, then the health benefit plan may choose to opt-out of the mandate requirements. The second amendment, by Rep. Anthony Daniels, D-Huntsville, added children covered by Medicaid and All-Kids to the mandate. Rep. Patterson’s original bill excluded Medicaid and All-Kids. The committee debated whether to vote on the bill since the Legislative Fiscal Office had failed to provide any cost estimates for the legislation. Ultimately, the committee decided to vote on the bill despite not knowing the cost to the state and to those who purchase health insurance. Stakeholders and legislators were assured that because the bill now has coverage parameters, the Legislative Fiscal Office will be able to provide a fiscal note.

The bill is now in position to be debated by the full House.

The BCA opposes this bill due to it being an expensive mandate on both public and private health plans. In a recent op-ed, Canary wrote: “If the Alabama Legislature is going to start aggressively inserting itself in health insurance agreements, it should be honest about who is footing the bill and call it what it is: a new health insurance tax.”

During the debate, Rep. Patterson stated that “the only way you get anything like this covered is through a mandate. When it comes to insurance, if you don’t mandate it, it doesn’t happen.”

Patterson’s comments are in sharp contrast with President Donald Trump’s recent remarks: “Mandating every American to buy government-approved insurance was never the right solution for our country.”

“Mandates are not free,” Canary said.


Impeachment Process Fine-Tuning Advances

The Senate Judiciary Committee voting 10-0 favorably reported SB 366 by Sen. Phil Williams, R-Rainbow City. It would provide for the enforcement of subpoenas and penalties for noncompliance during impeachment proceedings, which the House just concluded. Non-compliance could lead to arrest and imprisonment due to neglect or refusal to appear, testify, produce documents or evidence, or for engaging in disorderly conduct during impeachment proceedings under this bill.

This bill is part of a larger effort by a group of senators led by Sen. Williams to develop impeachment procedures for the Senate to follow in the future by looking at impeachment efforts in recent years in Illinois and at the federal level.

Problematic Medicaid False Claims Act Legislation Introduced

SB 367 by Sen. Trip Pittman, R-Daphne, would establish a state version to the federal False Claims Act for Medicaid fraud purposes. The bill was introduced on Tuesday and discussed in the Senate Finance and Taxation General Fund Committee on Wednesday before being carried over by the bill sponsor. This bill attempts to address the issue of Medicaid fraud by creating new civil penalties on defendants of $5,500 to $11,000 and two times to three times the amount of alleged damages to the state, a complicated new civil cause of action with financial rewards of up to 30% of case proceeds/settlement amount for the plaintiff in addition to attorneys’ fees, and significant workplace regulations on businesses with plaintiff employees.

The BCA has raised serious concerns about the creation of new engines for litigation against the private sector, and the U.S. Chamber of Commerce’s Institute for Legal Reform (ILR) has specifically criticized the adoption of state-level analogues to the federal False Claims Act (FCA). While Alabama could get an increased share of federal FCA funds by passing a state-level FCA, that gain could be wiped out or even turned into a net loss for the state once the additional costs of paying state “bounties” to plaintiffs (and their attorneys) are factored into the equation. Please see this ILR report on the issue for more information.

Reducing fraud and waste in Medicaid is important to the health of both the program and those it benefits, but fast-tracking a complex new cause of action with legitimate questions of effectiveness is not the correct path forward.  The BCA has been a part of discussions on this bill and will continue to raise concerns about the unintended consequences of creating new civil causes of action.

Ban the Box for Government Hiring Advances

The Senate Judiciary Committee voted 6-2 Wednesday to favorably report SB 200 by Sen. Quinton Ross, D-Montgomery.As introduced and amended, SB 200 would prohibit the state of Alabama, its agencies, and its political subdivisions from requiring a job applicant to provide his or her conviction history, if any, during the public employment application process until after a conditional job offer has been made. Exceptions would be allowed if the conviction is directly related to the position sought.

The BCA has worked with Sen. Ross on multiple previous versions of this legislation and will continue to work with him and other stakeholders to help those who deserve a second chance while also protecting employers offering one.


Work Will Continue on Transportation Infrastructure Investment

The House adjourned Thursday with HB 487, the infrastructure investment bill by Rep. Bill Poole, R-Tuscaloosa, carried over.

Earlier in the week, the House Transportation, Utilities & Infrastructure Committee favorably reported HB 487 which would provide much-needed additional funding to enhance and improve Alabama’s transportation system at both the state and local levels by increasing the state gasoline and diesel fuel tax by 4 cents in 2017 and 2 cents in 2019, with a conditional increase of 3 cents in 2024.

Cities, counties, and the state would receive funding from bond issues totaling $2.4 billion for improving and replacing roads and bridges with emphasis on safety, bridge replacement, and the enhancement of the state’s neglected Farm-to-Market Road System. HB 487 also would have provided money to match and leverage any funding provided from the anticipated federal infrastructure program that is a priority of the Trump administration.

“Now is the time to address infrastructure in Alabama,” BCA President and CEO William J. Canary said. After the bill was carried over, Canary issued a statement advocating for continued support to improve Alabama’s infrastructure, the heart and arteries of economic development.

The last time Alabama increased its infrastructure investment was in 1992. “During that quarter-century, vehicle fuel economy and road construction inflation minimized the ability to pay for improvements,” he said.

Governor Kay Ivey also provided her support and encouragement of HB 487 on Thursday by issuing a statement supporting those legislators willing to better fund our state’s roads and bridges. “I support the legislature’s bold move to invest in infrastructure upgrades and public safety. Roads and bridges are an essential service of government, and investing in them will bring more jobs and businesses to our state, creating opportunities for everyone,” said Governor Ivey in her statement.

“The Alliance for Alabama’s Infrastructure commends Rep. Bill Poole and those members of the Legislature who are willing to help move our state forward,” said AAI Chairman Jim Page. “AAI will remain focused on successfully investing in our state’s infrastructure in this legislative session because this is too important of an issue to continue to ignore.”

Streaming Video Tax Hearing Cancelled

The Alabama Department of Revenue cancelled a Tuesday administrative hearing on its proposed rule to tax digital transmissions. Canary had written the ADOR to register opposition to the department’s proposal. “In our opinion the proposed regulation far exceeds the authority of the Department by attempting to expand the tax beyond the statute, thereby intruding into the exclusive province of the Legislature,” Canary wrote.

Rural Broadband Initiative Bill Passes Senate

The Senate on Tuesday passed SB 253, the Alabama Renewal Act, by a vote of 31-1. The bill by Sen. Scofield would provide a tax credit of 10 percent for broadband technology investment, capped at $20 million a year. “If we max out the $20 million Alabama will realize $200 million in investment in rural Alabama infrastructure,” he told this week’s Tuesday briefing.

Government Owned Network Expansion Discussed in House Committee

The House Commerce and Small Business Committee on Wednesday conducted a public hearing on HB 375 by Rep. Joe Lovvorn, R-Auburn, but did not vote. The bill would permit Class 6 municipalities that offer telecommunications services to compete against private enterprise by providing those services throughout the county in which the municipality is located.

The BCA’s legislative agenda opposes state and local efforts to authorize and fund government-owned broadband networks that would directly compete with the private sector outside of the jurisdiction allowed under current law, which would create an un-level playing field.


Environment and Energy

HB 498 and HB 507, introduced Tuesday and Thursday respectively and sponsored by Rep. Chris Sells, R-Greenville, along with SB 372 by Sen. Orr, among other things, would regulate the unauthorized use of drones over certain industrial facilities.

HB 498 was assigned to the House Judiciary Committee and HB 507 was assigned to the House State Government Committee. SB 372, introduced Thursday, was assigned to the Senate Governmental Affairs Committee.

Judicial and Legal Reform

The House Commerce and Small Business Committee on Wednesday favorably reported HB 283 by Rep. David Faulkner, R-Birmingham. It would streamline the existing patchwork of licensing and regulation that impact transportation network companies and their drivers such as Uber.

SB 361 by Sen. Orr would make a substantial number of changes and updates to Alabama’s partnership law. The Senate Judiciary Committee favorably approved the measure on Wednesday.

Tax and Fiscal Policy

HB 263 by Rep. Ken Johnson, R-Moulton, relating to the existing apportionment rules of the financial institution excise tax (FIET), would codify the practice of including loans and credit card receivables as part of the “property” factor of the formula. This bill was sent to the governor for her signature on Thursday.


The Business Council of Alabama Wishes Governor Kay Ivey Success as Governor of Alabama

Lt. Gov. Ivey became Alabama’s 54th governor following the resignation of Gov. Bentley after he pleaded guilty to misdemeanor campaign finance and ethics violations. She took the oath of office on Monday. “Today’s transition should be viewed as a positive opportunity and a demonstration of our successful practice of the rule of law,” Governor Ivey said.

Governor Bentley resigned after release of the House Judiciary Committee impeachment report. Even though he resigned, the Senate continued on a path of refining the Legislature’s authority during the impeachment process with SB 366 that wouldcompel compliance with legislative subpoenas during impeachment proceedings by providing for penalties for non-compliance with subpoenas.

This week, WSFA interviewed Billy Canary regarding the impact of the new governor on business and future economic development opportunities.