Capital Briefing for Week 9 of the 2017 Session

A Tale of Two Bills, But There Might Be a Silver Lining

Last week, the House missed a significant opportunity to move Alabama forward by failing to muster a vote on a bill to invest in Alabama’s infrastructure, which would cost users about $3.50 a month to improve our roads and bridges. The bill would have authorized a 4 cent user fee increase on gasoline and diesel to update the 25-year-old motor vehicle fuel tax and pay for hundreds of millions of dollars of needed road and bridge work. Forty percent of the total amount of this user fee is paid by the trucking industry, a strong advocate for the passage of HB 487.

This week the same House passed HB 284 – essentially an Obamacare-like tax hike – mandating autism spectrum disorder treatment health insurance coverage without any indication of the real cost to policy holders, which could be millions of dollars, to businesses, individuals, and to taxpayers who pay for state employee, teacher health insurance, and Medicaid.

“You’re right, the people will pay for it,” bill sponsor Rep. Jim Patterson, R-Meridianville, said.

House members Thursday voted 100-0-3 to pass the twice-amended HB 284.

If the bill becomes law, individuals, small businesses, governmental employees, and taxpayers will pay for the increase in insurance costs, could lose some other benefit, or even insurance coverage. Some small companies struggling to provide health insurance coverage could move to the tipping point of having to drop coverage due to the new mandate.

The bill would mandate coverage for autism therapies even though the overwhelming majority of policyholders who will pay for this won’t benefit from the coverage. “The only way you get anything like this covered is through a mandate,” Rep. Patterson said.

It’s essentially a tax on people and businesses who pay insurance premiums, as if they aren’t high enough already partly due to outside forces such as Obamacare. “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-simple fact; mandates are not free,” Business Council of Alabama President and CEO William J. Canary said.

Ironically, debate in the Republican-controlled House over this mandate coincided with a renewed charge in Washington by Republicans, who, over the last four elections ran on repealing and replacing Obamacare, to dismantle Obamacare through the budget process. President Trump is supporting the effort, he said at a press conference with the Italian prime minister.

HB 284 is an unfunded mandate for an already strapped Alabama Medicaid program funded by the General Fund.

Rep. Patterson’s bill goes to the Senate where 21 Alabama senators two years ago passed a resolution opposing Medicaid expansion. The resolution stated, “expansion of Medicaid would further strain the state General Fund, where Medicaid is already the largest line-item…”

Since last year when a common-sense autism bill was introduced by Sen. Gerald Allen, R-Tuscaloosa, and this year by Rep. Jack D. Williams, R-Vestavia Hills, the issue hasn’t been about withholding autism treatment. It’s about the mandated cost.

The BCA supported the first autism therapy bill that was a consensus of an autism working group to appropriate $3 million to the Alabama Department of Mental Health to administer the limited program that would allow time to figure out the true expense. That bill was rejected in favor of Rep. Patterson’s expensive mandate on “all” public and private health plans.

However, if there is any silver lining, there are major concessions in the legislation:
One amendment says that if the total cost associated with the coverage of ABA therapies exceeds 1 percent of a health benefit plan’s premiums charged, then the insurer may opt out of the mandate for one year.

During House floor debate, Rep. Phil Williams, R-Monrovia, a small businessman, said he pays $1,800 a month for health insurance.

That’s the true cost of his coverage – not the smaller out-of-pocket subsidized premium cost for a teacher, or state employee, or factory worker whose insurance costs are largely borne by the employer who is the ultimate payer in any organization, whether it’s the taxpayer or private business. Any increase would be expensive.

Secondly, the original bill did not include Medicaid and All-Kids, which the BCA repeatedly pointed out during debate. The amended HB 284 added Medicaid, which mostly covers children, and All-Kids. Now these children covered by Medicaid and All-Kids- nearly 50 percent of all children in Alabama – will receive the same benefits.

In the policy arena, opinions are opinions, which everyone is entitled to, but not his or her own facts.

The fact is the Legislative Fiscal Office hasn’t determined the cost of HB 284 except to say it will increase the financial obligations of Medicaid (read General fund), the Department of Public Health, the Public Education Employee Health Insurance Board (PEEHIB), and the State Employee Insurance Board (SEIB), by an undetermined amount by requiring that all health benefit plans in the State of Alabama, including PEEHIB, SEIB, Medicaid and the Children’s Health Insurance Program (CHIP), provide coverage for the treatment for autism spectrum disorders up to the specified caps on coverage.

“The actual cost to the entities to provide this coverage is undetermined at this time …” the LFO said, noting that it will be dependent upon the number of insured with an autism spectrum disorder, rates negotiated by the health benefit plan with the providers of autism services, and the cost to provide the services.

The bill goes to the Senate where senators must seek answers to the bill’s unknown cost to the private and public sectors.

That action and more occurred during the ninth week of the 2017 legislative session that began with the Tuesday briefing featuring Education Policy Committee Chair Rep. Terri Collins, R-Decatur.

The Poarch Band of Creek Indians sponsored Tuesday’s briefing and tribal vice chairman Robert McGhee introduced Rep. Collins.

She spoke about the rise in power of women, mentioning Supreme Court Justice Lyn Stuart administering the oath of office as governor to Kay Ivey, and the Ethics Commission sending the report on then-Governor Bentley to a special prosecutor, former Montgomery County District Attorney Ellen Brooks.

The House acted positively this week, passing the historic building renovation tax credit bill by Rep. Victor Gaston, R-Mobile.

Through Day 19 of the session, the House has introduced 551 bills and the Senate 393. The House and Senate return to Montgomery on Tuesday, April 25, to continue the regular session.


Charter School Law Improvements Pass Committee

The House Education Policy Committee voted 7-6 to favorably report HB 245 by Rep. Collins and send it to the House. This bill would update the public charter school law by amending 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.

In addition, the governor, lieutenant governor, House speaker, and Senate pro tem would receive appointing authority to the Alabama Public Charter School Commission instead of the State Board of Education, among other provisions.


BCA Testifies in Public Hearing on Alabama Medicaid False Claims Act Bill

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 the subject of a public hearing in the Senate Finance and Taxation General Fund Committee on Wednesday, where the BCA and the health care provider community shared concerns about the legislation and suggested alternatives.

This bill attempts to address the issue of Medicaid fraud by creating new civil penalties on defendants of between $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 percent of case proceeds-settlement amount for the plaintiff in addition to attorneys’ fees, and significant workplace regulations on businesses with plaintiff employees.

The Business Council of Alabama 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.

Sen. Pittman indicated that a substitute bill was being worked on, but had not been released as of this writing.

Senate Passes Gun Bill to Limit Need for Conceal Carry Permits

Despite an attempted filibuster, the Senate voting 26-8 on Tuesday passed SB 24 by Sen. Gerald Allen, R-Cottondale.

The bill 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. It would add further requirements for owners of restricted-access buildings or facilities to prevent firearms from entering or being on-site.

The original bill would have removed the existing requirement for either a concealed weapon permit or property owner consent to carry a pistol on private property belonging to another person or business, but an amendment was adopted to keep those provisions in force.


Franchisees Could Soon See Fair Protection

The Senate Committee on Fiscal Responsibility and Economic Development voting 10-0 on Wednesday favorably reported HB 390, the Franchise Business Protection Act, by Rep. Jim Carns, R-Birmingham.

The bill that has broad support in the business community would protect franchise businesses from harmful National Labor Relations Board rulings such as a precedent that classified a franchisee and a franchisee’s employees as employees of the franchisor.

HB 390 provides that the following persons may not be 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.

HB 390 would clarify 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.


Historic Renovation Bill Advances

The House on Tuesday passed HB 345 by Victor Gaston, the historic building renovation tax credit bill, by a vote of 95-7. The bill goes to Senate where Sen. Jabo Waggoner, R-Vestavia Hills, has a companion bill, SB 262. The House bill will be the one that advances.

House Bill 345 as amended would reestablish for five years a tax credit for qualifying historic building renovation that expired in 2016. The total amount of tax credits to be granted in any one year would be $20 million and $100 million over the five-year life of the rule. The maximum credit for any one project would be $5 million and $50,000 for a certified historic residence.

Tax credits granted to a partnership, a limited liability company, S Corporations, trusts, or estates shall be claimed at the entity level and cannot be passed-through to the partners, members, or owners. The Alabama Historical Commission would administer the credits.

Government Competition Bill Stalls in Committee

The House Commerce Committee this week failed to report HB 375 by Rep. Joe Lovvorn, R-Auburn. The bill would have allowed the city of Opelika’s utility provider to compete with private industry providers of cable, Internet access, and other Internet services. Opelika Power Services wants to expand its Internet service outside of Opelika’s municipal jurisdiction and had received authority to issue $43 million in bonds to be paid by OPS revenue.

The BCA opposes this bill as it did the Senate version by Sen. Tom Whatley, R-Auburn, that failed last week.


Environment and Energy

SB 257 by Sen. Arthur Orr, R-Decatur, would authorize a larger, alternative income tax credit for the purchase and installation of irrigation equipment. The bill was given a favorable report by the House Agriculture and Forestry Committee on Wednesday.

Judicial and Legal Reform

The Senate Judiciary Committee on Wednesday favorably reported HB 279 by Rep. Alan Baker, R-Brewton. It 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.

Labor and Employment

The House voting 88-9 on Thursday passed a substitute version of HB 277 by Rep. Pebblin Warren, D-Tuskegee. It’s a compromise to increase oversight without the state infringing on the rights of religious institutions. HB 277 would increase state oversight of religiously affiliated child care facilities that are currently exempt from most inspection and licensure.

Tax and Fiscal Policy

Newly introduced SB 377 by Sen. Del Marsh, R-Anniston, would repeal the Alabama New Markets Development Act on January 1, 2018. The bill would allow any taxpayer earning a tax credit under the Act prior to that date to carry forward any unused amounts.

Sen. Pittman, R-Daphne, introduced SB 373 that would extend the Alabama Jobs Act provisions through Dec. 31, 2023, while exempting megaprojects with a capital investment of at least $100 million and at least 500 employees at one site from the current law’s $850 million cap.


Selma Legislator Takes Office

Newly elected State Rep. Prince Chestnut, D-Selma, took the oath of office in the Alabama House this week to succeed Rep. Darrio Melton, who was elected mayor of Selma in October.

Rep. Chestnut, representing District 67, is an attorney and municipal judge for the city of Selma who was endorsed by the Business Council of Alabama.

“Rep. Chestnut will stand be a good representative for his constituents in west-central Alabama,” said BCA President and CEO William J. Canary. “We look forward to working with him on business issues not only for his district in Dallas and Perry counties but all of the state of Alabama. Congratulations are due Rep. Chestnut.”

Former House Speaker Joe McCorquodale Dies

Former House Speaker Joe McCorquodale Jr., a Democrat from Clarke County who served as speaker from 1975 until 1983, died this week. The World War II Army Air Corps veteran was 96.

Businessman McCorquodale ran for governor in 1982 but lost in the primary to George Wallace who would win a runoff and the general election and serve his last term.

McCorquodale was first elected to the House in 1959. He hired now-Governor Ivey as a reading clerk in the House in the 1970s. “I counted him as a friend, a mentor, and a colleague,” she said.