One-third of the 2016 regular legislative session is in the books. Thursday was the 10th working day of the session, which cannot last beyond 30 working days.
Bills important to the business community and actively supported by the Business Council of Alabama gained traction this week in committees and on the floor of the House and Senate, including an important bill dealing with private-sector minimum wage scales.
On Thursday the Senate voting 23-10 passed the all-important HB 174, which would prohibit local governments from setting minimum wage and other employment laws for private employers. The Governor signed the bill by Rep. David Faulkner, R-Birmingham, on Thursday evening.
The Business Council of Alabama thanked the legislators who voted for HB 174 and those in the business community who worked diligently to see that Alabama keeps a consistent policy on private-sector minimum wages and prohibits a hodge-podge of confusing and counter-productive wage scales.
“Alabama consistently follows the federal minimum wage and this bill will keep Alabama’s private employer minimum wage uniform and competitive,” said BCA President and CEO William J. Canary. “A patchwork of minimum wage ordinances will cause confusion and cost businesses resources they can use to reinvest in themselves in order to maintain and create jobs.”
The House passed an economic development bill, HB 34 by Rep. Mac McCutcheon, R-Huntsville, that will help Alabama’s ports in Mobile and Huntsville remain competitive. “It helps existing sites, and helps develop new sites,” said Rep. Alan Harper, R-Northport.
The Senate Fiscal Responsibility and Economic Development Committee favorably reported HB 36 by Rep. Kyle South, R-Fayette. HB 36, the Small Business Act, incentivize small businesses to create more jobs.
This week’s Tuesday Briefing sponsored by the Business Education Alliance of Alabama featured House Education Policy Committee Chair Terri Collins, R-Decatur, the sponsor of HB 125 that is supported by the BCA. HB 125 would authorize collection of aggregate student performance data in order to evaluate how Alabama schools are linking education to potential careers.
The Senate passed a $1.8 billion General Fund budget for next fiscal year, which begins Oct. 1. House Ways and Means Education Chairman Bill Poole, R-Tuscaloosa, said he expects the 2016-17 Education Trust Fund budget to begin moving next week.
The House and Senate will reconvene Tuesday to begin the fifth week of the session.
EDUCATION/WORKFORCE PREPAREDNESS
House Passes Technology and Funding Bills for Schools With Strong Bi-Partisan Support
The House voted 59-37 on Thursday to pass Rep. Collins’ HB 125 and send it to the Senate.
HB 125 as substituted and amended would create the Alabama Longitudinal Data System that will match student performance data and workforce data to be administered by a newly created Alabama Office of Education and Workforce Statistics created within the Department of Labor.
In addition, K-12 education, higher education, and junior colleges will be required to define remediation.
Rep. Collins explained the importance of HB 125 that will greatly aid the evaluation of how well students do from early schooling to their first jobs.
“The data will help us do research on what works,” Rep. Collins said. “This will give us real information, productive information.”
HB 125 will help Alabama move to the forefront of workforce development. “It lets students know what the possibilities are for good career choices early on,” Rep. Collins said.
The bill was sent to the Senate for consideration. The Alabama Workforce Council recommends this legislation and the BCA fully supports its passage.
An amendment was added on the House floor that would prohibit public funding to flow to private schools. Due to the unknown implications of this amendment, it is unclear if the Senate will approve the change.
Alabama to Lead Nation by Expanding Wi-Fi to all Schools
The House unanimously passed BCA-supported HB 41, a bill that will provide technology in public school classrooms. Immediately following the 105-0 vote on HB 41, the House voted 104-0 to pass HB 227, which will provide $12 million to fund the wireless broadband technology authorized in HB 41.
HB 41 went to the Senate Finance and Taxation Education Committee that issued a favorable report with a 12-0 vote. The Senate committee favorably reported HB 227 on a vote of 11-0.
HB 41, known as the WIRED Act, sponsored by Rep. Donnie Chesteen, R-Geneva, would amend the Alabama Ahead Act and enable high-quality Wi-Fi broadband access in all Alabama public schools. “For many years, Alabama was at the bottom of most public school performance measures, but this legislation will allow us to lead the way in providing 21st Century technology and infrastructure without making additional demands on Alabama taxpayers,” he said.
It would provide grants to local school systems to buy, install, or upgrade their wireless broadband infrastructures by leveraging available federal e-rate dollars. Remaining funds would be used to buy mobile digital devices.
House members applauded Rep. Chesteen’s bill that would set up the Alabama Ahead Oversight Committee.
“This probably will be the No. 1 thing that will level education, whether those students are in charter schools, home schools, or public schools,” said Rep. Oliver Robinson, D-Birmingham. “It’s a roadmap for better education in the state of Alabama.”
The bill also will take care of local systems that already have purchased equipment. “This takes us into the technology era,” said Rep. Juandalynn Givan, D-Birmingham.
Rep. Poole’s HB 227 would provide a total of $12 million in matching funds for local school systems under HB 41.
“Funding is available immediately upon signature,” Rep. Poole said. “Those dollars are on hand. It will be allocated to systems on a fair and equitable allocation.”
Rep. Mark Tuggle, R-Alexander City, said “because of the difficult decisions we’ve made in five years, this money is available” from the Education Trust Fund.
School systems that have already bought wireless broadband that meets standards may use the grants to purchase wireless devices, pay off existing debt dedicated toward wireless capabilities, or buy other hardware or software needed to enhance the digital learning environment, House Speaker Mike Hubbard’s office said in a release.
JUDICIAL AND LEGAL REFORM
Data Breach Notification Bill Passes Senate Committee
Alabama’s Attorney General is actively promoting a bill that would require businesses to notify consumers and the Attorney General’s office if a data breach occurs that contains “sensitive personally identifying information” affecting more than 1,000 Alabama residents.
SB 238 by Sen. Arthur Orr, R-Decatur, also would allow the Attorney General to impose civil penalties up to $50,000 on businesses that do not comply with the act. Government entities are also required to report data breaches, but they are exempt from any fines.
The Senate Fiscal Responsibility and Economic Development Committee favorably reported SB 238 on Wednesday.
Sen. Orr introduced a similar bill last year. This year’s version addresses many of the concerns raised by the business community. However, concerns were raised during the committee discussion about a provision in the bill that states “a violation of this act is a deceptive trade practice.”
The concern stems from a recent U.S. 11th Circuit Court of Appeals opinion that exposes businesses to class action lawsuits under the Alabama Deceptive Trade Practices Act.
This reference to deceptive trade practices in SB 238 has created concern and confusion within the business community and the Legislature.
Alabama is one of two states that does not have data breach notification laws. Data security breaches are serious problems for any entity that possesses personal data, and businesses invest millions of dollars annually on data security measures.
The failure of Congress to pass a comprehensive data breach notification law has resulted in states adopting a patchwork of notification laws with which businesses have to comply.
As a recent article from The Hill explains: “One federal standard that applies to data breaches involving disclosure of personally identifiable information belonging to consumers and employees/applicants will provide a uniform compliance standard for businesses.
“Businesses will be able to develop a comprehensive policy and protocol regarding steps to take in the event of a data breach based on the federal standard and eliminate the impracticalities and doubts created by different state compliance standards.
“Data breach notification laws should not exist simply to provide plaintiff’s lawyers with an avenue for filing claims against businesses that are nothing more than games of ‘gotcha’ in the event a business fails to comply with the details of every state data breach notification law that applies to it. Legislators at both the federal and state level should be concerned with providing clear guidance to businesses about how to notify those affected by a data breach, which will benefit all parties involved in a data breach.”
LABOR AND EMPLOYMENT
BCA Applauds Legislature for Protecting Jobs with Uniform Minimum Wage Act
Alabama does not have a minimum wage law but chooses to follow the federal minimum wage. When Birmingham approved an accelerated calendar for a $10.10 minimum wage on private employers, uniformity and consistency were threatened.
Rep. Faulkner sponsored HB 174 that would prohibit local governments from setting private employer minimum wage scales.
The House on Feb. 16 passed the bill 71-31 and the Senate voting 23-10 to pass the Alabama Uniform Minimum Wag and Right to Work Act that prohibits local governments from requiring minimum wage or other benefits. The Governor signed it into law.
The BCA, Alabama Retail Association, NFIB, Alabama Restaurant Association and other business groups worked diligently and rallied support for HB 174. The bill was handled in the Senate by Sen. Jabo Waggoner, R-Vestavia Hills.
“Governor Bentley and the legislative leadership including Sen. Marsh and Speaker Hubbard as well as bill sponsors Rep. David Faulkner and Sen. Jabo Waggoner showed real leadership in passing this legislation is such a short time frame,” Canary said. “People’s jobs were at stake and they delivered.”
Committee Votes on Workers’ Compensation Law Change
The Senate Fiscal Responsibility and Economic Development Committee voted 12-2 this week to favorably report SB 122 by Sen. Arthur Orr, R-Decatur.
SB 122 will bring Alabama’s Workers’ Compensation law more in line with the laws of adjacent states and enable Alabama to remain competitive compared with those states.
This bill would revise portions of the workers’ compensation law to limit an employer’s liability for permanent total disability benefits after the 65th birthday or 500 weeks after the date of injury, whichever is longer, and would limit the obligation of an employer to pay medical benefits if an employee does not seek prompt medical attention for a claimed work injury.
Alabama’s current WC obligation is for the life of a recipient whether he or she has seen a physician years after the original injury. SB 122 will require a WC recipient to maintain a medical determination every two years in order to continue receiving benefits.
The bill would end the employer’s obligation to continue paying workers’ compensation benefits for a recipient who does not see a doctor for more than four years. The presumption is that an injury reported after a lapse of four years of medical treatment would not be related to the original workers’ compensation injury.
Right-to-Work Bill Is on Senate Committee Agenda
After the House, led by Speaker Mike Hubbard, R-Auburn, voting 69-33 passed a proposed constitutional amendment that would solidify Alabama’s standing as a right-to-work state, the bill was assigned to the Senate Fiscal Responsibility and Economic Development Committee.
HB 37 by Rep. Arnold Mooney, R-Birmingham, was on the committee’s agenda Wednesday when the committee had to adjourn due to the imminent start of the Senate session.
If the Senate passes the bill and it is approved by voters in November, Alabama’s status as a right-to-work state will be strengthened. It also will help spur investment and job creation by potential industrial prospects.
HB 37 is part of the BCA’s 2016 legislative session priority list and is part of the House Republican Caucus’s 2016 “Right for Alabama” legislative agenda.
The BCA’s Canary wrote an op-ed and a letter to editors, which were published this week.
SMALL BUSINESS
Bill to Boost Small Business Hiring Sails Through Senate Committee
The Senate Fiscal Responsibility and Economic Development Committee voting 15-0 on Wednesday favorably reported South’s HB 36, the Small Business Act.
HB 36 would authorize a tax credit of $1,500 per employee for a business of 75 employees or fewer for hiring a new, full-time resident of Alabama in a job that pays at least $40,000 a year.
HB 36 is a BCA priority and is part of the BCA’s legislative agenda for 2016. It also is a priority of the House Republican Caucus, which recognizes that small businesses have created more than 65 percent of new jobs over the past 20 years nationally.
HB 36 defines a small business as having 75 or fewer employees, is qualified to do business in Alabama, and is headquartered in or has its principal place of business in the state. Any employee the business claims for the tax credit must not have been employed by that company full time 12 months prior to the start of the qualifying hire.
This bill also will authorize an additional $1,000 tax credit for hiring a recently deployed and unemployed veteran of the U.S. Armed Services.
HB 36 would require the Department of Revenue to actively promote the tax credits allowed under the Small Business Act along with other tax credits available for small businesses, such as the Full Employment Act of 2011 and the Heroes for Hire Tax Credit Act.
House Committee Discusses Small Business Investment Fund
The House Ways and Means Education Committee conducted a brief public hearing on HB 224 sponsored by Rep. Danny Garrett, R-Trussville. The committee did not vote.
HB 224 would create the Alabama Small Business Investment Company Act and provide for insurance premium tax credits to insurance companies who make capital contributions to an Alabama small business investment fund certified by the Department of Commerce. The credits would not be allowed to exceed $12.5 million a year up to a maximum of $100 million over the eight-year life of the program.
The credits would be nonrefundable and may not be sold, transferred, or allocated to any other entity other than an affiliate subject to insurance premium taxes. The Department of Commerce would oversee the program and establish the necessary rules and regulations for its administration.
TAX AND FISCAL POLICY
Republicans and Democrats Lend Unanimous Support for Jobs Bill
The House this week voting 105-0 approved HB 34, the important job-creating Alabama Renewal Act, sending it to the Senate.
McCutcheon’s HB 34 will create a number of new programs to enhance Alabama as a place to do business by authorizing a tax credit for increased use of the state’s port facilities, create the Growing Alabama Act tax credit to address economic development, and create the Renewal of Alabama Commission that will consider applications for the credit.
“This creates an opportunity for us to bring in business to Alabama ports at Mobile and Huntsville,” McCutcheon said. The port-usage tax credit will be capped at $5 million with a cumulative cap of $12 million.
A committee substitute will allow local economic development organizations to have direct input in developing sites and creates an oversight commission to include House and Senate members.
Port credits issued for economic development project agreements may have allocations made by the Governor and approved by the Renewal of Alabama Commission if a company commits to invest at least $20 million and create 75 jobs.
In addition, a taxpayer would be allowed a Growing Alabama Credit limited to 50 percent or less of a taxpayer’s tax liability. Unused credits may be carried forward for up to five years.
The nine-member Renewal of Alabama Commission would oversee and approve the administration of the credits and would annually report to the Legislature.
The BCA supports this legislation.
House Committee Approves Historic Structure Rehabilitation Tax Credit Extension
The House Ways and Means Education Committee also favorably reported an amended HB 62 by Rep. Victor Gaston, R-Mobile. HB 62 as amended would extend tax credits for rehabilitating qualified structures for seven years, until 2022.
HB 62 would extend the current state tax credit that expired in 2015. Any unused portion of the credits may be carried forward for up to 10 additional tax years and credits may also be transferred and assigned until used.
An amendment added to the bill by Rep. Phil Williams, R-Huntsville, would suspend and carry over the tax credit during any year in which the Governor declares proration in either the General Fund or the Education Trust Fund or if either fund is level-funded based on the prior fiscal year’s amount. This amendment is not supported by bill proponents.
HB 62 now goes to the full House for consideration. The Senate companion bill is SB 230 by Sen. Waggoner.
The BCA is a member of a coalition advocating for this important legislation. Learn more about how extending this tax credit benefits Alabama at www.advancealabama.org.
Medicaid at Center of General Fund Debate; ADEM Funding Improves
SB 125 sponsored by Sen. Trip Pittman, R-Montrose, is a proposed General Fund budget that was approved 23-10 in the Senate on Thursday night. The $1.8 billion budget for FY 2016-17 would level fund most state agencies, with minor increases for the court system and National Guard.
However, level funding for the state Medicaid system, at $685 million, would be approximately $100 million less than requested by the Alabama Medicaid Agency to maintain current service levels and implement the RCO reforms that were recently approved by the federal government.
In early February, BCA and the Alabama Hospital Association hosted a forum to educate legislators on the current state of Medicaid and the RCO implementation process.
SB 125 now awaits deliberation in the House.
The proposed FY 2016-17 General Fund budget maintains the FY 2015-16 reduction in appropriations to ADEM; however, unlike last year, the budget does not divert nearly $1 million in permit fees collected by ADEM which is positive for Alabama’s regulated community.
In December 2015, the Alabama Environmental Management Commission (AEMC) increased fees 20 percent for most permits due to the Legislature diverting nearly $1 million in collected fees to other state agencies.
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. All Alabamians benefit from environmental action, not just the industries that need fees to operate, fees which often cannot be passed on.
The proposed budget also restores $280,000 for Concentrated Animal Feeding Operations (CAFO).
The General Fund appropriation to ADEM was $7.3 million in 2009. The Legislature began cutting the state appropriation the next year. In 2011 fees increased 19 percent, 50 percent in 2013, and 20 percent in 2015.
“In the aggregate, the regulated community will have seen its fees more than double since 2011,” Canary said. “We are particularly concerned with the continually increasing fees’ impacts on small businesses, which are less suited to absorb additional expenses.”
Temporary Worker Bill Delayed
SB 137 by Sen. Bobby Singleton, D-Greensboro, would prohibit recipients of economic development incentives from having temporary employees constituting more than 5 percent of its workforce.
The bill would allow the Department of Commerce to find an incentive recipient in non-compliance and thus ineligible for any further grant, loan, or incentive offered by the department for a period of at least three years. An incentive recipient found ineligible by the department would have the opportunity to request a hearing before the Department to offer proof of compliance.
SB 137 was carried over without discussion in the Senate Fiscal Responsibility and Economic Development Committee on Wednesday, although a public hearing is expected. This bill would negatively affect any industry that hires temporary workers.
INFRASTRUCTURE
Bill Would Ensure Infrastructure Dollars Are Accountable, Transparent, and Help All 67 Counties
On Thursday, the Senate Transportation and Energy Committee adopted a substitute version of SB 180 by Sen. Gerald Dial, R-Lineville, that would establish the Alabama Transportation Safety Fund.
As substituted, SB 180 would require any new revenue for infrastructure be deposited into a secure fund dedicated to road and bridge construction, more transparent to the public, and help all 67 Alabama counties meet their infrastructure needs.
Sen. Greg Albritton, R-Atmore, who initially raised concerns about infrastructure funding for rural counties, supported the substitute legislation. He noted that it would help every Alabama county meet its needs, especially rural counties.
The BCA’s Canary urged the Senate to quickly consider the bill that is the result of hard work over many months by stakeholders.
“Sen. Del Marsh, Sen. Gerald Dial, and Sen. Greg Albritton should be commended for working with all parties to ensure that this reform legislation is strong and that all communities in Alabama benefit from infrastructure investment,” Canary said.
The bill would implement the following reforms:
- The Alabama Department of Transportation (ALDOT), counties and municipalities would be required to use funds on road and bridge projects rather than on salaries or administrative expenses;
- ALDOT would be required to announce annual projects and post quarterly progress reports on its website. Counties and cities would be required to adopt annual plans that identify the road and bridge projects for the year and post the plan throughout the district. County and city engineers must provide annual written reports detailing the expenditures made during the prior fiscal year;
- Provides the first $32 million of any increase in revenue to counties via the Alabama Transportation Rehabilitation Improvement Program (ATRIP) that would allow for an additional ATRIP program of up to $300 million to expedite construction in every county;
- After the first $32 million of new revenue, the current distribution formula between the state, counties and cities is used: 65.9 percent to the state and 34.1 percent to counties and cities;
- If a growth or indexing component is included for new revenue, the ATRIP element would be expanded further to allow for an additional $32 million for local projects.
- Provides for $500,000 to be distributed to each county, that must be let via contracts, in lieu of the $533,000 in federal dollars each county gets currently providing more certainty and flexibility to counties;
- Expands the ATRIP Committee to include local government and business representatives.
Rep. McCutcheon is expected to file a House bill to increase Alabama’s investment in infrastructure.
The BCA, business groups, chambers of commerce, and other organizations have rallied together under the banner of the Alliance for Alabama’s Infrastructure to advocate for responsible investment in Alabama’s crumbling roads and bridges.
Alabama’s business community is strongly encouraged to contact their legislators and as for their support for investing in Alabama’s infrastructure and implementing the reforms contained in SB 180. Now is the time to solve this problem: our roads, our responsibility, our future.
Learn more at www.alabamaroads.org.
SESSION NOTES
On Tuesday, March 1, Alabama voters will head to the polls to cast their votes in the 2016 Republican and Democratic federal and state primaries and to consider an important statewide constitutional amendment. The Business Council of Alabama is proud to present our list of 2016-endorsed candidates for the primary election cycle.