Bills important to the business community and actively supported by the Business Council of Alabama including a right-to-work constitutional amendment advanced this week in committees and on the House and Senate floors.
HB 37, the right-to-work constitutional amendment by Rep. Arnold Mooney, R-Birmingham, is a priority on the BCA’s 2016 State Legislative Agenda and is an important piece of the state’s economic development efforts to attract and retain jobs.
The bill, previously passed by the House and favorably reported 9-1 by a Senate committee, is on the Senate calendar for final passage, one step from November’s ballot.
Another priority for BCA is SB 180, which the Senate passed by a vote of 25-4. It would ensure that all new funds for roads and bridges are dedicated for that purpose and used in an accountable and transparent way. SB 180, sponsored by Sen. Gerald Dial, R-Lineville, now goes to the House for consideration.
The Senate on Thursday passed both the WIRED Act by Rep. Donnie Chesteen, R-Geneva, that would authorize high-speed internet access in all Alabama public schools, and its funding bill, HB 227 by Rep. Poole.
The proposed 2016-17 Education Trust Fund budget came out of committee as did a bill to give most teachers and support personnel and two-year system employees a 4 percent pay raise beginning Oct. 1. Universities stand to get a 2.5 percent increase in operations and maintenance.
The Legislation calls for smaller class sizes in grades 7-12, which will mean the hiring of 475 more teachers. Importantly, the legislation contains funding for those teachers.
The current version of the proposed budget would fund a number of important education programs and initiatives that will improve education outcomes for students and improve Alabama’s future workforce.
In a surprise announcement, State School Superintendent Tommy Bice announced on Tuesday that he is retiring on March 31 after more than four years as superintendent and nearly 40 years in education.
The BCA’s winter board meeting held Tuesday in Montgomery included a ceremony reaffirming the partnership between the BCA and the Alabama Automotive Manufacturers Association, a speech by Governor Robert Bentley, and a reception for state leaders that followed.
BCA Chairman Tommy Lee and AAMA President Ron Davis signed an agreement renewing the partnership. The renewal strengthens the influence of the automotive manufacturing community in Alabama with the BCA’s state and national presence and creates a business network better suited to adapt to ever-changing circumstances. The agreement further renews the BCA’s exclusive statewide representation of the AAMA.
Governor Bentley explained the shift in job-incentive thinking from a system that offers tax credits for creating jobs to an after-the-fact tax credit plan that requires performance parameters. He also discussed the importance of early childhood learning.
House and Senate leadership chiefs of staff spoke at our Tuesday Briefing. Senate President Pro Tem Chief of Staff Philip Bryan and House Speaker Chief of Staff Jim Entrekin updated Governmental Affairs Committee members on legislative activities.
The House and Senate will reconvene Tuesday to begin the sixth week of the session.
Alabama Will Lead Nation by Expanding Wi-Fi to All Schools
The Senate voting 33-0 on Thursday passed Rep. Poole’s HB 227 in amended form.
HB 227 appropriates $12 million from the ETF Advancement and Technology Fund this year to fund HB 41, the WIRED Act by Rep. Chesteen that will allow local school systems to install high-quality, wireless networks capable of providing Wi-Fi broadband access in all classrooms and common areas.
“When we pass this bill it will be one of the most significant things we do this session,” said Sen. Gerald Dial, R-Lineville, who handled the bill on the Senate floor. “When we provide funding, every school system will be wired to high-speed internet. We’ll be one of the few states in the nation to do that.”
The Senate then amended and passed HB 41 by a vote of 33-0.
“This will be one of the best things we ever will have done for education,” Sen. Rodger Smitherman, D-Birmingham, said of the bills. Both will return to the House for consideration of the amendments.
Teacher Raises and the ETF Move to Full House
The 2016-17 Education Trust Fund budget and a bill to give public education employees raises moved out of committee and to the House floor where they will be considered on Tuesday.
The $6.3 billion ETF legislation, HB 117 sponsored by Rep. Poole, was substituted and favorably reported by the House Ways and Means Education Committee. This fiscal year’s ETF is $6 billion.
HB 117 contains significant increases for education initiatives that will improve student outcomes and that are supported by the business community: $14 million for Pre-K, bringing spending to $62.5 million, $2 million for career-tech instructors, and $1 million each for Advanced Placement and Distance Learning.
Fully-funding voluntary Pre-K is a BCA and Business Education Alliance of Alabama priority. The $14 million increase for Pre-K would add about 150 classrooms and enroll about 2,700 more 4-year-olds.
The bill also provides $5 million for classroom technical support, $1.6 million for classroom supplies, and fully funds PEEHIP and retirement. The bill would appropriate $2 million for career-tech instructors who struggle to find people from the private sector to fill the jobs and remain competitive.
Jim Page, president and CEO of the Chamber of Commerce of West Alabama, said the ongoing investments in pre-kindergarten would particularly benefit low-income children and reduce the need for law enforcement and criminal justice service in the long run, the Montgomery Advertiser reported.
“The research is clear and the math is simple,” said Page, a BCA board member. “We can invest in high-quality Pre-K now and give more children a greater chance to achieve their God-given potential, or we can pay much more later.”
The salary increase legislation, HB 121 also by Rep. Poole, includes provisions for 4 percent raises for teachers, support personnel, and two-year system employees. Certified personnel earning more than $75,000 would get a 2 percent raise.
Rep. Poole said the differential is intended to recognize and prioritize teachers and employees who are in the classroom every day. Classroom size was adjusted for grades 7-12, which will mean that 475 more teachers will be needed.
Many of these recommendations can be found in the Business Education Alliance’s recent report, “Teachers Matter.”
Important Longitudinal Data Bill Nears Senate Passage
HB 125 by Rep. Terri Collins, R-Decatur, passed the House on Feb. 25 and was sent to the Senate Education and Youth Affairs Committee that amended and favorably reported it this week with two amendments.
HB 125 would create the Alabama Longitudinal Data System and authorize collection of aggregate student performance data in order to evaluate how Alabama schools are linking education to potential careers. The bill prohibits identification of individual student data.
The data system that will match student performance data and workforce data will be administered by a newly created Alabama Office of Education and Workforce Statistics created within the Department of Labor. The bill also will require K-12 education, higher education, and junior colleges to define remediation.
The BCA supports this bill that is recommended by the Alabama Workforce Council.
Two-Year College System Oversight Bill Subject of Public Hearing
The House Education Policy Committee this week conducted a public hearing but did not vote on HB 247 sponsored by Rep. Steve McMillan, R-Gulf Shores.
The legislation would authorize the Alabama Community College System to operate similar to four-year colleges and authorize the Board of Trustees of the Alabama Community College System to create and adopt policies for the operation of the system including, but not limited to, their personnel policies. In addition, employees of the two-year college system hired after Jan. 1, 2017, would not be subject to the Students First Act of 2011, which changed the tenure arbitration system.
The Senate version is SB 246 by Sen. Trip Pittman, R-Montrose. It was referred to the Senate Committee on Education and Youth Affairs.
HB 247 and SB 246 will be up for committee votes in their respective committees next Wednesday.
Virtual Education Bill Passes Committee
SB 229 by Sen. Dick Brewbaker, R-Pike Road, would amend current law that requires each local school board to adopt a virtual education option for students in grades nine through 12. SB 229 would provide guidance to those local school systems providing a virtual school program to students residing outside a school district and even outside the state as regards to a dependent of the U.S. military or a person who resides outside the state for military service.
JUDICIAL AND LEGAL REFORM
Bill to Protect Businesses from Class Actions Passes Committee
The Senate Judiciary Committee favorably reported BCA-backed SB 270 by Sen. Phil Williams, R-Rainbow City, voting 6-2 with two abstentions and sent it to the full Senate this week. This bill is necessary due to a recent opinion from the U.S. 11th Circuit Court of Appeals that threatens to expose Alabama businesses to class-action lawsuits brought by private parties under the Alabama Deceptive Trade Practices Act (ADTPA).
SB 270 simply reestablishes the original legislative intent of the ADTPA that the limitation barring private parties from bringing class-actions is a substantive limitation. The 11th Circuit, in its ruling that created this problem, interpreted this aspect of the statute to be “procedural” rather than “substantive,” which created a serious threat of increased litigation for the business community.
The bill was amended to further clarify that only the attorney general or a district attorney could bring actions on behalf of a class. The BCA supports this legislation.
Read more about this issue on the BCA Blog.
Public Hearing on $800 Million Prison Bond Issue Legislation
A public hearing was held on HB 313, the Alabama Prison Transformation Initiative Act by Rep. Steve Clouse, R-Ozark. It will allow the Corrections Institution Finance Authority to issue up to $800 million in bonds for regional and women’s prison facilities. The bill authorizes the pledge of a portion of a 1 mill property tax, which produces about $50 million a year, to secure bonds issued by the Authority.
Governor Bentley on Tuesday told the BCA board of directors that it’s his plan to consolidate the state’s prisons into three men’s prisons and one new prison for females. The bill is in the House Ways and Means General Fund Committee.
Lawsuit Lending Legislation Is In Position to Pass
SB 67 sponsored by Sen. Cam Ward, R-Alabaster, was debated in the Senate on Thursday morning but was carried over before a vote was taken. The bill, which has bipartisan support, is expected to come back to the Senate floor next week. This bill would extend fair-lending laws and subject consumer lawsuit lenders to licensure requirements and to oversight by the State Banking Department.
Consumer lawsuit lending is the unregulated practice of loaning money at exorbitant interest rates to plaintiffs who might receive large settlements or judgments. A plaintiff must repay the lender if any settlement or judgment is received at an interest rate that can exceed 100 percent. This practice targets a vulnerable population, introduces third-party interests into the attorney-client relationship, and both slows the pace of and increases the cost of litigation for plaintiffs and defendants.
In the 2015 regular legislative session, a BCA-supported lawsuit lending bill passed the House on a bipartisan 98-1 vote. The BCA, working with the U.S. Chamber of Commerce’s Institute for Legal Reform, supports SB 67.
LABOR AND EMPLOYMENT
Right-to-Work Amendment is One Step from Ballot
The all-important right-to-work constitutional amendment, Rep. Mooney’s HB 37, is on the Senate calendar awaiting final passage and placement on the November statewide ballot.
The House passed the bill by a vote of 69-33 and sent it to the Senate Fiscal Responsibility and Economic Development Committee that favorably reported it Tuesday by a vote of 9-1.
BCA President and CEO William J. Canary and National Federation of Independent Business Alabama State Director Rosemary Elebash spoke in favor of the bill during the Senate committee’s public hearing this week.
Canary said enshrining Alabama’s right-to-work status in the Constitution is important for job creation. Elebash said business sees the amendment as a chance to strengthen Alabama’s right-to-work status with a constitutional amendment.
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.
Sen. Dial spoke in favor of the bill at the Senate public hearing. He said while on an industry trip in Korea, investors wanted to know about Alabama’s right-to-work status and mentioned that a constitutional amendment would enhance an investor’s decision to locate in Alabama.
HB 37 is part of the BCA’s 2016 legislative agenda and is part of the House Republican Caucus’s 2016 “Right for Alabama” legislative agenda.
Workers’ Compensation Legislation Passes Committee
SB 122 by Sen. Arthur Orr, R-Decatur, was favorably reported by the Senate Fiscal Responsibility and Economic Development Committee 12-2 this week and sent to the Senate for consideration.
This bill would revise portions of the workers’ compensation law to limit an employer’s liability for permanent total disability benefits after an employee’s 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.
Apprentice Hiring Tax Credit Bill Nears Final Passage
SB 90 the Apprenticeship Tax Credit Act by Sen. Orr, passed the Senate 29-0 in amended form and was favorably reported by the House Ways and Means Education Committee this week.
The bill is on the House calendar awaiting final passage.
The BCA supports SB 90. It would allow an employer to claim a nonrefundable income tax credit of $1,000 for each apprentice employed, up to five per year. The employer may claim the credit authorized by this bill if the apprentice is employed for at least seven full months of the taxable year and may only claim the credit for an individual apprentice for a maximum of four taxable years. The credit is capped annually at $3 million.
Senate Committee Sends Bill to Boost Small Business Hiring to Full Senate
The Senate Finance and Taxation Committee this week voting 15-0 amended and favorably reported HB 36 by Rep. Kyle South, R-Fayette, and sent it to the full Senate. The bill was amended to include agribusiness.
HB 36 is a BCA priority and is part of the BCA’s 2016 legislative agenda. 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 would authorize a tax credit of $1,500 per employee for a small business for hiring a new, full-time resident of Alabama in a job that pays at least $40,000 a year. The bill 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.
The bill also will authorize an additional $1,000 tax credit for hiring a recently deployed and unemployed veteran of the U.S. Armed Services.
Health Savings Account Tax Deduction Bill Debated in Senate; To Help Small Businesses
Sen. Paul Sanford, R-Huntsville, on Thursday discussed SB 131, a health savings account tax deduction bill, but carried it over. The bill is the companion to HB 109 by Rep. Becky Nordgren, R-Gadsden, which passed the House 97-1 last month and was assigned to the Senate Finance and Taxation Education Committee.
The BCA’s Small Business Agenda includes support for Health Savings Accounts for Alabama small businesses.
TAX AND FISCAL POLICY
Jobs Bill Clears Senate Committee
The Senate Fiscal Responsibility and Economic Development Committee this week voting 13-0 this week favorably reported HB 34 by Rep. Mac McCutcheon, R-Huntsville, with one amendment. HB 34 would grant tax credits for the state’s port facilities.
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 the credit applications.
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.
Digital Goods Tax Clarified
HB 349 by Rep. Ed Henry, R-Hartselle, would clarify the law taxing digital goods.
Under existing law, the gross proceeds from certain products are exempt from rental, sales, and use taxes. This bill would clarify the exemption for the rental or sale of products transferred electronically and acquired with less than the right of permanent use granted by the seller or use, which is conditioned upon continued payment from the purchaser. Confusion over the law has resulted from recent court cases and regulatory actions, and HB 349 would clarify the confusion and reestablish the original legislative intent of the tax on digital goods. The BCA supports this bill.
Bills Coincide State with Federal Business Filing Tax Deadlines
Alabama currently requires corporate state income tax returns to be filed on or before March 15. The bills would align the filing deadline to April 15. The bills are necessary because the federal government recently changed certain filing dates for federal income tax returns. The bills also would require payments to be made on the due date of a return.
The House State Government Committee favorably reported HB 251 and placed it on the House calendar this week. The Senate Finance and Taxation Education Committee voting 9-0 favorably reported SB 263 and sent it to the Senate calendar this week.
The BCA and the Alabama Society of CPAs supports these bills.
Senate Passes Infrastructure Bill That Holds All Dollars Accountable and Transparent for Alabama’s 67 Counties
The Senate on Thursday voting 25-4 approved SB 180 by Sen. Dial and sent it to the House for consideration. The bill was amended to sunset in two years if no revenue is created from a yet-to-be introduced revenue measure.
“This bill says all funds raised will have to go to build roads and bridges,” Sen. Dial said. Projects will be on the Department of Transportation website for public view.
The BCA urges quick final passage of this bill that is the result of months of hard work by many stakeholders.
The bill is a victory for responsible reform of Alabama Department of Transportation policies. The BCA, business groups, chambers of commerce, and other organizations have rallied under the banner of the Alliance for Alabama’s Infrastructure to advocate for responsible investment in Alabama’s crumbling roads and bridges.
The BCA’s Canary praised Senate President Pro Tem Del Marsh, R-Anniston, Sen. Dial, and Sen. Greg Albritton, R-Bay Minette, for ensuring that the transportation infrastructure reform legislation benefits all communities.
BCA Chairman Tommy Lee penned an op-ed this week highlighting the urgency needed for repairing Alabama’s roads and bridges.
Alabama’s business community contacted their legislators and asked for their support for investing in Alabama’s infrastructure and implementing the reforms contained in SB 180:
- The Alabama Department of Transportation (ALDOT), counties, and municipalities would be required to use funds on road and bridge projects and not 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 plans 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 in new revenue, the current distribution formula between the state, counties, and cities will be followed: 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 in order to provide more certainty and flexibility to counties;
- Expands the ATRIP Committee to include local government and business representatives.
Learn more at www.alabamaroads.org.
Rep. McCutcheon is expected to file a House bill seeking to increase Alabama’s investment in infrastructure.