Right-to-Work Constitutional Amendment Goes to Voters
The midpoint of the 2016 regular legislative session saw legislative passage and consideration of important issues that are vital to the Alabama business community.
The Senate on Thursday approved a right-to-work constitutional amendment, HB 37 by Rep. Arnold Mooney, R-Birmingham. The measure goes to the Secretary of State for placement on the November general election ballot when voters will be asked to secure Alabama’s job-creating and manufacturing status.
Rep. Mac McCutcheon, R-Huntsville, introduced the anticipated highway infrastructure investment bill, HB 394, and it received a favorable committee report. HB 394 would create the first road and bridge user fee since 1992. An accompanying bill that designates new revenue to roads and bridges, SB 180 by Sen. Gerald Dial, R-Lineville, was favorably reported and sent to the full Senate.
The BCA’s Tuesday Briefing, this week sponsored by the University of Alabama System, included a budget review by House Ways and Means Education Chairman Bill Poole, R-Tuscaloosa.
The House sent the proposed $1.8 billion, 2016-17 General Fund budget back to the Senate to consider House-passed amendments. The budget, if it remains in its current form, might be vetoed.
The Alabama House and Senate will reconvene Tuesday for the 17th day of the 2016 regular legislative session that must end on or before May 16.
Bill Would Allow Most State Funding to Follow Students Enrolled in Virtual Education
The Senate Education Policy Committee this week favorably reported, and the full Senate followed suit, voting 19-8 to pass SB 229 by Sen. Dick Brewbaker, R-Pike Road. SB 229 would allow most state funding to follow a student to another school’s full-time virtual education program.
The Legislature last year passed a bill requiring all public high schools to have a virtual education component, either their own or contracted through another school or private company. The bill goes to the House for consideration.
JUDICIAL AND LEGAL REFORM
Bill to Protect Businesses from Class Actions Carried Over in Senate at Call of the Chair
The Senate this week carried over at the call of the chair BCA-backed SB 270 by Sen. Phil Williams, R-Rainbow City. This bill is necessary due to a recent opinion from the 11th U.S. 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 is in a position to be considered by the Senate next week.
Read more about this issue on the BCA Blog.
Prison Bond Issue Favorably Reported by Senate Committee
SB 287 by Sen. Trip Pittman, R-Montrose, would authorize up to $800 million in bonds, backed by proceeds from an existing 1 mill tax, to provide for the construction of new prisons. The bond issue, supported by the Governor’s office, would be used to construct three new regional men’s facilities and one new women’s facility by 2020. A committee amendment was added to protect the funding stream of two of the current beneficiaries of the 1 mill tax, the Department of Human Resources and the Veterans’ Assistance Fund. The bill received a favorable report as amended in the Senate Finance and Taxation General Fund Committee on Wednesday.
LABOR AND EMPLOYMENT
Right-to-Work Amendment Goes to Alabama Voters
Alabama’s economic development and manufacturing landscape received a major boost on Thursday when the Senate voting 25-9 with one abstention sent the Right to Work constitutional amendment to the Secretary of State for November general election ballot placement.
Rep. Mooney’s HB 37 will cement Alabama’s status as a right-to-work state. Sen. Dial handled Rep. Mooney’s bill in the Senate.
Many friends worked long and hard with the BCA to push this important legislation over the goal line.
“We thank Representative Mooney and Senator Gerald Dial, R-Lineville, who sponsored the Senate version, for this vital measure that will further encourage job creators to establish a presence in Alabama and to remain and grow the jobs for our citizens,” said BCA President and CEO William J. Canary. “The House and Senate are to be commended for their forward thinking in order to further protect the thousands of manufacturing and tech jobs that have moved into Alabama from other states.”
Alabama’s right-to-work status played a major role in the decisions of such companies as Airbus and Austal USA to manufacture in Alabama. Over the last two decades, many businesses that were located in heavily unionized states have moved their operations to Alabama, choosing to locate their facilities in the right-to-work Alabama due to the ability to compete in the global marketplace.
With this amendment, Alabama will remain a business-friendly state. “The BCA strongly supports Alabama’s right-to-work status for its benefits to economic growth, industrial recruitment, and job creation,” Canary said.
“The right to join or not join a union and be free of coercive attempts to force unionization is often cited as a hallmark of Alabama’s attraction to every segment of our economy, especially manufacturers and suppliers,” Canary said.
TAX AND FISCAL POLICY
Road and Bridge Infrastructure Investment Progresses in House
The House Transportation, Utilities, and Infrastructure Committee this week amended and favorably reported two important road and bridge infrastructure bills, Rep. McCutcheon’s HB 394 and SB 180 by Sen. Dial. Both were sent to the full House for consideration.
BCA President and CEO William J. Canary issued a statement after the committee reports: “The members of the House Transportation, Utilities, and Infrastructure Committee deserve a word of thanks. The committee today recognized that Alabama’s crumbling infrastructure is unacceptable and supported two responsible bills that will ensure that Alabama maintains a safe, reliable infrastructure network for the people who live, work, and do business in Alabama.”
HB 394 establishes the average of Alabama’s contiguous states’ gas tax as the benchmark for Alabama’s gas and diesel taxes using the totals as determined by the American Petroleum Institute, which would result in a 6 cent increase per gallon for gasoline and diesel. The bill allows for an adjustment to this border-state average rate in 2019, 2023 and 2027, unless the Legislature adopts a resolution to nullify the adjustment.
Jim Page, President and CEO of the Chamber of Commerce of West Alabama, is the spokesperson for the Alliance for Alabama’s Infrastructure.
“We’ve reached a point where Alabamians can no longer ignore the problems facing our roads and bridges,” Page said. “Alliance for Alabama’s Infrastructure members strongly encourage lawmakers to support Rep. McCutcheon’s bill because it will help promote public safety, spark economic growth, and improve quality of life.”
It is imperative for BCA members to continue contacting their legislators to urge support for this important measure that is vital to continued economic wellbeing due to useable and safe roads and bridges.
“Our roads are our arteries of commerce, and safe and effective road and bridge infrastructure is essential to keeping Alabama economically competitive – to attract and retain job creators, keep drivers and passengers safe, and maintain a high quality of life for our citizens,” Canary said.
Sen. Dial’s SB 180 would create the Alabama Transportation Safety Fund for the purpose of receiving designated revenues for maintenance, improvement, replacement, and construction of state, county, and municipal roads and bridges in the state. This bill would specifically restrict state, county, and municipal transportation authorities from using revenue for administrative salaries and benefits, purchasing or maintaining equipment, or construction of buildings not related to road and bridge construction.
Tuesday, March 22 – AAI Drive-In
11:00 a.m. – 12:30 p.m.
Organizational Meeting – Location: Alabama State House, Room 200
12:30 p.m. – 2:30 p.m.
Meet with your legislator
RSVP to: AHodge@BCAToday.org
Join the Alliance for Alabama’s Infrastructure Drive-In on Tuesday, March 22, at 11:00 a.m. in Montgomery and show your support for a solution to fix our roads and bridges and invest in Alabama’s future! Legislators need to hear directly from you both in Montgomery and when they are at home. A strong grassroots-driven effort is the only way that legislators will have the courage to invest in Alabama roads and bridges this year. Make your voice heard in Montgomery!
The BCA is a member of the Alliance for Alabama’s Infrastructure, a group of business and community leaders who believe that now is time for Alabama to address this growing problem with a reasonable long-term solution that puts Alabama’s transportation infrastructure back in working order and allows us to invest in our future. For more information, visit Alabamaroads.org
General Fund Budget Protects ADEM from Further Cuts; Medicaid Funding Remains Bleak
After long debate, the House on Tuesday voted 65-35 to pass the proposed 2016-17 General Fund budget and send it back to the Senate for consideration of House amendments.
As amended and substituted by the House, SB 125 by Sen. Pittman would appropriate $120,000 more than the Senate-passed appropriation of $280,000 for the Alabama Department of Environmental Management’s Concentrated Animal Feed Operations.
The proposed budget mostly maintains the FY 2015-16 appropriation reduction to ADEM. But unlike last year, the budget will not divert nearly $1 million in permit fees collected by ADEM, which is a positive for Alabama’s regulated community.
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 bill would appropriate $700 million for Medicaid, an increase of $15 million from the current fiscal year. Governor Bentley had requested $785 million. House Ways and Means General Fund Committee Chairman Steve Clouse, R-Ozark, said the legislative appropriation to Medicaid has nearly doubled – from $398 million to $685 million – in the last 10 years while some appropriations to other state agencies have declined or remained level.
Remittance Bill Goes to Governor for Consideration
The House voting 98-0 on Thursday passed the sales and use tax remittance bill, SB 233 by Sen. Pittman, and sent it to the Governor for consideration.
This bill will allow eligible sellers to remain in the voluntary Simplified Seller Use Tax Remittance Program unless a presence through a physical business address for making in-state retail sales is established or collection is required through an affiliate.
Committee Favorably Reports Taxation Exemption from Sale, Use and Rental Tax Bill
The House State Government Committee this week favorably reported HB 349 by Rep. Ed Henry, R-Hartselle. The bill would exempt electronically transferred products that do not give the right of permanent use from rental, sales, and use taxes. In light of the increasing popularity of data streaming websites, such as Netflix, this bill would exempt the electronic streaming of data from rental, sales, and use taxes. This bill also ensures that the ability to create a future tax (or similar user fees) on these services is under the discretion of the Legislature.
BCA supports this legislation.
House Committee Approves Alabama Small Business Investment Company Act
On Wednesday, the House Ways and Means Education Committee voted to give a favorable report on HB 224, sponsored by Rep. Danny Garrett, R-Trussville.
HB 224 would create the Alabama Small Business Investment Company Act and provide for insurance premium tax credits to companies making contributions to an Alabama small business investment fund that has been approved by the Alabama Department of Commerce. These qualified Alabama small business investment funds would provide access to capital for the state’s small businesses that have fewer than 250 employees or no more than $5 million in net income for the preceding taxable year. To qualify, they must have their principal business operations in Alabama or are planning to use the investment to establish their principal business operations in the state.
The credits provided by the legislation 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.
House Committee Discusses R&D Tax Credit Legislation
The House Technology and Research Committee conducted a public hearing on HB 390 sponsored by Rep. Chris Pringle, R-Mobile, but did not vote. This is a revised version of the original research-and-development tax credit bill that was included in the Governor’s Made in Alabama Jobs Incentive Package from last year’s legislative session and is modeled after the R&D tax credit offered at the federal level.
HB 390, named the Alabama Innovation Act, would establish an R&D tax credit for companies that incur qualified research expenses at an Alabama research entity. A tax credit would be allowed for up to 25 percent of expenses incurred with a qualified Alabama research entity, and 10 percent on in-house research expenses and contract research expenses for qualified research conducted in Alabama during the taxable year. If this legislation would become law, it would encourage businesses who need research and development performed to keep it in the state of Alabama and support the state’s economy instead of having it performed out of state.
The bill sets an annual cap of $25 million of tax credits that will be allowed and the credits would be distributed on a first-come, first-serve application basis. The credit would be allowed to be taken against a company’s income tax or financial institution excise tax. If the bill were to become law, companies would be able to begin to participate in the program beginning Jan. 1, 2017.
BCA’s 2016 legislative agenda includes support for legislation that provides an R&D tax credit parallel to the federal R&D credit, with an extra incentive if a qualified research institution performs the research.
BP Settlement Bond Issue Bill Carried Over
SB 267 by Sen. Bill Hightower, R-Mobile, is a constitutional amendment asking voters to authorize a bond issue based upon the $1 billion being paid to the state of Alabama by BP over 18 years, generating an immediate estimated $650 million to $700 million to pay off the $161 million borrowed from the Rainy Day Fund in FY 2010, finance projects in the areas most-affected by the BP oil spill, and pay down the $422 million borrowed from the Alabama Trust Fund in FY 2013-15.
Up to $439 million would go to supplement the U.S. 98 completion project, the Interstate 10-Interstate 65 Beach Expressway Completion project, and the Rangeline Road Extension project. Of the $439 million, $50 million would go to the Strengthen Alabama Homes Fund for residential property owner grants to retrofit insurable property to resist loss due to hurricane, tornado, or other catastrophic wind events. Federal or local matching funds for these projects would correspondingly decrease the amount allocated by this bill.
The bill was debated on the Senate floor on Thursday and the Budget Isolation Resolution measure was passed, but the bill was carried over before a final vote was taken.