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Sixth Week of the 2016 Session

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The House-passed $6.3 billion Education Trust Fund budget that was sent to the Senate contains important business-sought appropriations including an additional $14 million for voluntary Pre-K for Alabama 4-year-olds.

Following passage of the budget, the House approved a pay raise measure for teachers and support personnel.

The House on Tuesday concurred with Senate amendments to HB 41, the Alabama Ahead Act by Rep. Donnie Chesteen, R-Geneva, and its funding bill, HB 227 by Rep. Poole. The governor attached executive amendments to both bills, which were approved by the House on Tuesday, but the Senate adjourned for the week before it addressed the amendments.

The BCA’s Tuesday Briefing this week included a session outlook by Senate Minority Leader Quinton Ross, D-Montgomery, and the view from Washington, D.C., by U.S. Rep. Robert Aderholt, R-Haleyville, Alabama’s senior member of its U.S. House delegation.

The Tuesday Briefing was sponsored by the Montgomery Area Chamber of Commerce.

Sen. Ross said there’s still a lot of work to do with the session near its halfway point including consideration of his proposed “ban the box” legislation, which was introduced on Tuesday and assigned to the Senate Judiciary Committee on Thursday.

“Banning the box” generally refers to eliminating the question on the initial employee applications that asks about an individual’s past arrest or conviction record. Sen. Ross said that he understood there are concerns over his legislation but said there is much common ground to be sought and that is his goal.

But SB 327 as introduced presents numerous challenges for the business community, including extensive communications and record-keeping requirements for employers, audits and fines enforced by the Alabama Department of Labor, and a new private cause of action against employers.

BCA members are encouraged to provide feedback on this legislation to Trevor Parrish at trevorp@bcatoday.org.

Rep. Aderholt, in Montgomery for meetings, brought the Tuesday Briefing audience up to speed on current political and practical issues in Congress. He said Washington is talking about the presidential primaries and is working to avoid another omnibus budget bill that contains one or more of the 12 appropriation bills that must pass each year.

The Alabama House and Senate will reconvene Tuesday on the 15th day and halfway point of the 2016 regular legislative session that must end on or before May 16.


 

EDUCATION/WORKFORCE PREPAREDNESS

Education Budget, Educator Raises, Get House Nod

The House this week approved the $6.3 billion 2016-17 Education Trust Fund budget and a separate bill to give educators raises of either 2 percent or 4 percent based on salary.

The House passed the ETF budget, HB 117 by Rep. Poole, by a vote of 105-0, and sent it to the Senate for consideration. The proposed budget is nearly 5 percent more than this fiscal year’s ETF of $6 billion.

It contains increased funding for education initiatives supported by the business community that are designed to improve student outcomes: $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. A $14 million increase would add about 150 classrooms and enroll about 2,700 more 4-year-olds.

The bill also would provide $5 million for classroom technical support, $1.6 million for classroom supplies, and fully fund PEEHIP and teacher retirement. The bill would appropriate $2 million for career-tech instructors to recruit from the private sector to fill jobs and remain competitive.

Many of these recommendations are found in the Business Education Alliance’s report, “Teachers Matter”.

The House voting 104-0 passed the Rep. Poole’s teacher pay raise bill, HB 121. It would give education employees raises of between 2 percent and 4 percent depending on their salary level beginning Oct. 1.

Educators making $75,000 or less a year will see their pay go up by 4 percent. Educators making more than that will get a 2 percent raise. Because the bill would change the teacher-student ratio in grades 7-12, 475 more teachers will have to be hired for those grades.

PREP Act Gets Committee Approval

SB 316, the Preparing and Rewarding Educational Professionals Act by Senate President Pro Tem Del Marsh, R-Anniston, received a favorable report from the Senate Education Committee on Tuesday and was placed on the Senate calendar for consideration. Sen. Marsh said National Assessment of Education Progress scores demand pro-education accountability.

SB 316 would change how public school teachers and administrators are evaluated and gain tenure. Tenure also would be subject to performance reviews.

SB 316 would create teacher and administrator evaluations. At least 25 percent of the evaluation would be based on student achievement growth and the bill would increase the number of years required to reach tenure – from the current three to five.

SB 316 also would appropriate $10 million to reward high-performing schools, $5 million to recruit teachers to rural and low-performing schools, and $3 million for teacher mentoring.

BCA President and CEO William J. Canary testified in favor of SB 316.

Education Savings Account Bill Will Help 1,000 Students a Year

The House Education Policy Committee this week favorably reported Rep. Ken Johnson’s HB 84, the Education Savings Account bill, and sent it to the House. ESAs are an example of another policy that emphasizes parental options for their children’s education.

Rep. Johnson, R-Moulton, introduced the bill to help parents move their children from assigned public schools and access 90 percent of the state’s funding allocation for a child’s public education service such as private school tuition, curriculum, learning therapies, and tutoring.

The committee adopted a substitute to remove siblings of special needs children being eligible and changed its administration to the Alabama Department of Revenue. The state would deposit the equivalent of 90 percent of the calculated amount the eligible student would have received in the district school to which he or she would have been assigned. The average is about $4,800.

To qualify, a student must be classified as a special-needs student. Students will still be required to take state assessments as well as prove they are being taught reading, grammar, mathematics, social studies, and science.

The bill would cap eligibility at 1,000 students annually.

House Concurs With Governor’s Amendment on School Wi-Fi and Funding Bills

The House on Tuesday voting 78-0 approved a Senate-amended HB 41 by Rep. Chesteen, which will provide technology in school classrooms. The Governor returned it with an executive amendment, the House concurred 103-1, but the Senate adjourned before it could consider the amendment.

Following Tuesday’s HB 41 vote, the House voted 93-0 to pass Rep. Poole’s Senate-amended HB 227, which will provide $12 million for wireless broadband technology authorized in HB 41. The Governor added an executive amendment to HB 227 and returned it to the House that approved it 105-0. The Senate also didn’t take up this bill prior to Thursday’s adjournment.

Both HB 41 and HB 227 are expected to come up in the Senate next week. The BCA supports these bills.

Both are expected to be taken up by the Senate next week.


 

JUDICIAL AND LEGAL REFORM

Expert Witness Reform Raised at Public Hearing

HB 161 by Rep. Fridy would fully implement the Daubert standard in Alabama courts and bring the state in line with both federal courts and 41 other states. Sen. Cam Ward, R-Alabaster, introduced the Senate version, SB 158.

The BCA spoke in favor of HB 161 at a Wednesday House Judiciary Committee public hearing. The plaintiffs’ attorney group, the Alabama Association for Justice, in opposition to the bill suggested that adopting the full Daubert standard would increase court costs. But no evidence was presented to support this claim. Forty-one other states have the Daubert standard, and Alabama uses it in part, and the claim that costs would increase has not materialized.

Alabama long used the Frye standard, which only asked that a judge determine if a scientific expert’s methods were generally accepted. In 2011, the Legislature adopted a partial reform, and since then, Alabama courts have used the Daubert standard for scientific expert testimony.

Daubert, the standard used in federal courts and in a majority of states, asks that a judge use a multifactor test to determine the admissibility of expert testimony. HB 161 will include all expert testimony, both scientific and non-scientific, under Daubert to hold all expert witnesses to a more reliable standard and produce a fairer and more efficient judicial system.

This bill will further that goal by discouraging frivolous lawsuits based on questionable expert witness testimony. With the more reliable Daubert standard applying to all expert witness testimony, Alabama courts will have more uniform results, thus lessening the slow pace, uncertainty, and high cost of litigation for both the business community and the state as a whole.

‘Case Running’ Fix Advances

HB 162, also sponsored by Rep. Fridy, seeks to address the problem of “case running,” where some Alabama law firms allegedly use private investigators or other third-parties to directly solicit (by presenting contracts/exclusivity agreements to) potential plaintiffs and clients.

On Wednesday, the House Judiciary Committee conducted a public hearing on HB 162.

Existing rules of professional conduct for attorneys already prohibit case running and there are existing criminal penalties for attorneys or their agents who improperly solicit clients or cases for the lawyer’s gain. Case running continues to be a problem in Alabama despite existing prohibitions. HB 162 would add a new civil cause of action to void improperly solicited contracts, allow for the recovery of fees and expenses paid, actual damages, reasonable attorneys’ fees, and impose a civil fine of $5,000 against each person found to have engaged in the prohibited conduct.

Among nearby states, Georgia and Texas have similar laws in place to the provisions of HB 162.

Lawsuit Lending Carried Over Again in Senate

SB 67 sponsored by Sen. Ward was debated in the Senate on Tuesday but was carried over before a final vote was taken. The BCA, working with the U.S. Chamber of Commerce’s Institute for Legal Reform, supports SB 67, the consumer lawsuit lending regulatory bill.

This bill would extend fair-lending laws and subject consumer lawsuit lenders to licensure requirements and to oversight by the State Banking Department. The bill has broad support among both Republicans and Democrats.

Speaking in opposition and using procedural tactics to prevent a vote, Sen. Paul Bussman, R-Cullman, indicated that his opposition to the bill is motivated by his disdain of insurance companies and lawyers, though the bill has little to do with either.

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 Senate Judiciary Committee has favorably reported the bill twice.


 

LABOR AND EMPLOYMENT

Right-to-Work Amendment Awaits Final Passage

HB 37 by Rep. Arnold Mooney, R-Birmingham, a constitutional amendment guaranteeing the right-to-work in Alabama, was brought up in the Senate on Thursday but was carried over before a final vote was taken. It awaits final passage in order to be placed on the November statewide ballot.

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.

The BCA’s Canary wrote an op-ed and a letter to editors in support of the amendment.


 

SMALL BUSINESS

Senate Committee Approves BCA-Backed House Health Savings Account Deduction Bill

HB 109 by Rep. Becky Nordgren, R-Gadsden, would create an income tax deduction for contributions to Health Savings Accounts, which are currently deductible at the federal income tax level. Sen. Paul Sanford, R-Huntsville, introduced a companion bill, SB 131, but carried it over at the call of the chair.

The BCA’s Small Business Agenda includes support for Health Savings Accounts for Alabama small businesses.

The House last month passed HB 109 and on Thursday the Senate Health and Human Services Committee favorably reported it 11-1.

Under HB 109, a new state income tax deduction would be available for contributions made after Dec. 31, 2017. The bill would limit the total annual amount exempt from income taxation to the annual deduction amount allowed by federal law or regulation, currently $3,350 for individuals and $6,750 for families. An additional amount is allowed for individuals over the age of 55.


 

TAX AND FISCAL POLICY

General Fund Budget Progresses

The 2016-17 General Fund Budget, SB 125 by Sen. Trip Pittman, R-Montrose, is advancing in the Senate. On Thursday a substituted and amended Senate-passed bill was placed on the House calendar for consideration.

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.

The House Ways and Means General Fund Committee amended and substituted version 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, and $15 million more than the Senate’s $685 million appropriated to the Alabama Medicaid Agency.

The proposed budget mostly maintains the FY 2015-16 appropriation reduction to ADEM; however, unlike last year, the budget does 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.

Level funding Medicaid at $685 million would be about $100 million less than requested by Medicaid to maintain current service levels and implement Regional Care Organization reforms that were recently approved by the federal government.

In February, the BCA and the Alabama Hospital Association hosted a forum to educate legislators on the current state of Medicaid and RCO implementation.

Bill to Allow Expansion of Public Telecommunication Providers Does Not Receive Committee Approval

A substitute version of SB 56 by Sen. Tom Whatley, R-Auburn, was not favorably reported by the Senate Transportation and Energy Committee this week. After the substitute was adopted, the committee discussed the bill at length and eventually voted to not give the bill a favorable report.

SB 56 would remove restrictions on certain public providers of telecommunication services and allow those providers to operate and provide their services outside of their municipal jurisdiction. The provided services that would be allowed by a government-run provider would be Internet, cable and phone services.

Simplified Use Tax Remittance Bill to Be Considered by Senate

Sen. Pittman’s SB 233 advanced to the Senate calendar on Thursday. This bill would 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.

Digital Goods Tax Bill Fails in Senate Committee

On Wednesday, SB 242 sponsored by Sen. Pittman failed to receive a favorable report from the Senate Finance and Taxation Education Committee by a vote of 4-8. A substitute for the original bill was offered and adopted, but after lengthy committee debate, it was subsequently voted down.

SB 242 provided a definition for “tangible personal property” and “digital goods” and included digital goods under the definition of personal property. Since tangible personal property is subject to state sales tax, this bill would subject digital goods to state sales tax as well. SB 242 also would amend the definition of a “wholesale sale,” which is currently not subject to sales tax because wholesale sales are not considered retail sales.


 

SESSION NOTES

nichellenix

BCA President and CEO Applauds Governor’s Creation of Office of Minority Affairs

Canary this week applauded Governor Bentley’s creation of the Office of Minority Affairs and his appointment of Nichelle Nix as the first director.

“From her work in Washington, D.C., for former U.S. Rep. Artur Davis, to leading the Sickle Cell Disease Association of America ¬ Mobile Chapter, Inc., and most recently in the Government and Regulatory Affairs practice at Maynard Cooper & Gale, Nichelle Nix has extensive non-profit and political experience,” Canary said. “I commend Gov. Bentley for identifying this need. Nichelle is well known and well-respected throughout the state, and the Business Council of Alabama stands ready to be of any assistance to her in this new mission.”

State School Board Starts Process to Find Retiring Superintendent’s Successor

The Alabama State Board of Education plans to meet Monday to continue its process to choose an interim superintendent to replace State Superintendent Tommy Bice, who is retiring March 31 after four years as superintendent and nearly 40 years in education.

Board members on Thursday discussed whether an interim superintendent could be a candidate for the permanent job. Al.com reported that some board members said allowing the interim superintendent to be a candidate for the permanent job might give someone an inside track to the permanent position. Others said it would be a mistake to exclude anybody in the search for the best possible interim superintendent.

The Board is expected to determine Monday if the interim should be qualified to be permanent superintendent and board members said they would like to seek applicants in a nationwide search.

Juliana Dean, the current General Counsel for the Alabama Department of Education, will serve as proxy superintendent until an interim can be named.

About Dana Beyerle

Dana Beyerle
Director of Communications
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