This week’s Business Council of Alabama Tuesday Briefing was sponsored by Alabama Power Co. and featured House Rules Committee Chairman Mac McCutcheon, R-Huntsville. He outlined the upcoming House work schedule and explained his pending legislation to invest in Alabama’s roads and bridges.
After falling short of votes last week, the House this week reconsidered and passed a proposed constitutional amendment that would enshrine Alabama’s status as a right-to-work state in the Alabama Constitution. The House voted 69-33 to pass HB 37 by Rep. Arnold Mooney, R-Birmingham.
The constitutional amendment, if passed by the Senate, would go on the November general election ballot. It asks voters to enhance Alabama’s right-to-work status by placing the status in the Constitution in order to protect Alabama’s economic and job development advantage.
The House also passed HB 174 by Rep. David Faulkner, R-Birmingham, which would further preserve Alabama’s status as a right-to-work state by prohibiting local governments from setting private-sector minimum wage, leave, or other employee benefits.
BCA-supported education and workforce bills advanced, including HB 125, the Alabama Longitudinal Data System bill sponsored by Rep. Terri Collins, R-Decatur, and HB 41 and the companion SB 17 by Rep. Donnie Chesteen, R-Geneva, and Sen. Gerald Dial, R-Lineville, respectively. The bills would amend the Alabama Ahead Act and serve to fund Wi-Fi in schools.
The House and Senate are scheduled to return in session on Tuesday for the eighth legislative day.
Student Progress Bill Advances to House
The Education Policy Committee on Wednesday favorably reported Rep. Collins’ HB 125, a bill that is supported by the BCA. HB 125 would authorize the collection of student data from early education through entry into the workforce by a newly created Alabama Longitudinal Data System.
In addition, a new Alabama Office of Education and Workforce Statistics would be created within the Alabama Department of Labor in order to access more federal labor workforce grants. The system would access student performance data from various agencies to include grade-point average, state and national assessment results, and demographic information, but it would not collect health and medical records or any court or juvenile criminal and delinquency information or any personal identifiable information.
The data will be “a thread that will follow groups of students throughout their educational careers and give the state important information back,” Rep. Collins said.
Public schools, including two- and four-year colleges, could share data. The information will allow K-12 systems to determine if students in dual enrollment actually filled jobs in those fields of study. HB 125 also would require the state’s K-12, community college, and four-year university systems this year to define remediation and a process to utilize remediation.
As a recommendation of the Alabama Workforce Council, the BCA fully supports passage of this legislation
Technology Funding Bill Advances to House Calendar
HB 227 sponsored by Rep. Bill Poole, R-Northport, would make a $12 million supplemental appropriation this fiscal year from the Education Trust Fund Advancement and Technology Fund to the Alabama State Department of Education to implement high-quality broadband Wi-Fi infrastructure in every public school classroom. In addition, this bill would require the ASDE to establish an advisory committee to assist in the implementation of the Wi-Fi infrastructure.
HB 227 is on the House calendar.
Important Education Bills Considered
The House adjourned Thursday with Rep. Chesteen’s HB 41 in place for action next week. HB 41 would amend the Alabama Ahead Act and lift a requirement that schools invest in pen-enabled mobile devices and provide that funds used in the 2016-2017 fiscal year ensure that a high-quality Wi-Fi system is available in classrooms and lunchrooms, with remaining funds obligated to buy mobile digital devices. The bill also would set up the Alabama Ahead Oversight Committee.
HB 41 is the first bill on Tuesday’s proposed House Special Order calendar.
Sen. Dial’s SB 17 was substituted Wednesday in the Senate Finance and Taxation Education Committee in order to mirror HB 41 and placed on the Senate Calendar for consideration.
HB 84 by Rep. Ken Johnson, R- Moulton, the Education Savings Accounts bill, was subject to a public hearing in the House Education Policy Committee this week. A committee vote is expected next week.
HB 84 would allow parents to move their children from their assigned public schools and access 90 percent of the state’s allocation of funding for that child’s public education to pay for services such as private school tuition, curriculum, learning therapies, tutoring, and more.
The amount the state deposits into an education savings account would be equivalent to 90 percent of the calculated amount the eligible student would have received in the district school he or she would have been assigned to. The average is about $4,800.
To qualify, a student must be classified as special-needs, be a child of a military parent, a foster child, or a sibling of a current program participant. Students will still be required to take state assessments as well as prove they are receiving instructions in reading, grammar, mathematics, social studies, and science.
The State Department of Education shall provide program parents a written explanation of the allowable uses of ESAs, the parental responsibilities, and department duties. Quarterly ESA reports will ensure that parents and students are utilizing the state funds appropriately.
The bill would cap eligibility at 1,000 students annually.
ESAs are an example of another policy that emphasizes parental options for their children’s education.
The BCA supports these bills.
JUDICIAL AND LEGAL REFORM
Senate Committee Favorably Reports Lawsuit Lending Reform
The Senate Judiciary Committee voting 7-4 this week favorably reported the Alabama Consumer Lawsuit Lending Act and sent it to the full Senate for consideration.
SB 67 sponsored by Sen. Cam Ward, R-Alabaster, 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.
During the committee meeting Sen. Rodger Smitherman, D-Birmingham, voiced his support for the bill. He said he has experienced lawsuit lending in his legal practice and this legislation would be good for consumers.
BCA President and CEO William J. Canary testified at a Feb. 10 public hearing on consumer lawsuit lending and stated the BCA’s position in support.
“A diverse national coalition of business and consumer groups have voiced support for lawsuit lending reforms, including the U.S. Chamber of Commerce, National Black Caucus of State Legislators, and the national Hispanic Caucus of State Legislators,” Canary said.
In the 2015 regular legislative session, a BCA-supported lawsuit-lending bill passed the House on a bipartisan 98-1 vote. After the Senate Banking and Insurance Committee favorably reported the bill, it remained stuck at the “call of the chair” in the Senate unable to receive a vote despite broad support from both sides of the political aisle.
LABOR AND EMPLOYMENT
House Passes Right-To-Work and Minimum Wage Measures
The House this week, led by Speaker Mike Hubbard, R-Auburn, passed a proposed constitutional amendment that would solidify Alabama’s standing as a right-to-work state. The House also passed a bill prohibiting local governments from setting minimum wage rates for private businesses.
The House on Wednesday passed Rep. Mooney’s right-to-work constitutional amendment, HB 37. The House passed the bill 69-33 and it was assigned to the Senate Fiscal Responsibility and Economic Development Committee. If the Senate passes the bill and it’s 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.
“After experiencing recent successes in unionizing businesses like Golden Dragon in Wilcox County and Volkswagen in Tennessee, labor unions have stepped up their efforts to organize workers in Alabama,” Rep. Mooney said. “While state law already designates Alabama as a right-to-work state, a constitutional amendment would reaffirm and cement that fact, which would reassure new industries looking to locate here and support our already existing industries that are under attack from labor union forces.”
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.
Local Minimum Wage Preemption Goes to Senate
The House voting 71-31 on Tuesday passed the second right-to-work bill, Rep. Faulkner’s HB 174. It is co-sponsored by Rep. Mooney and 51 other House members. HB 174 is the Alabama Uniform Minimum Wage and Right to Work Act and is supported by theBCA.
HB 174 would further preserve Alabama’s status as a right-to-work state by prohibiting local governments from setting private-sector minimum wage, leave, or other employee benefits. Alabama has chosen to follow a uniform federal minimum wage.
Allowing cities or counties to set minimum wages for private employers will create a “patchwork” of wages and hurt entry-level jobs and decrease their numbers, supporters of the bill said. Rep. Faulkner’s bill does not affect wage scales for public-sector employers.
Rep. Faulkner said his legislation will further enhance Alabama’s “pro-business” reputation. Rep. Ed Henry, R-Hartselle, said HB 174 will protect business owners from “overreach” by city and county governments.
The BCA’s Canary testified at the bill’s public hearing.
“Instead of raising small businesses labor costs and creating more barriers to entry-level employment, government should focus on policies that actually help create jobs,” Canary said. “Alabama businesses are already subject to and are complying with numerous government regulations at the federal, state, and local level. This bill will prevent even more onerous regulations from being imposed on Alabama businesses.”
The bill now goes to the Senate where it will be handled by Sen. Jabo Waggoner, R-Vestavia Hills. BCA members are encouraged to contact their senators to encourage quick passage of HB 174.
The BCA signed a joint letter this week with the Alabama Retail Association and the National Federation for Independent Businesses to encourage House passage of HB 174.
TAX AND FISCAL POLICY
Department of Revenue-backed Bills Are Alarming to Business
The Senate Finance and Taxation General Fund Committee favorably approved SB 183 on Wednesday by a vote of 13-0.
SB 183 sponsored by Sen. Tim Melson, R-Florence, would change interest calculation for overpayment of taxes.
This bill will allow the Alabama Department of Revenue to begin calculating interest on any tax refund owed a taxpayer due to overpayment 30 days after receipt of the refund petition and supporting documentation. Current law requires the ADOR to begin calculating interest upon receipt of the refund petition and supporting documentation. This bill would not change when interest begins accruing on an underpayment, which would still begin accruing when the tax is due.
In its current form, SB 183 creates a level of tax unfairness for taxpayers; however, Sen. Melson has indicated a willingness to consider concerns raised by the business community.
SB 202 by Sen. Linda Coleman-Madison, D-Birmingham, will require the implementation of mandatory unitary combined reporting. The BCA has consistently expressed opposition to the arbitrary tax increase on business as you can read in this Op-Ed by 2015 BCA Chairman Marty Abroms.
SB 202 is almost identical to bills introduced by Sen. Coleman-Madison in the two special legislative sessions last year.
The Department of Revenue commissioner has voiced support of SB 202 and deems it as “closing corporate loopholes.” Sen. Trip Pittman, R-Montrose, is a co-sponsor of the bill that is assigned to the Senate Finance and Taxation Education Committee.
Sen. Pittman’s SB 242 introduced Feb. 16 has been assigned to the Senate Finance and Taxation Education Committee.
This bill would define “tangible personal property” and “digital goods” and include 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.
The Legislative Fiscal Office has not posted a fiscal note on SB 242.
This is a new effort by the ADOR to collect tax on non-tangible goods. As you may recall, the ADOR last year proposed (and withdrew) a rule, which would have subjected digital transmissions such as movies, television programs, and music to Alabama’s rental tax. (Certain modems, routers, and DVRs also were included in the rule.)
Presently, ADOR has taken other administrative action by rescinding prior rulings in an attempt to unilaterally tax digital goods.
Alabama Renewal Act Legislation Gets House Public Hearing
The House Ways and Means Education Committee on Wednesday conducted a public hearing on HB 34, the Alabama Renewal Act sponsored by Rep. McCutcheon.
HB 34 would authorize income tax credits to businesses that generate economic growth in Alabama. HB 34 also would create a port credit for increased use of Alabama’s port facilities capped at $5 million annually with a cumulative cap of $12 million.
Port credits issued for economic development project agreements may have allocations made by the Governor and approved by a newly created Renewal of Alabama Commission if a company commits to invest at least $20 million and create 75 jobs.
HB 34 also would create the Growing Alabama Credit to award a credit for contributions of cash or property to economic development organizations approved by the Renewal of Alabama Commission.
At HB 34’s public hearing, Commerce Secretary Greg Canfield said there is an “import center” project interested in Mobile, which must remain confidential, that could be secured for Alabama if the legislation is enacted. He said the project could create at least 400 jobs.
The nine-member Renewal of Alabama Commission would oversee and approve the administration of the credits and would annually report to the Legislature.
The committee did not vote but will consider the bill next week. Rep. McCutcheon said the bill will be substituted. A similar bill passed the House unanimously last year but did not pass the Senate.
The BCA supports this legislation.
Historic Structure Tax Credit Bill Debated
The House Ways and Means Education Committee also conducted a public hearing on HB 62 sponsored by Rep. Victor Gaston, R-Mobile. HB 62 would extend the current state tax credit for qualified rehabilitation expenditures on qualified historic and non-historic structures.
The current tax credit ended Dec. 31, 2015, but HB 62 would extend the credit through 2022. Any unused credit portion may be carried forward for up to 10 additional tax years and credits may also be transferred and assigned until used. This tax credit would incentivize the rehabilitation and reuse of historic buildings, many of which are in the heart of Alabama’s cities and small towns.
The committee did not vote on HB 62.
SB 230 sponsored by Waggoner, and 31 other co-sponsors is the companion bill that was introduced this week.
The BCA is part of a coalition supporting this legislation. Please visit Advance Alabama’s website for more information.
The House is now at its full complement of 105 members. On Wednesday, Speaker Hubbard administered the oath of office to newly elected House District 5 Rep. Danny Crawford, R-Athens.
Speaker Hubbard assigned Rep. Crawford to serve on the County and Municipal Government Committee and on the Health Committee. “As a veteran member of the Athens City Council, I know that Rep. Crawford will bring a unique skill set and useful institutional knowledge to the House County and Municipal Government Committee,” Speaker Hubbard said.
“My service on the Health Committee will be especially important, too, because the bills it considers directly affect every living, breathing Alabamian, and that is a responsibility that I will take very seriously,” Rep. Crawford said.
Rep. Crawford was elected in a special election on Tuesday to fill the unexpired term of the late Rep. Dan Williams, R-Athens.