This week’s Tuesday Briefing, sponsored by Vulcan Inc., featured House Minority Leader Craig Ford, D-Gadsden, who urged bipartisan cooperation on issues such as economic development. Vulcan Inc. President and CEO Tommy Lee, the 2016 BCA chairman, introduced Rep. Ford.
The House passed an amended Alabama Transportation Safety Fund bill on Tuesday, and on Wednesday the Senate took up the bill for final passage. The Senate passed the 2016-17 Education Trust Fund budget that had originated in the House and which must return there due to Senate changes.
Legal reform legislation that is crucial to Alabama’s business community advanced this week.
The State Board of Education on Thursday appointed Dr. Philip Cleveland as interim state School Superintendent.
The House and Senate met Tuesday and Wednesday this week, the 10th of the 2016 regular legislative session that saw action on issues that are vital to Alabama business. The Legislature will reconvene April 19 for the 23rd day of the 2016 regular session that cannot last beyond 30 legislative days.
Next Fiscal Year’s Education Trust Fund Budget Nears Final Passage
The Senate on Wednesday voting 32-1 passed its version of the 2016-17 Education Trust Fund budget that returned to the House for consideration of Senate changes, which will occur next week.
The ETF budget – HB 117 by Rep. Bill Poole, R-Northport – will be the largest proposed ETF budget since 2008 – a $6.3 billion spending plan for public schools and universities. This year’s ETF budget is $6 billion.
The Senate version of HB 117 includes the following funding increases for business-backed initiatives compared with this year: $16 million for Pre-K; $100,000 for Workforce Development; $2 million to recruit Career Tech instructors from the private sector; $4 million for Student Assessment; $2.7 million for At-Risk students; $1 million for Advanced Placement; $1 million for Distance Learning; $400,000 for Career Coaches; and $3 million for Teacher Mentoring.
Many of these recommendations are found in the Business Education Alliance’s report, “Teachers Matter.” In addition, fully funding voluntary Pre-K is a BCA and Business Education Alliance of Alabama priority. A $16 million increase would add more than 150 classrooms and enroll an additional 2,700 4-year-olds.
The budget also contains money for 4 percent raises for public K-12 school employees who make less than $75,000 per year and all two-year college employees. K-12 employees making more than $75,000 will get a 2 percent raise but an amendment would grant raises of 4 percent to principals and assistant principals no matter how much they make. The proposed budget will pay for hiring 475 new teachers for grades 7-12.
With the pay raise, a beginning teacher in Alabama with a four-year degree will start out at about $38,000 plus full benefits for a 187-day work year.
The House passed its version of the ETF voting 105-0 last month and the Senate passed a floor substitute by Sen. Arthur Orr, R-Decatur, on Wednesday, then adjourned. The House will have to consider the Senate changes.
The authority for the pay raise is in HB 121 also by Rep. Poole. The Senate passed an amended version 30-0 on Wednesday. The bill also will have to return to the House for consideration of Senate changes.
Senator Says He Will Not Push PREP Act This Year
Senate President Pro Tem Del Marsh, R-Anniston, the sponsor of SB 316, which is known as the PREP Act, said that he will not move this legislation in the current session. His bill would have lengthened the time new teachers must work to reach tenure, offered bonuses for teachers willing to serve in certain areas, and created an evaluation system for teachers of which only 25 percent would be based on student test results.
Marsh said that within the education community there is very little support for evaluations and the accountability they would bring. He suspects that the lack of a true teacher evaluation system is affecting economic development, student performance and the ability to recruit and retain highly skilled teachers.
“I think it’s already affected the economy of this state,” the Montgomery Advertiser quoted him. “Other companies are looking at those NAEP scores, looking at those grades . . . they’re going to say ‘Why should we go to Alabama’?”
Interestingly, even though education groups fought the accountability portion of the bill, the State Department of Education is still required to implement a teacher evaluation model that is in part based on student outcomes.
JUDICIAL AND LEGAL REFORM
House Passes Lawsuit Lending Regulation Bill
The House on Tuesday passed HB 395, the Consumer Lawsuit Lending Act, by Rep. Chris Pringle, R-Mobile. The House voted 86-6 and sent the bill to the Senate. The BCA, working with the U.S. Chamber of Commerce’s Institute for Legal Reform, supports HB 395 and the Senate version, SB 67 by Sen. Cam Ward, R-Alabaster.
HB 395 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.
The bill has broad support among both Republicans and Democrats. In last year’s regular legislative session, a BCA-supported lawsuit lending bill passed the House on a bipartisan 98-1 vote. The Senate Judiciary Committee twice has favorably reported the bill.
Deceptive Trade Practices Bill Favorably Reported by House Committee
The Senate last month passed the BCA-backed SB 270 by Sen. Phil Williams, R-Rainbow City, sending it to the House. The House Judiciary Committee favorably reported it and it was placed on the House calendar on Wednesday and is now in position to be considered by the House when it returns in session next week. Rep. David Faulkner, R-Birmingham, is carrying the bill in the House.
The BCA supports this legal reform bill that is necessary due to a recent opinion by 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.
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 business.
Read more about this issue on the BCA Blog.
‘Case Running’ Bill Advances to House
The House Judiciary Committee on Wednesday approved the third legal reform bill backed by the BCA in this session, HB 162 by Rep. Matt Fridy, R-Montevallo. It was placed on the House calendar and is in position for consideration next week.
HB 162 would make it more punitive for law firms to send case runners seeking clients for lawsuits.
Current law says case running can be punished by a fine of up to $1,000, but that doesn’t deter anyone, according to Rep. Fridy. HB 162 would increase the fine to $5,000 and allow plaintiffs to void improperly solicited contracts that may have been signed in the wake of a tragedy and recover fees, expenses, actual damages, and reasonable attorney fees.
Case running also is not fair to law firms that follow the rules and when lawyers get involved, the business cost of defending an action skyrockets. Rep. Fridy said the bill would help business by cutting the number of frivolous lawsuits.
TAX AND FISCAL POLICY
Infrastructure Accountability and Reform Bill Goes to Governor, BCA Praises Passage of Responsible and Accountable Transportation Infrastructure Legislation
The Senate on Wednesday gave final passage to the Alabama Transportation Safety Fund that paves the way for the first new investment in Alabama’s road and bridge infrastructure in the last quarter-century.
SB 180, the Alabama Transportation Safety Fund, sponsored by Sen. Gerald Dial, R-Lineville, will create a responsible and accountable fund that will receive designated revenues for maintenance, improvement, replacement, and construction of state, county, and municipal roads and bridges.
SB 180 is supported by the grassroots Alliance for Alabama’s Infrastructure that was created in January by the BCA and members of the Alabama business community, chambers of commerce, industry associations, community groups, and concerned citizens who desire to promote financially responsible investment in Alabama’s roads and infrastructure.
“We applaud the members of the legislature who recognize that we can no longer ignore Alabama’s crumbling infrastructure,” said Jim Page, CEO of the West Alabama Chamber of Commerce and spokesperson for the Alliance for Alabama’s Infrastructure.
The Senate approved SB 180 on March 3 by a vote of 25-4. The House amended the bill and passed it 90-3 on Tuesday. It returned to the Senate Wednesday for final passage by a vote of 31-0. The bill went to the Governor for his review.
SB 180 is necessary legislation that precedes consideration of HB 394 by Rep. Mac McCutcheon, R-Huntsville. HB 394, which is on the House calendar, would adjust Alabama motor fuel revenues to match the average of the user fees of bordering states beginning Oct. 1.
“With SB 180 now law, it’s time to pass HB 394. The people of Alabama deserve action, not excuses,” said BCA President and CEO, William J. Canary.
The user fees would be deposited into the Alabama Transportation Safety Fund and may not be used for administrative salaries and benefits, purchasing or maintaining equipment, or construction of buildings not related to road and bridge construction.
House Passes Bill That Clarifies Law for Digital Downloads
The House on Tuesday passed HB 349 by Rep. Ed Henry, R-Decatur, by a vote of 58-28. The BCA supports this legislation. This legislation re-establishes the intent of Alabama’s existing law, and is necessary due to confusion regarding regulatory actions intended to tax digital content as tangible personal property.
In light of the increasing popularity of data streaming websites, such as Netflix, HB 349 would exempt from rental, sales, and use taxes, electronically transferred products that do not give the right of permanent use. Without this legislation, the Alabama Department of Revenue could interpret tax regulations and start taxing these services. HB 349 ensures that the power to tax lies solely with the Legislature and not the executive branch.
House Passes Tax Increment Financing Tool Useful for Economic Development
The House on Tuesday voting 98-0 passed HB 311 by Rep. Anthony Daniels, D-Huntsville, and sent it to the Senate where it was assigned to the Finance and Taxation Education Committee.
HB 311 is a proposed constitutional amendment that asks voters to authorize local municipalities the ability to define the parameters of tax increment financing for economic development. TIF is used in a lot of larger areas to guarantee bonds, Rep. Daniels said, but local governments need the authority to expand what tax increment financing can do for them.
HB 311 would allow counties and municipalities utilizing tax increment districts within a Major 21st Century Manufacturing Zone to redevelop property to determine, in their discretion, the compensation to be received from the disposition of property.
“We used tax increment financing as a very useful tool,” said Rep. Juandalyn Givan, D-Birmingham.
State School Board Appoints Interim Superintendent
The Alabama State School Board on Thursday named Dr. Philip Cleveland as Interim School Superintendent to succeed retired Superintendent Dr. Tommy Bice. Dr. Cleveland has been serving as Alabama Director of Career and Technical Education and Workforce Development for the Alabama Department of Education.
He holds a bachelor’s degree from Auburn University in Agriculture Business and Economics, a master’s degree from Auburn in Agriculture Education, an A.A. from Alabama A&M University in Agribusiness Education, and an Ed.D. in Organizational Leadership from Nova Southeastern University. Dr. Cleveland has served as an Agriscience Education teacher, a Career Technical Education director, and a High School principal. His postsecondary experiences range from serving as the Vice President for Learning and Dean of Applied Technologies at Wallace State Community College, and Interim Community College President of Chattahoochee Valley State Community College.