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Week 10 of the 2018 Session

Sen. Clay Scofield, R-Guntersville, chairman of the Senate Confirmations Committee, and Rep. Donnie Chesteen, R-Geneva, chairman of the House Technology & Research Committee, spoke at the final Business Council of Alabama Tuesday Briefing scheduled for the 2018 regular legislative session.

They discussed compromise legislation to encourage high-speed Internet service that will enable rural Alabama homes and businesses prosper, legislation which was favorably reported by the House Ways and Means Education Committee on Wednesday.

Tuesday’s briefing was sponsored by the Alliance for Alabama’s Infrastructure. Sen. Scofield and Rep. Chesteen were introduced by AAI board member Morgan O. “Major” Ogilvie Jr. of BCA-member Ready Mix USA LLC in Birmingham.

The Legislature began its 10th week in regular session and on Tuesday moved the two state budgets toward their conclusion in anticipation of an early end to the session, probably March 29.

The Senate passed a $6.6 billion Education Trust Fund budget but due to changes it will have to be reconciled with the House version. State employee and public education employee pay raise legislation and one-time bonuses for retirees advanced also advanced toward their inevitable conclusion.

Through the 20th legislative day, legislators have introduced 519 bills in the House and 396 in the Senate. The Legislature will reconvene on Tuesday for the 21st legislative day.


EDUCATION AND WORKFORCE DEVELOPMENT

Education Trust Fund Budget Includes Substantial Pro-Business Increases

The education budget calls for spending $6.6 billion from the Education Trust Fund next year, about $216 million more than this year. The budget will have to be reconciled with the House before it can be sent to the governor for consideration.

The Senate voting 29-0 on Thursday passed an amended and substituted $6.6 billion Education Trust Fund, HB 175 by Rep. Bill Poole, R-Tuscaloosa, for Fiscal Year 2018-19 that begins Oct. 1.

The budget includes substantial funding for programs that the Business Education Alliance of Alabama has provided data in support of over the past four years including early childhood reading and early elementary school reading support. Total BEA-recommended initiatives would receive a combined $95.9 million.

The budget contains important business-backed education functions: HB 175 would appropriate an $18.5 million increase for pre-Kindergarten, the greatest single-year increase in program history, from its current budget amount of $77.5 million, to $95.9 million, and an increase of $4 million to the vaunted Alabama Reading Initiative program, from its current appropriation of $40.8 million, to $44.8 million.

Senate Finance and Taxation Education Committee Chairman Sen. Arthur Orr, R-Decatur, who explained the budget on the Senate floor, said he appreciated BEA Chairman and President Joe Morton, Ph.D., for his assistance in accountability language rewarding school growth in reading.

National Board-Certified teaching standards would get a $1 million increase and Career Tech, an increase of $1.3 million. The substitute bill keeps a $200,000 increased appropriation to Advanced Placement and an appropriation of $1.5 million to the proposed new Alabama School of Cyber and Engineering in Huntsville.

The ETF budget also includes a $250,000 appropriation to support the Automotive Manufacturing Workforce Development Program and $200,000 for the Automotive Workforce Training Scholarship Program.

Education Raises, Retiree Bonuses, Near Finale

The proposed ETF contains money for a 2.5 percent pay raise for K-14 public education employees, which is authorized in HB 174 sponsored by Rep. Poole. The Senate passed it Thursday by a vote of 29-0. It went to Governor Ivey for consideration.

The one-time bonus for teachers, SB 21 by Sen. Gerald Dial, R-Lineville, is in the House Ways and Means Education Committee.

House Committee Approves Senate’s Elected Superintendent Bill

The House Education Policy Committee voting 5-2 on Wednesday favorably reported SB 280 by Sen. Dick Brewbaker, R-Pike Road. SB 280 would authorize county school boards to appoint their superintendents of education unless local voters choose to keep their superintendent an elected position.

Most county superintendents are elected while most if not all city superintendents are appointed by their respective boards of education. Being able to appoint their superintendents can ensure that superintendents and school board members will be working on the same page to the benefit of students and their school systems.

STEM Teacher Loan Help Bill Moves Forward

The Senate Finance and Taxation Education Committee favorably reported HB 261 sponsored by Rep. Joe Lovvorn, R-Auburn. HB 261 would create a loan repayment program for public school teachers titled the “Alabama Math and Science Teacher Education Program” that would be administered by the Alabama Commission on Higher Education (ACHE).

Contingent upon availability of funding, this program would provide up to $7,500 each year for repayment of federal student loans to each teacher accepted to the program.


JUDICIAL AND LEGAL REFORM

Ethics Bill Relating to Economic Developers Waits for Updates

The Senate Financial Responsibility and Economic Development Committee on Wednesday adopted a committee amendment to HB 317 sponsored by Rep. Ken Johnson, R-Moulton.

The committee then carried the bill over after Senate President Pro Tem Del Marsh, R-Anniston, said he planned to meet with officials from the Ethics Commission, attorney general’s office, and governor’s office to get more information prior to a possible vote next week.

Over recent weeks, various entities including the Attorney General’s office and the Department of Commerce have been negotiating a compromise which resulted in an amended HB 317. The bill would clarify that Alabama economic developers such as site selectors, industrial developers, and chamber of commerce officials are not classified as lobbyists.

If classified as lobbyists, economic developers would have to reveal information that could endanger economic development efforts, which demand secrecy for competitive reasons until the last possible moment.

Governor Ivey Gets Vacant Store Bill

The so-called “Dark Store” bill by Sen. Phil Williams, R-Rainbow City, SB 100, went to the governor on Tuesday after the House passed it 96-0.

With this legislation, a taxpayer protesting or appealing a tax ruling on commercial or industrial property will have to disclose whether proposed comparable property used for valuation purposes was occupied or unoccupied at the time of the transaction. Disclosure will allow a court to determine whether the proposed comparable property is sufficiently similar to be used as evidence in considering the appeal.

Representatives of the business community and counties negotiated over compromise language. Rather than prohibit a court from receiving certain evidence in the original bill, the solution will require more disclosure on the part of the entity seeking to introduce the evidence.


LABOR AND EMPLOYMENT

Unemployment Comp Bill Would Reduce Employer Trust Fund Costs by $50 Million

The House Commerce and Small Business Community substituted SB 92 by Sen. Orr and favorably reported it. SB 92 would update Alabama’s unemployment compensation law.

SB 92 would reduce costs to the Unemployment Compensation Trust Fund for benefit payments funded by employer contributions by over $50 million. The bill if it becomes law will authorize an additional five weeks of benefits if an individual is enrolled in a job training or certification program approved by the Alabama Department of Labor.

The bill also would reduce the maximum number of weeks that unemployment compensation benefits could be paid in a benefit year beginning on or after Jan. 1, 2019, from the lesser of 26 weeks or one-third of the wages paid for insured work during the base period, to the lesser of 14 weeks up to a maximum of 20 weeks depending upon the state’s average unemployment rate or one-fourth of the wages paid for insured work during the base period.

It would increase the weekly benefit amount from $265 to $275 beginning Jan. 1, 2019. The substitute made technical changes to disqualification provisions and adopted the state average unemployment rate as a measure for the duration sliding scale, rather than that of the claimant’s county of residence.


TAX AND FISCAL POLICY

House Approves General Fund Budget, Prisons to get $87.5 Million More

The House on Tuesday voted 98-1 to pass a substituted SB 178, the $2.03 billion General Fund budget sponsored by Sen. Trip Pittman, R-Montrose. The proposed budget would appropriate $166 million more for general government spending than this year’s budgeted amount.

It probably was the quickest passage of a state budget in history, taking approximately 10 minutes with no questions asked by House members. Because of committee changes, the bill was returned to the Senate for reconciliation with its version.

The proposed budget contains funding for a 3 percent pay raise and a one-time bonus for retired state employees authorized in SB 185  by Sen. Clyde Chambliss, R-Prattville, which the House passed 101-0, followed by the Senate agreeing in a 20-0 vote to House changes. The bill went to Governor Ivey.

HB 150 by Rep. Dimitri Polizos, R-Montgomery, is the House version of the pay raise.

The House passed Sen. Dial’s amended SB 215 87-0, returned it to the Senate where it was approved 26-0 on Thursday, and sent to the governor. It authorizes a one-time bonus of $1 for each month employed for state retirees.

HB 440 by Rep. Kerry Rich, R-Albertville, is the House version.

General Fund Budget Explained

Rep. Steve Clouse, R-Ozark, explained a few details in the proposed General Fund budget: Medicaid will not need as much money as originally thought due to federal extension of CHIP, but it will still receive an increased appropriation of $54 million.

The bill would increase the Alabama Department of Corrections budget by $55.7 million in order to add staff and implement a new health care contract to improve medical and mental health care for inmates.

The related SB 175 by Sen. Pittman would authorize a $30 million supplemental appropriation to the Department of Corrections. The House passed the bill 80-1 on Tuesday and sent it to Governor Kay Ivey.

Governor Signs Largest Middle-Class Tax Cut in Decade

Governor Kay Ivey on Thursday signed into law the largest state income tax break in more than a decade for middle-class Alabamians.

SB 76 Senate President Pro Tem Del Marsh, R-Anniston, was part of the Senate Republican Caucus’ plan for the session. Rep. Reed Ingram, R-Mathews, handled the bill in the House.

“I am proud to sign SB 76 giving low-income and middle-income Alabamians much needed relief on their taxes,” Governor Ivey said. “The economy in our state is booming and this tax break reflects that. Every dollar spent by the government belongs to the people and I am pleased to be able to give some of that money back.”

“This is the first tax cut in Alabama since 2006 and I am proud that through smart, conservative management, the economy is doing well and the money for this middle-class tax break is available,” Sen. Marsh said.

The new law increases the threshold for claiming the maximum exemptions for state income taxes.

For married couples filing jointly, heads of households, and single filers, the income threshold would be raised from $20,000 to $23,000. For married individuals filing separately, the threshold would be raised from $10,000 to $10,500. The overall impact of the bill is projected to be a $40 million savings for taxpayers over the next 10 years, Governor Ivey said.

The bill was passed unanimously by both houses.

Data Center Tax Abatement Period Could Be Extended

The House voting 95-0 passed HB 494 by Rep. Nathaniel Ledbetter, R-Rainsville, the companion to SB 379 by Sen. Jabo Waggoner, R-Vestavia Hills. It was favorably reported by the Senate Finance and Taxation Education Committee on Wednesday.

The bills would extend property and sales tax abatements for certain data processing centers for five years, through calendar year 2023. The Tax Incentive Reform Act of 1992 provided certain sales and property tax abatements for data processing centers. The incentives were to end after Dec. 31, 2018.

Senate Committee Amends and Favorably Reports SSUT Bill

The Senate Finance and Taxation General Fund Committee amended and favorably reported HB 470 on Wednesday, one day after the House passed it by a vote of 87-8.

The bill by Rep. Rod Scott, D-Fairfield,would amend the existing Simplified Sellers Use Tax Program (SSUT) law. The bill would keep the SSUT rate at 8 percent and split receipts 60 percent and 40 percent between cities and counties, respectively. New entrants to the SSUT (which voluntarily collect sales tax for the state) would be able to keep 1 percent of taxes paid for remittance.

Introduction of the bill was prompted by Amazon’s acquisition of Whole Foods last year, which triggered a review of whether the online retailer could continue to pay sales tax through the SSUT program.

House Approves Bill Increasing Authority of Banking Superintendent

The House voting 88-7 on Thursday passed a committee substitute of HB 417 by Rep. Chris Blackshear, R-Phenix City.

The bill would provide the Superintendent of Banks with substantial new authority over bank service providers. The bill aims to help police customer data security at third-party institutions that may handle banking data, as well as protect the stability of our financial system. Some concern was expressed about the scope of the bill and the potentially broad array of companies that could be affected.

House Passes Transportation Infrastructure Bank Capitalization Bill

The House on Tuesday passed Sen. Orr’s SB 100 by a vote of 96-0 and sent it to the governor’s office for consideration. SB 100 is the Transportation Infrastructure Bank bill. HB 311 by Rep. Margie Wilcox, R-Mobile, is the House version.

SB 100 will amend the 2015 Transportation Infrastructure Bank Act and capitalize the existing bank by allowing it to use certain funds from motor vehicle license and registration fees, state proceeds of the diesel fuel excise tax and motor carrier fuel tax, and fees on motor vehicle identification markers as a third priority pledge when paying or securing revenue bonds and other financial assistance issued by the bank.

A seven-member board of directors will be created to govern the bank. The board will include the director of the Alabama Department of Transportation, the state Finance Director, three members appointed by the governor, one member appointed by the Speaker of the House, and one member appointed by the Senate President Pro Tem. An annual audit will be required.

This bill also will allow certain local governments to obtain bonds for transportation projects throughout the state. The state will be allowed, using its AA bond rating, to back bonds of some counties with higher bond ratings, such as an A rating, resulting in a better repayment rate.

Committee Approves Substitute Rural High-Speed Internet Bill

The House Ways and Means Education Committee following a public hearing on Wednesday favorably reported a committee substitute for SB 149, the broadband bill sponsored by Sen. Scofield.

SB 149 originally would have authorized income tax credits to incentivize businesses to provide rural high-speed Internet service, but negotiations resulted in a compromise to switch from a tax credit to a $10 million grant program to be administered by the Alabama Department of Economic and Community Affairs.

The Alabama Broadband Accessibility Act would establish the Alabama Broadband Accessibility Fund to be used to install broadband Internet services in unserved areas. ADECA would be tasked with developing plans and rules for the program. ADECA also would establish priorities for the grants including wiring areas without access. Accountability language was added in committee including a requirement to produce quarterly reports.

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Dana Beyerle
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