Week 11 of the 2018 Session

The Legislature completed its 11th week in regular session on Thursday, working three legislative days in preparation for the session’s probable finale next week.

Through the 23rd legislative day, legislators have introduced 526 bills in the House and 396 in the Senate. The Legislature will reconvene on Tuesday for the 24th legislative day with a goal of ending the session on or before March 29.

Among the bills receiving final passage this week was the rural broadband bill by Sen. Clay Scofield, R-Guntersville. It creates a grant program to encourage high-speed Internet service in rural Alabama.

The General Fund for next fiscal year was sent to Governor Kay Ivey.

And the Senate passed an important Senate infrastructure bill, sending it to the House.

Governor Ivey signed bills authorizing pay raises for educators and state employees, and a one-time bonus for retired state employees. The teacher pay raise, sponsored by Rep. Bill Poole, R-Tuscaloosa, and Sen. Arthur Orr, R-Decatur, enacts a 2.5 percent salary increase for many public education employees of K-14 schools effective Oct. 1.

The state employee salary increase legislation sponsored by Sen. Clyde Chambliss, R-Prattville, and Rep. Dimitri Polizos, R-Montgomery, authorizes a 3 percent raise for state employees and appellate judges effective the first pay day after Oct. 1.

Sen. Gerald Dial, R-Lineville, and Rep. Connie Rowe, R-Jasper, sponsored legislation to grant a one-time lump-sum bonus of $1 per month for each year of service to Employees’ Retirement System retirees whose effective date of retirement is prior to May 1, 2018, or their beneficiaries.

The one-time bonus for retired education employees, SB 21 by Sen. Dial, is first on Tuesday’s proposed House special order calendar.


House Passes Cyber School Funding Bill

The House voting 91-1 on Wednesday passed an amended SB 212, the cyber school bill by Sen. Arthur Orr, R-Decatur. Because it was amended, the bill returned to the Senate, which concurred. Rep. Anthony Daniels, D-Huntsville, handled the bill in the House.

The bill appropriates $1.5 million for a new Alabama School of Cyber Technology and Engineering, an independent residential school in Huntsville. The bill also creates a 15-member board of trustees to govern the school. Cyber technology and engineering is expected to be a growing field with employment opportunities for Alabama’s current and future workforce.

School Security Legislation Going Back to Senate for Concurrence

The House voting 96-4 on Thursday passed SB 323 by Sen. Trip Pittman, R-Daphne, a bill providing financial support for school security. The bill was returned to the Senate for consideration of a House-added amendment stipulating the money couldn’t be used for recurring expenses. The Senate concurred 29-0, sending the bill to the governor.

“We all know importance of (security) and we need to provide every feasibility we can to provide for the security of our students,” said Rep. Bill Poole, R-Tuscaloosa, who handled the bill on the House floor. SB 323 will add school security measures as an allowable use of funds appropriated from the Education Trust Fund Advancement and Technology Fund.

Education Budget Goes to Conference Committee

House and Senate members created a conference committee this week to work out differences in HB 175, the $6.6 billion Education Trust Fund budget for 2018-19, by Rep. Poole.

The proposed budget includes substantial pro-business increases: total Business Education Alliance-recommended initiatives would receive a combined $95.9 million.

HB 175 would appropriate an $18.5 million increase for pre-K, 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;

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.

House Teacher Scholarship Loan Repayment Bill Is Amended and Passed in Senate

The Senate voted Thursday 29-0 to amend and pass HB 261 by Rep. Joe Lovvorn, R-Auburn. His bill would authorize a loan repayment amount for qualified public school teachers. The “Alabama Math and Science Teacher Education Program” to be administered by the Alabama Commission on Higher Education, contingent upon availability of funding, would provide up to $7,500 each year for repayment of federal student loans.

Sen. Linda Coleman-Madison, D-Birmingham, said Alabama needs to provide financial incentives for teachers with student loans if they teach science, math, or technology in unserved areas.


Irrigation Equipment Tax Credit Clarified

The Senate voting 26-0 on Thursday passed HB 260 by Rep. Donnie Chesteen, R-Geneva, and sent it to the governor. The bill clarifies that an eligible taxpayer may claim one irrigation equipment income tax credit during tax years 2011 through 2017 and one credit during tax years 2018 through 2022. The law stipulates that the maximum amount of credit will be $10,000 for tax years 2011 through 2017 and $50,000 for tax years 2018 through 2022. The credit will be available for any agricultural trade or business that purchases and installs qualified irrigation equipment or a qualified reservoir.


Rural Hospital Resource Center Proposed at UAB

The Senate on Wednesday voting 26-0 concurred with a House amendment to SB 351 by Sen. Greg Reed, R-Jasper, and sent the bill to Governor Ivey.

Sen. Reed’s bill establishes the Alabama Rural Hospital Resource Center at the University of Alabama at Birmingham. The House amendment clarifies that funding is not included so financing will be needed to implement provisions, which UAB estimates will be about $1 million. The new center will work to increase the viability and capabilities of nonprofit or public rural hospitals. UAB would have to formally approve creation of the center, which also would require funding to begin operating.


Economic Developer Ethics Clarification Nears Passage

The Senate Fiscal Responsibility and Economic Development Committee this week voting 10-2 amended and favorably reported HB 317, the economic developer ethics rule bill by Rep. Ken Johnson, R-Moulton. The bill, which is on the Senate calendar, states that a person acting as an economic development professional will not be considered a lobbyist.

In 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 will clarify that Alabama economic developers such as site selectors, industrial developers, and chamber of commerce officials will not be 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. The rule for professional economic developers includes exemption from registering with the state, undergoing yearly training, and reporting activity.

Ethics Reform Commission Authorization Passes

The House joined the Senate in approving SJR 11 by Sen. Arthur Orr, R-Decatur, that creates the Code of Ethics Clarification and Reform Commission.

Meanwhile, the Senate voting 19-3 on Wednesday approved an amended SB 267 by Sen. Cam Ward, R-Alabaster. The bill would amend the definition of a minor violation of the Ethics Law to increase the threshold for public officials who receive an economic gain, or for governmental entities that suffer an economic loss, from $250 to $1,500.

The bill would remove the provision that an administrative penalty imposed shall not be less than three times the economic loss to a governmental entity or the economic gain to a public official or public employee, subject to the $1,000 cap, and would increase the administrative penalty assessed for minor violations, from a maximum of $1,000 to a maximum of $6,000.

Data Breach Notification Bill Nearing Final Passage

The Senate passed a floor substitute for the data breach notification bill, SB 318 by Senator Orr, and sent it to the House that approved an amended version 101-0. The bill will have to return to the Senate for consideration of changes.

Consumer protection data breach legislation is the result of ongoing discussions between interest groups that include the business community and the Alabama Attorney General’s office. The legislation would require businesses and other entities to provide notice to affected individuals upon a breach of security that results in the unauthorized acquisition of sensitive, personally identifying information.

House Passes Bill Increasing Fentanyl Penalties with Last-Minute Changes that Could Have Broad Liability Impact

The House voted Thursday to stiffen the penalties for distributing fentanyl. Under SB 39 by Sen. Cam Ward, R-Alabaster, carried in the House by Rep. April Weaver, R-Alabaster, a person would be convicted of trafficking in the event they possess more than one gram of fentanyl or 50 packages of a fentanyl mixture.  The bill also sets mandatory minimum sentences based on weight.

A floor substitute adopted by the House, however, also inserted broad language relating to lawsuits against opioid manufacturers and distributors.  The bill would institute an otherwise rare “market-share liability” system wherein companies that make, sell, market, or distribute these products would be liable for their percentage of the total market share of opioid sales, regardless of whether their particular product was the cause of an individual plaintiff’s harm.  The bill also limits the defense that, relating to market-share liability, unlawfully produced opioids are also involved in the overall opioid epidemic.  The bill additionally states that it is not a requirement that “a party claiming damages received, was prescribed, or consumed opioids.”

The bill can either be reconsidered by the House or sent to the Senate for concurrence or nonconcurrence.


Workforce Development Council Tweak Goes to Governor

The Senate voting 26-0 on Wednesday passed HB 170 by Rep. Alan Baker, R-Brewton. The bill revises the size of the Workforce Development Council and limits it to 35 members. The Workforce Development Council advises and supports various state officials and serves as an advisory body in formulating policies, developing innovative educational workforce programming, and discussing issues critical to the workforce development needs.

Bill Increasing Authority of Banking Superintendent Can Still Pass

The Senate Governmental Affairs Committee voting 6-0 on Tuesday favorably reported a substituted HB 417 by Rep. Chris Blackshear, R-Phenix City, and placed it on the Senate calendar for consideration next week.

The bills would provide the Superintendent of Banks with substantial new authority over bank service providers. The bills aim 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.


Income Tax Credit Clarification Bill Goes to Governor

The Senate on Wednesday voted 26-0 to pass HB 384, by Rep. Rod Scott, D-Fairfield, and send the bill to the governor. The bill clarifies out of state income tax credits. The legislation will provide certainty regarding how Alabama residents calculate their credit for taxes paid to other states. In keeping with sound tax policy and an existing Department of Revenue regulation, this bill will provide that the credit for taxes paid to another state shall not be used to offset that portion of a taxpayer’s income tax liability attributable to Alabama sources. In other words, the credit will only be used to offset a taxpayer’s income tax liability that is attributable to income from other jurisdictions.

This compromise legislation is the result of litigation invalidating Department Rule 810-3-21-.03, which provided an additional limitation not authorized by the existing statute, Ala. Code § 40-18-21. This legislation essentially codifies Department Rule 810-3-21-.03, which has been in effect since 2013.

General Fund Budget Goes to Governor

Voting 25-0, the Senate on Wednesday approved House changes to SB 178, the $2.05 billion, 2018-19 General Fund budget, and sent it to the governor for her consideration. The GF budget will increase funding for prisons and authorizes a 3 percent pay raise for state employees, the first in 10 years.

The proposed budget for the fiscal year that begins Oct. 1 is $167 million more than this year’s budget. (The Education Trust Fund budget is in a conference committee to work out differences in House and Senate versions.)

The Department of Corrections will get $472 million, $56 million more than this year, in addition to a supplemental appropriation of $30 million in this year’s DOC budget.

The DOC needs to expand mental health services and hire more correctional officers. A federal court ruled that the DOC’s mental health care was inadequate, so the department is working to improve mental health care and expand its security staff.

Medicaid will receive $755 million, the largest piece of the budget, up from $701 million this year. Because Medicaid also received $105 million in one-time funds from an oil spill settlement this year, next year’s total budget will be less than this year’s.

Amended SSUT House Bill Awaits Senate Passage

HB 470, the Simplified Sellers Use Tax bill by Rep. Scott, was debated and amended on the Senate floor on Thursday before being carried over to the call of the chair. The bill would keep the rate 8 percent and allow eligible sellers in the SSUT remittance program to have a substantial nexus in this state through acquisition of an in-state business and remain in the program. HB 470 also would require marketplace facilitators who participate in the SSUT program to collect the simplified sellers use tax on all sales made through the marketplace facilitator’s marketplace by or on behalf of a marketplace seller.

This bill would clarify that state and local sales tax are not collected under the SSUT remittance program and that state and local sales tax would be due on sales that are sold at a retail location in this state.

Data Process Center Tax Abatement Extended Five Years

The Senate voting 27-0 this week passed HB 494 by Rep. Nathaniel Ledbetter, R-Rainsville. His bill extends the tax abatement for data processing centers for five years. Under existing law, the Tax Incentive Reform Act of 1992 provides certain sales and property tax abatements for data processing centers. The incentives are due to expire after Dec. 31, 2018. HB 494 reauthorizes the tax abatements through calendar year 2023. The bill was sent to Governor Ivey.

Bill Sets Income Tax Filing Amount Threshold

The Senate voting 26-0 on Wednesday passed HB 320 by Rep. Rod Scott, D-Fairfield. The bill went to Governor Ivey on Thursday.

HB320 says the income tax threshold filing amounts will be the sum of standard deductions and any personal exemptions allowed for each filing status. The law would be amended to require that every taxpayer having an adjusted gross income before deductions allowed for the taxable year exceeding the sum of the allowable standard deduction and the personal exemption as allowed for his or her respective filing status will file a return specifically stating certain information.

High-Speed Internet Bill Goes to Governor

The House voting 99-0 on Tuesday approved an amended Senate broadband bill and the Senate voting 26-0 on Wednesday concurred in the House amendment, sending the bill to the governor.

SB 149 by Sen. Clay Scofield, R-Guntersville, creates a grant program to encourage broadband Internet services to unserved, mostly rural, areas in Alabama. The grant program will be administered by the Alabama Department of Economic and Community Affairs. ADECA will develop plans and rules for the program and ADECA also will establish priorities for the grants, including wiring areas without access. Accountability language was added in committee including a requirement to produce quarterly reports.

Senate Passes Transportation Bonding Authority Legislation

The Senate voted 27-2 on Thursday to pass SB 86 by Sen. Dial. The bill would establish the Alabama Road and Bridge Rehabilitation and Improvement Authority, which would be able to finance the rehabilitation and improvement of roads and bridges using bond issues payable solely from proceeds from any new levy of gasoline and diesel fuel excise taxes.

The total bond issue could not exceed $2.45 billion. Of that amount, $1.25 billion would be earmarked to finance county and municipal transportation projects, and the remainder for state projects.

The bill also would permanently establish the Alabama Transportation Rehabilitation and Improvement Program (ATRIP) Committee created in 2016. That committee is charged with reviewing projects submitted by counties and municipalities and submitting to the authority those meeting the criteria for funding.