This week’s Tuesday Briefing sponsored by the Drummond Co. featured Senate Majority Leader Greg Reed, R-Jasper, who gave his overview of the last five days of the 2016 regular legislative session. The briefing was the final briefing of the 2016 regular legislative session.
The House approved a controversial Senate bill to authorize an $800 million bond issue that would pay for four new state prisons. The bill returns to the Senate for consideration of House changes.
Governor Robert Bentley has signed the 2016-17 Education Trust Fund budget and the public education pay raise into law. The new budget and the pay raises take effect Oct. 1.
The House and Senate also dealt with tax bills and the Senate approved a proposal that would use BP settlement money to pay back state debt, invest in infrastructure projects in Mobile and Baldwin Counties, and free up money for Medicaid.
The Legislature adjourned Thursday and with two legislative days remaining in the 2016 regular session will reconvene on Tuesday.
Governor Signs Education Budget That Is Good for Business, Inks Pay Raise
Governor Bentley on Tuesday signed both the 2016-17 Education Trust Fund budget and the school employee pay raise bill into law. The 2016-17 ETF of $6.3 billion kicks in Oct. 1. This year’s ETF is $6 billion.
The ETF, HB 117 by Rep. Bill Poole, R-Northport, will be the largest since 2008 mostly due to budget controls including proration prevention that have been enacted by the Legislature since 2010.
HB 117 includes the following funding increases for business-backed initiatives compared with this year: $16 million for Pre-K; $4 million for Student Assessment; $3 million for Teacher Mentoring; $2.3 million for At-Risk students; $2 million to recruit Career Tech instructors from the private sector; $1 million for Advanced Placement; $1 million for Distance Learning; $400,000 for Career Coaches; and $200,000 for Workforce Development.
A $16 million increase for Pre-K will add more than 150 classrooms and enroll an additional 2,700 4-year-olds. Fully funding voluntary Pre-K is a BCA and Business Education Alliance of Alabama priority. The proposed budget also would add 475 new teacher units in grades 7 through 12.
HB 121, the pay raise bill also by Poole, authorizes a 4 percent raise for public K-12 school employees who make less than $75,000 per year and all two-year college employees beginning Oct. 1. K-12 employees making more than $75,000 will get a 2 percent raise and principals and assistant principals will get 4 percent raises. The spending bills will give teachers their first actual pay increase since 2008.
Wired Act Goes to Governor
HB 123 by Rep. Poole, is the Wired Act. It authorizes appropriations to completely provide wireless networks in all public schools, provide matching funds to local school systems that apply for federal funds to pay for providing wireless networks, or provide funds to implement a local school system’s state-approved technology that already has a wireless network.
A supplemental appropriation authorizes $3.9 million for K-12 schools and $5.9 million for the Alabama Community College System for equipment and/or deferred maintenance. “It’s a way to pull down more federal dollars,” Rep. Poole said. He estimated that the appropriations will result in $70 million in federal funding.
RCOs Seek Deadline Extension
HB 530 by Rep. April Weaver, R-Alabaster, was favorably reported by the Senate Health and Human Services Committee 8-0 on Tuesday after the House passed it 97-1 last week. The Senate version, SB 397 was indefinitely postponed in the Senate in favor of the House bill.
The bills would extend the Medicaid Regional Care Organizations’ Oct. 1 certification deadline while the Legislature struggles with funding to ensure that RCOs are successful. An extension is required because the RCOs won’t be operational by Oct. 1 under the current Medicaid appropriation for the 2016-17 fiscal year.
JUDICIAL AND LEGAL REFORM
Prison Construction Bill Passes After Lengthy Debate
Governor Bentley’s plan to borrow $800 million to build four new state prisons withstood more than seven hours of debate in the House on Thursday but ultimately it passed in amended form by a vote of 52-33. The Senate voted 23-11 on April 5 to pass the prison bond issue bill, SB 287 by Sen. Trip Pittman, R-Montrose.
The prison plan calls for consolidating the operations of 13 of the 15 men’s prisons into three new regional prisons, replacing the Julia Tutwiler Prison for Women, and upgrading the remaining open ones.
The $800 million would be repaid with $50 million a year that officials said would be realized from consolidation and reduced employee costs. The state faces pressure to reduce the inmate population of 24,000 in facilities designed for 13,000.
The Department of Corrections has not said which men’s prisons would be closed. “This addresses the problem we have,” said Rep. Mike Jones, R-Andalusia, who handled SB 287 on the House floor.
The plan is to reduce overcrowding and fix problems within the female inmate system in order to avoid federal sanctions and possibly punitive and costly oversight. The prison reform plan will save Alabama taxpayers over the long run, backers said. An amendment provides legislative oversight on spending. The bill returns to the Senate for consideration of changes.
Data Breach Bill Passes Senate, Goes to House
The Senate on Wednesday voting 34-0 passed a substitute SB 238, the Alabama Information Protection Act of 2016, sending it to the House. SB 238 by Sen. Arthur Orr, R-Decatur, would require businesses to notify consumers and the Attorney General’s office if a data breach occurs that contains “sensitive personally identifying information” affecting more than 1,000 Alabama residents.
Businesses that do not comply with the act under SB 238 face Alabama Deceptive Trade Practices Act (ADTPA) implications and up to $50,000 in civil fines from the Attorney General’s Office. Government entities also would be required to report data breaches, but they would be exempt from any fines.
Legislators at both the federal and state level should be concerned with providing clear guidance to businesses about how to notify those affected by a data breach, which will benefit all parties involved in such a breach.
TAX AND FISCAL POLICY
New BP Settlement Passes House; Needs Fast Action in Senate
The House voting 82-12 on Thursday night passed HB 569 by Rep. Steve Clouse, R-Ozark. This bill would allow the state to collect a lump-sum payment on its share of BP’s settlement with Gulf Coast states over the 2010 oil spill.
HB 569 is a late-session bill designed to accomplish several things, including provide money for Medicaid. The bill creates the Alabama Economic Settlement Authority and authorizes a bond issue backed by the state’s share of the BP oil spill money in order to fully repay $161.5 million to the General Fund Rainy Day Account, $287 million of the outstanding $422.4 million debt to the Alabama Trust Fund, and for unspecified road projects in Southwest Alabama.
The bill also would add $55 million to the Medicaid Agency’s budget and reduce the unmet budget request of $85 million to $30 million.
The bill was assigned to the Senate Finance and Taxation General Fund Committee and must be released by the committee on Tuesday in order to be considered for a vote on the Legislature’s final day.
Job-Creating Apprentice Tax Credit Bill Goes to the Governor
Apprenticeship Tax Credit Act, SB 90 by Sen. Arthur Orr, R-Decatur, passed the House 84-3 on Thursday. This important business-backed legislation would allow an employer to claim a nonrefundable income tax credit of $1,000 for each apprentice employed up to five claims per year.
The employer may claim the credit if the apprentice is employed for at least seven full months of the taxable year and may only claim the credit for an individual apprentice for a maximum of four taxable years. The credit is capped annually at $3 million for the first two years and then $5 million thereafter.
Senate Approves Bill Limiting Local Government Use of Third-Party Collecting Firms
The Senate 30-0 on Wednesday passed SB 335 that would update the Alabama Taxpayers’ Bill of Rights and Uniform Revenue Procedures Act by restricting aggressive third-party auditing and collecting firms from mistreating businesses when collecting local sales and use tax and protect businesses from becoming overburdened by the audit process.
SB 335 by Sen. Paul Sanford, R-Huntsville, went to the House State Government Committee that favorably reported it Thursday, placing it on the House calendar. The House version is HB 375 by Rep. Paul Lee, R-Dothan.
The bills would add specific requirements and disclosures that would have to be made by third-party auditing and collecting firms when they are contracted by a municipality or county. They include certain confidentiality requirements, requiring the taxing authority to use an independent hearing and appeals officer, and requiring a public official or employee of the local government to sign the final assessment.
Tax Preparer Bill Would Require Certain Preparers to Register with Department of Revenue
The Senate on Wednesday voting 30-1 passed SB 402 by Sen. Tim Melson, R-Florence. The House State Government committee favorably reported the bill and it was placed on the House calendar on Thursday.
SB 402 would require certain individual tax preparers to register with the Department of Revenue. If not registered, they would not be able to conduct tax preparation services. SB 402 also would create the Alabama Taxpayer Protection and Assistance Act Advisory Council for the purpose of determining acceptable examinations, continuing education requirements, and certification.
Bills to Make Minority Affairs Office Director a Cabinet Level Position Advance
The House and Senate voted on separate bills to make the Governor’s new director of the Office of Minority Affairs a cabinet-level position and create an Advisory Board on Minority Affairs.
The Senate on Tuesday voted 26-0 to pass SB 411 by Sen. Rodger Smitherman, D-Birmingham. It was sent to the House where it received a favorable report by the State Government Committee and placed on the calendar for final consideration.
Rep. John Knight, D-Montgomery, has the House version, HB 534, which was favorably reported 13-0 by the Senate Finance and Taxation Education Committee after the House passed it on Tuesday.
Governor Bentley created the Office of Minority Affairs by executive order in March and named Mobile native Nichelle Nix as the GOMA director.
She most recently served as an attorney in the Governmental and Regulatory Affairs Division at Maynard, Cooper & Gale P.C. in Birmingham. She is a graduate of Spelman College in Atlanta, earned a Master’s of Public Health degree from Emory University, and a law degree from The University of Alabama School of Law in 2008. She served as Legislative Counsel to U.S. Rep. Artur Davis, D-Birmingham, was a Fellow at the Alabama Appleseed Center for Law & Justice in Montgomery, and Executive Director of the Sickle Cell Disease Association of America in Mobile.