Week 4 of the 2018 Session

Senate and House Rules Committee chairs Sen. Jabo Waggoner and Rep. Mike Jones said they expect the 2018 regular legislative session to end in March, a month earlier than usual because of the June election primaries. Sen. Waggoner, R-Vestavia Hills, and Rep. Jones, R-Andalusia, spoke at this week’s Business Council of Alabama’s Governmental Affairs Committee Tuesday briefing.

L. Waymond Jackson Jr., senior vice president of public policy for BCA-member Birmingham Business Alliance, which sponsored the briefing, introduced Sen. Waggoner and Rep. Jones.

The House on Tuesday fast-tracked SB 98, the tax incentive bill for Toyota-Mazda sponsored by Sen. Arthur Orr, R-Decatur. A separate bill to clear up industrial recruiting was favorably reported by a House committee.

House Ways and Means Education Committee Chairman Rep. Bill Poole, R-Tuscaloosa, this week distributed next fiscal year’s proposed Education Trust Fund budget bill to House members prior to a planned committee public hearing next week. Rep. Poole said a committee vote on HB 175 could occur next week.

The Senate also approved a much-needed rural broadband access bill.

At the end of the session’s fourth week, House members had filed 370 bills and senators, 277.

The House and Senate are scheduled to return to Montgomery on Tuesday for the session’s ninth legislative day.

The BCA monitors and acts on the business community’s legislative agenda that includes infrastructure investment preparation for 2019, education, health care, legal reform, tax and fiscal policy issues.


Senator Proposes Changes to State School Board and Education Superintendent

Sen. Greg Albritton, R-Bay Minette, had introduced SB 24 and SB 25 that would change the makeup of the state school board and both the way it and the K-12 school superintendent are chosen. This week, the bills were carried over in the Senate Education and Youth Affairs Committee for further discussion.

Under existing law, membership of the State Board of Education includes the Governor as an ex-officio member and eight members who are elected from districts. Also, under existing law, the state superintendent of education is appointed by the State Board of Education.

SB 24 proposes a constitutional amendment asking voters to create the position of director of education as a cabinet level position in lieu of the state superintendent of education and give the governor the authority to appoint the director of education, subject to Senate confirmation. The bill also would create a board of counsel in lieu of the state school board and authorize the director of education to appoint members of that board.

SB 25 is the enabling legislation to SB 24. Its provisions would only kick in if the bill becomes law and if SB 24 is passed and approved by voters. SB 25 would create a 13-member board of counsel and establish qualifications of board members, their terms of office, and how to fill vacancies. The new board would be comprised of superintendents within school districts and would include cabinet-level officials who would be held accountable for department progress.

Education Savings Account Bill Update Is Introduced

Sen. Dick Brewbaker, R-Montgomery, introduced SB 189, which would update the existing Wallace-Folsom Savings Investment Plan law that authorizes the Achieving a Better Life Experience Program (ABLE), the Alabama College Education Savings Program (ACES), and the Alabama Prepaid Affordable College Tuition Program (PACT).

This bill, favorably reported by the Senate Education and Youth Affairs Committee, is similar to previous education savings account bills that are supported by the BCA and other school-choice advocacy groups.

SB 189 would authorize a contribution to, and continued investment in, an ACES or ABLE program savings account for a designated beneficiary by the guardian or conservator of the designated beneficiary. This bill would also conform the applicable code sections to recent amendments to Section 529 of the Internal Revenue Service Code.

A 529 savings plan is a qualified tuition program, sponsored by a state or state agency, and designed to give families a tax-advantaged way to save for college. A 529 college savings account provides federal tax advantages, potential state tax benefits, account control, and investment flexibility. Savings can be used at eligible institutions for tuition, fees, books, supplies, and equipment required for enrollment. Room and board is also a qualified education expense if the student is enrolled at least half-time.

Information about the tax credit can be found here.


Ride-Sharing Regulation Bills Are Moving on Down the Road

Currently, Alabama is one of only six states with no uniform, statewide regulations for Transportation Network Companies (TNCs), and there is a hodgepodge of regulations in 15 Alabama cities that license them. Now there is legislation to create uniform regulations that are needed to expand the availability of ride sharing across the state and to protect the public.

The House voting 97-3 on Tuesday passed an amended and substituted HB 190 by Rep. David Faulkner, R-Birmingham, that would create regulations for ride-sharing companies such as Uber and Lyft. The bill was sent to the Senate Commerce and Tourism and Marketing.

The Senate last week voting 28-0 passed a similar bill, SB 143, by Sen. Bobby Singleton, D-Greensboro. The House Commerce and Small Business Committee on Wednesday amended and then favorably reported SB 143 to the full Senate.

Rep. Faulkner’s HB 190 would require TNCs to obtain permits from the Public Service Commission, maintain agents for service of process, implement nondiscrimination policies, a zero-tolerance intoxicating substance policy, and maintain certain records.

This bill would require TNC drivers and vehicles to meet certain safety and consumer protection requirements and would require TNCs to collect a local assessment fee for each trip fare and remit it to the Public Service Commission. A portion would be distributed to the municipality or county where the ride originates but would prohibit municipalities and certain authorities from imposing taxes or business licenses on TNCs.

Uber and Lyft advocated for Sen. Singleton’s bill, which has bipartisan support and is endorsed by Gov. Kay Ivey.


Broadband Bill Would Spur Rural Internet Development

The Senate on Thursday voted 29-0 to pass SB 149, the Alabama Broadband Act by Sen. Clay Scofield, R-Guntersville.

“Seventy years ago, co-ops and private companies invested in bringing electricity to the country, improving life and creating jobs for millions. It’s my hope that this legislation will spur the same expansion with the internet to all those same households and businesses,” Sen. Scofield said.

The bill would authorize income tax credits to entities that purchase, construct, or install qualified broadband telecommunications network facilities in Alabama’s rural areas retroactive from Dec. 31, 2017, through Dec. 31, 2023.

The income tax credit would be 10 percent of new investment in qualified broadband telecommunications network facilities, but there would be an annual, per-taxpayer limit of the lesser of income tax due or $750,000/$1.4 million, depending on the broadband speed of the project. Total income tax credits could not be more than a collective $20 million. Of this amount, $18 million shall he designated for projects in rural areas and $2 million shall be designated for project in areas which do not have broadband speeds of at least 10 megabits down/one megabit up.

The legislation, designed to spur Internet connectivity in rural areas, also would exempt state ad valorem, sales, and use taxes for 10 years and provide a mechanism for requesting local ad valorem, sales, and use tax exemptions for qualified facilities and materials and equipment. The provisions for tax credits and exemptions would automatically be repealed on Dec. 31, 2023, unless extended.

Toyota-Mazda Incentive Bill Goes to Governor

After a short debate, the House on Tuesday voted 97-0 to pass SB 98, the Toyota-Mazda tax incentive bill sponsored by Sen. Orr. The bill was quickly sent to Governor Ivey for her consideration. Later that night President Trump mentioned Toyota-Mazda plans in his State of the Union speech.

Toyota and Mazda formed a joint venture to build a $1.6 billion vehicle assembly plant in eastern Limestone County between Athens and Huntsville. The plant could create 4,000 jobs.

Rep. Danny Crawford, R-Athens, who sponsored a House version, handled SB 98 in the House. He said the incentive legislation originally began at a minimum investment amount of $100 million but the eligibility threshold was reduced to $50 million, which will allow supporting industries to take advantage of the incentive.

SB 98 will authorize counties to abate all or a portion of their ad valorem taxes for certain properties that will be used for a qualifying project of at least $50 million of anticipated capital expenditures pursuant to the Alabama Jobs Act and which create a specified number of new jobs.

President Trump said the January announcement by Toyota-Mazda is an example of manufacturers choosing to expand in the United States: “Toyota and Mazda are opening a plant in Alabama and it’s a big one,” he said. “We haven’t seen this in a long time and they are all coming back. They want to be where the action is. They want to be in the United States of America.”

New Legislation Would Update Alabama’s Industry Incentives

Legislation filed recently in the House is intended to clean up and modernize the state’s incentives and reporting laws and address a potential pitfall that state and local economic developers say could severely affect Alabama’s ability to compete.

HB 317, the Alabama Jobs Enhancement Act sponsored by Rep. Ken Johnson, R-Moulton, was amended and favorably reported by the House Economic Development and Tourism Committee. It’s on the House calendar.

Rep. Johnson said a “little house cleaning in the Alabama code” is needed to update industry recruiting incentives. The proposed change would clarify the definition of economic development incentives to ensure site selectors, local chamber of commerce officials, and other economic development professionals aren’t unnecessarily forced to register as lobbyists and be subject to the Ethics Law, Alabama Daily News reported.

The 2010 Alabama’s Ethics Law update required those seeking to do business with the executive branch to register as lobbyists. Prior to that, those lobbying the governor or cabinet officials for prison, Medicaid, mental health, or other executive contracts were not required to register like those seeking to influence state lawmakers are, the news blog reported.

Requiring site selectors to register and disclose the names of clients during early stages when projects are secretive could be enough to kill a project. HB 317 would clarify that legitimate economic development activity – defined as seeking legally authorized incentives for a specific project – does not qualify as lobbying.

Personal Income Tax Adjustments Advance

The Senate on Tuesday voting 27-0 passed SB 76. Sponsored by Senate President Pro Tem Del Marsh, R-Anniston, SB 76 would expand the adjusted gross income range allowable for a maximum standard deduction for Alabama individual income tax purposes. The bill would increase the optional standard deduction adjusted gross income floor for taxpayers that are married filing joint, head of family, and single, from $20,000 to $23,000, and married filing separate from $10,000 to $10,500. The bill went to the House Ways and Means Education Committee.

Single-Petitioner Tax Refund Bill Gets Nod

The Senate passed SB 63, by Sen. Steve Livingston, R-Scottsboro, by a vote of 22-0. It would eliminate the current requirement that petitions for tax refunds be jointly filed by a taxpayer and the consumer/purchaser and replace it with a single-petitioner refund request authorization by the person who paid the tax directly to the licensed seller.

Local Fuel Tax Referendum Legislation Reported Out of Committee

The Senate Transportation and Energy Committee this week favorably reported SB 89 by Sen. Orr. This bill would allow a county commission to call for a local referendum to authorize the commission to levy an excise tax on gasoline or diesel fuel not to exceed 5 cents per gallon for specific road and bridge projects. The duration of the tax levy could not exceed more than five years. According to the Alabama Department of Revenue, 27 counties and about 320 municipalities have local gas taxes. Most of them are 1 cent or 2 cents, with some as much as 6 cents.


Senate Passes Bill to Capitalize Transportation Infrastructure Bank

The Senate on Thursday passed a substituted SB 100 by Sen. Orr. This bill would capitalize the already established Alabama Transportation Infrastructure Bank by allowing the appropriation and pledge of certain gas tax revenues, license and registration fees, diesel fuel tax revenues, motor carrier tax revenues, and identification marker fees.

A seven-member board of directors would be established to govern the bank, which would 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.

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