Week 6 of the 2018 Session

Senate and House Majority Leaders Sen. Greg Reed, R-Jasper, and Rep. Nathaniel Ledbetter, R-Rainsville, spoke at this week’s Tuesday Briefing that was sponsored by Business Council of Alabama member McWane Inc., a family run business headquartered in Birmingham.

McWane Inc. is an international manufacturer that began when two McWane brothers created a foundry business in 1903 and a cast iron pipe and fittings subsidiary in 1904. McWane Inc. currently has operations in Abu Dhabi, Australia, Canada, and Korea, in addition to numerous states in the U.S.

Sen. Reed and Rep. Ledbetter spoke of politics, the 2018 legislative session, and Alabama’s economic future.

The House and Senate started passing the state’s two budgets; both include provisions for pay raises for K-14 education employees and state employees.

Alabama also could get new Transportation Network Company regulations under a bill sent to Governor Kay Ivey.

Through the 12th legislative day, the House has introduced 432 bills and the Senate, 321. The Legislature reconvenes on Tuesday.


House Passes Education Bills, Including Budget and Pay Raise

The House this week approved education-related bills, including the 2018-19 Education Trust Fund budget and a pay raise for K-14 education employees. The budget and related bills, which went to the Senate, contain BCA-backed line items that are important to workforce development and early childhood reading

“I’m very optimistic about the state of education in Alabama,” said Rep. Poole, chairman of the House Ways and Means Education Committee.

The House voting 102-0 passed a substituted and amended HB 175, the $6.63 billion, 2018-19 Education Trust Fund budget.

“This is a positive budget for the state,” Rep. Poole said. “We’re trying to recover the budget from the recession, provide increases, and do those in sustainable fashion.”

The proposed budget represents a 3.4 percent increase, or $216 million, from this year’s ETF appropriation amount.

It includes a $20 million increase for Pre-Kindergarten, from $77 million to $97 million, to fund an additional 142 classrooms serving 2,556 students.

“Today, the Alabama State House of Representatives made clear its desire to prioritize education revenues to help expand Alabama’s high-quality, voluntary First-Class Pre-K program by approving the largest funding increase in the program’s history,” said BCA board of directors’ member Bob Powers and Mike Luce, co-chairs of the Alabama School Readiness Alliance’s Pre-K Task Force. Powers is president of the Eufaula Agency Inc. in Eufaula, and chair of the BCA’s Education and Workforce Preparedness Committee.

“The additional funding will mean that more Alabama families will be able to voluntarily enroll their four-year-old in the nation’s highest quality pre-kindergarten program next school year,” they said.

HB 175 also includes a $5 million appropriation to renew the Alabama Reading Initiative for early grade levels because it’s important that children learn to read at grade level by the third grade or face a lifetime of catching up or potential failure.

The ETF bill also includes a $500,000 appropriation for Governor Ivey’s Strong Start, Strong Finish initiative. And the bill includes the money and authority to hire nearly 197 teachers in the fourth through sixth grades.

Just under half of the $216 million in growth will pay for the 2.5 percent pay raise for education employees in K-14 schools at a cost of $91 million. The pay raise itself is in a substituted HB 174 also by Rep. Poole that was passed Tuesday by a vote of 100-0.

The gross pay of a rank-and-file teacher with a four-year degree is expected to increase by just under $1,000 a year. The current Alabama teacher salary matrix shows that a teacher possessing a four-year degree and with up to three years’ experience grosses $38,342 up to $50,993 for a doctorate degree, for about 10 months of work. That’s the equivalent of about $46,000 annually for a beginning teacher and about $61,000 for a teacher with a doctorate, not including the cost of benefits.

Teachers got a 4 percent pay raise in 2016 but they also saw increased benefit costs. The increase in benefit costs followed the trend in private industry that is just now seeing a turnaround from the nearly decade-long recession. Rep. Poole said the proposed ETF appropriates $8 million to fully fund retirement.

The ETF budget includes an additional $22.7 million in operational dollars; an additional $1.9 million for technology coordinators; $200,000 for Advanced Placement; $750,000 for teacher professional development; $300,000 for agribusiness education; $1.5 million for National Board-Certified Teachers, with language that teachers receiving this accreditation and work in hard-to-staff content in At-Risk areas would receive an additional $5,000 a year in addition to the $5,000 pay increase for earning national board certification; $1.3 million for career tech in K-12; Science and Math teacher mentoring, $400,000, and At-Risk, an additional $1 million.

Overall, state funding for four-year colleges and universities would increase $37 million, to $1.12 billion, or 3.54 percent. Funding for community colleges would increase by $16.2 million, to $380.1 million, an increase of 4.4 percent, to support workforce development across the state.

The House voting 102-0 passed Rep. Poole’s substituted HB 179 that requests supplemental appropriations of $2 million to the Alabama Community College System, $15.2 million to colleges and universities, and $41.2 million to the Department of Education, the Alabama Institute for Deaf and Blind, Youth Services School districts, the  Alabama School of Fine Arts, and the Alabama School of Math and Science.

Rep. Poole’s HB 180 passed 101-0. It would make a supplemental appropriation of $4.3 million to the Department of Veterans’ Affairs and $500,000 to the Alabama School of Cyber and Engineering, and would allow the Alabama Community College System to carry-over unused appropriations from this fiscal year to FY 2019.


Senate, House Data Breach Bills Introduced

Sen. Arthur Orr, R-Decatur, and Rep. Phil Williams, R-Monrovia, have introduced consumer protection data breach legislation after ongoing discussions between interest groups that included the Alabama Attorney General’s office and the business community.

Sen. Orr introduced SB 318 and Rep. Williams introduced HB 410, the Alabama Data Breach Notification Act.

This bill 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.

If more than 1,000 Alabama residents are impacted by a data breach, then additional notice to the Alabama Attorney General’s Office and consumer reporting agencies would be required. Exemptions would be provided for businesses or other entities already regulated by and complying with federal law.

A failure to follow these notification requirements would subject a business or other entity whose data was breached to Alabama Deceptive Trade Practices Act liability of up to $500,000 under some circumstances such as “knowingly engaging [. . .] in a violation of this act”, as well as civil penalties of up to $5,000 per day outside of the notification window.

The Attorney General’s Office would additionally be able to pursue actual damages on behalf of affected individuals. Government entities would be subject to the notification requirements of the bill only and would otherwise be exempt from the aforementioned penalties for violating this act.

Sen. Orr has introduced similar bills in recent years, and Alabama is currently one of only two states without a data breach notification law.


House TNC Bill Goes to Governor

Alabama will soon join the majority of states that regulate Transportation Network Companies (TNCs). As of 2017, Louisiana and Alabama had insurance-only requirements; all other Southeastern states had TNC regulatory laws.

If Governor Ivey signs HB 190 by Rep. David Faulkner, R-Birmingham, Alabama will have TNC regulatory authority.

The Senate on Tuesday voting 27-0 sent HB 190 to Governor Ivey. It would authorize the Public Service Commission to create uniform, statewide regulations governing TNCs, such as Uber and Lyft, and for those companies to secure permits from the PSC, maintain agents for service of process, maintain certain records, implement a non-discrimination policy, and require drivers and vehicles to meet certain safety and consumer protection requirements.

In addition, TNCs would be required to collect a 1 percent assessment fee based on each ride fare for the PSC, which would remit a portion of it to local governments where a ride originates. Local governments would not be allowed to levy any fee.

SB 143 by Sen. Bobby Singleton, D-Greensboro, was the Senate version.

Senate Committee Acts Favorably on General Fund Budget, State Employee Pay Raises

The Senate Finance and Taxation General Fund Committee voting 15-0 this week favorably reported a substituted SB 178, the $2.03 billion 2018-19 General Fund budget.

The bill, sponsored by Sen. Trip Pittman, R-Montrose, was sent to the full Senate and placed on the calendar. The Senate could vote on the bill as early as Tuesday.

Another $13.8 billion in state, federal, and earmarked funds push the state’s General Fund spending to $15.86 billion. The General Fund pays for most non-education state agencies including Medicaid and prisons. State employees would get their first cost-of-living raise in 10 years and Alabama’s beleaguered prison system would get a $50 million increase.

The Senate committee version is close to Governor Ivey’s recommended budget that includes a state employee pay raise, increased funding for mental health, Medicaid, prisons, and law enforcement. SB 178 will increase the Department of Corrections’ budget by $50 million in order to provide more mental health medical treatment for inmates. A separate bill that would authorize a $30 million supplemental appropriation to prisons this year was not acted on, but it probably will be approved.

Overall, Pittman’s bill calls for spending $2 billion from the General Fund, an increase of $159 million.

The committee also favorably reported SB 185, which authorizes a 3 percent pay raise for state employees.

Compromise Bill Clears Committee Addressing ‘Dark Store’ Property Tax Issue

The Senate Committee on Fiscal Responsibility and Economic Development on Wednesday favorably reported a Senate committee substitute for SB 182, which aims to prevent the misuse of the “Dark Store Theory” for property valuations. The bill was placed on the Senate calendar on Thursday.

SB 182 by Senator Phil Williams, R-Rainbow City, and the House version, HB 157 by Rep. Corley Ellis, R-Columbiana, as originally introduced would have amended state law and significantly alter evidence that could be introduced by a taxpayer in appeals of property valuations for commercial and industrial property.

Specifically, for appeals relating to an operating commercial or industrial property, a taxpayer would be prohibited from introducing evidence relating to a vacant property, or a property that contained use or deed restrictions.

At the request of the sponsors, representatives of the business community and counties met to negotiate compromise language. Rather than prohibit a court from receiving some types of evidence as called for in the original bill, the solution would require more disclosure on the part of the entity seeking to introduce the evidence.

Under the compromise substitute version of SB 182, a party introducing evidence of a purported comparable sale to be used for valuation purposes would be required to disclose whether that property was vacant at the time of the subject sale, or whether the property was subject to any use, deed or lease restriction.

The court would then be required to use that information to determine whether the proposed comparable property is sufficiently similar to be used as evidence in the appeal. Failure of a party to disclose the required information would render the proposed evidence inadmissible.