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Week 7 of the 2018 Session

Rep. Bill Poole, R-Tuscaloosa, chairman of the House Ways and Means Education Committee, spoke at this week’s Tuesday Briefing that was sponsored by the Business Education Alliance of Alabama.

The BEA assists in providing the best education opportunities and skills training available for Alabama’s public-school students. “We work on research projects that identify things that improve education,” said BEA Chairman and President Joe Morton, Ph.D.

Rep. Poole said a successful state economy depends on focusing on the right legislation, adequate and modern infrastructure and health care, and a competitive tax structure.

This week the House and Senate considered financial bills, legal bills, and a proposed General Fund budget for next fiscal year.

Sen. Del Marsh, R-Anniston, has introduced the long-awaited Ethics Law update. Alabama Daily News has the story.

And Governor Kay Ivey on Thursday signed the Transportation Network Companies bill into law.

Tuesday briefings are held each week during regular legislative sessions. The Feb. 27 Tuesday Briefing scheduled speaker is Steve Pelham, who is Governor Kay Ivey’s chief of staff.

Through the 14th legislative day, the House has introduced 453 bills and the Senate, 343. The Legislature reconvenes on Tuesday to begin the second half of the session, which cannot last beyond 30 legislative days.


JUDICIAL AND LEGAL REFORM

Senate Pro Tem Introduces AG’s Ethics Law Update

Senate President Pro Tem Marsh introduced SB 343 on behalf of Attorney General Steve Marshall. The legislation is intended to clarify the law, which has had numerous interpretations, and to clear up what’s permissible conduct by public officials.

“I introduced this bill on behalf of the Attorney General and I encourage my colleagues to review the bill and offer feedback,” Sen. Marsh said.

The bill would clarify that public officials cannot be lobbyists nor serve as consultants for businesses that have any interests before the Legislature, revise the definition of a principal, create the crime of extortion of a public official or public employee by persons attempting to corruptly influence the action of a public official or public employee, exempt lower-profile public employees like teachers and police officers from certain requirements and prohibitions, and revise the definition of thing of value to specify the circumstances in which gifts, proceeds from the sale of property, and prospective or actual compensation from an employer are not a thing of value.

House Data Breach Reporting Bills Advance

Alabama is currently one of two states without a data breach notification law but legislation to change that is moving forward.

The House Technology and Research Committee on Wednesday favorably reported the House version of the Data Breach Notification Act, HB 410. The bill is sponsored by Rep. Phil Williams, R-Monrovia.

The Senate Governmental Affairs Committee voting 8-0 favorably reported the Senate bill, SB 318, by Sen. Arthur Orr, R-Decatur.

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.

If more than 1,000 Alabama residents were to be affected by a data breach, then additional notice to the Alabama AG’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. The AG would be able to pursue actual damages on behalf of affected individuals.


TAX AND FISCAL POLICY

Alabama Will Now Have Ride-Sharing Company Regulations

Governor Ivey on Thursday signed the Transportation Network Companies bill by Rep. David Faulkner, R-Birmingham. With her signature on HB 190, Alabama will join 48 other states that have TNC regulatory laws. The bill’s provisions become effective on July 1 and August 1.

HB 190 authorizes 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 will 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 will not be allowed to levy any fee.

Sen. Bobby Singleton, D-Greensboro, had the Senate version.

Senate Passes $2.03 Billion General Fund Budget

The Senate voted 26-2 on Tuesday and passed a substituted $2.03 billion General Fund budget, SB 178 by Sen. Trip Pittman, R-Montrose. It was sent to the House.

The proposed budget is about $165 million more than the current fiscal year’s appropriated amount. With other federal, state, and local funds, the total GF budget bill would authorize spending of $13.8 billion on non-education functions such as Medicaid and prisons.

Two items were of concern in the budget: sufficiently funding prisons to the satisfaction of a federal judge who is overseeing a lawsuit filed over prison mental health care, and Medicaid.

The proposed budget would add about $56 million to the Department of Corrections’ budget, to $472 million next year. A federal judge ruled last year that the state’s mental health care for prisoners did not meet constitutional standards.

Medicaid would get $755 million from the General Fund next year, which is less than this year’s $701 million GF appropriation and the $105 million from a settlement. But, Sen. Pittman said, the economy has reduced the number of Alabamians on Medicaid and that, in turn, will reduce pressure on the budget.

Sen. Pittman added a floor amendment to increase road and bridge funding for the Alabama Department of Transportation by $4.5 million.

House Passes Bill to Ease Business License Requirement

The House on Tuesday voting 95-0 passed HB 107 by Rep. Paul Lee, R-Dothan. The bill would amend current state law regarding municipal business license requirements by removing the business license requirement for a person travelling through a municipality on business if the person is not operating a branch office or doing business in the municipality.

The bill goes to the Senate.

Senate Renews Tax Amnesty Program for this Year

The Senate on Thursday voting 29-1 passed Moulton Rep. Ken Johnson’s bill, HB 137. The bill would renew a tax amnesty program for Alabama taxpayers.

HB 137 would create the “Alabama Tax Delinquency Amnesty Act of 2018” and authorize a tax amnesty for three months between July 1, 2018, and Sept. 30, 2018. The legislation is expected to increase tax receipts to state and local governments depending on the number of taxpayers that participate in the program and the amount of the delinquent taxes owed, including all taxes, except motor fuels, motor vehicle, and property taxes administered by the Department of Revenue either due prior to Jan. 1, 2017, or for taxable periods that began before Jan. 1, 2017.

The Department of Revenue collected about $5.7 million for the state and $30,000 for local governments during the “Alabama Tax Delinquency Amnesty Act of 2016.”

House Committee Approves Compromise Tax Bill on Out-of-State Income

The House Ways and Means Education Committee on Wednesday favorably reported HB 384 sponsored by Rep. Rod Scott, D-Fairfield. This bill provides 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 would 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 that is 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.

Bill Addressing ‘Dark Store’ Property Valuation Clears House Committee

The Senate on Thursday voting 30-0 passed a substitute SB 182, the so-called dark store bill, sponsored by Sen. Phil Williams, R-Rainbow City.

The previous day, the House County and Municipal Government Committee favorably reported the House companion bill, a substituted HB 157 by Rep. Corley Ellis, R-Columbiana.

Under this legislation, a taxpayer protesting or appealing a tax ruling on commercial or industrial property would be required to disclose whether proposed comparable property used for valuation purposes was occupied or unoccupied at the time of the transaction, and other provisions. Disclosure would 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 met to negotiate compromise language. Rather than prohibit a court from receiving certain evidence in the original bill, the solution would require more disclosure on the part of the entity seeking to introduce the evidence.

Irrigation Tax Credit Bill to Extend Program Advances

HB 260 by Rep. Donnie Chesteen, R-Geneva, was placed on the Senate calendar this week after the House passed it 72-0 on Feb. 15. The bill would clarify the current tax credit for purchase and installation of qualifying irrigation equipment or a reservoir.

The bill specifies that an eligible taxpayer could claim one credit during tax years 2011 through 2017 and one credit during tax years 2018 through 2022.

Simplified Sellers Use Tax Program Bill Advances

Under current law, the Simplified Sellers Use Tax Remittance Program allows an eligible seller to voluntarily collect and remit simplified sellers use tax.

On Wednesday, the Senate Finance and Taxation General Fund Committee favorably reported a substitute version of SB 307 sponsored by Sen. Pittman.

SB 307 would clarify that sellers remain eligible to pay the lower rate even if they acquire a brick-and-mortar presence in the state, but clarifies that purchases at those brick-and-mortar locations do not qualify for SSUT. The 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.

The amount collected from the 1 percentage point tax increase, from 8 percent to 9 percent, would be distributed to each municipality on a prorated basis. SB 307 also would add a provision affecting out-of-state vendors that are eligible sellers in the Simplified Sellers Use Tax Remittance Program.

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Dana Beyerle
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