General Fund Budget Passed, Governor Vows Veto; Infrastructure Alliance Drive-In Successful
The eighth week of the 2016 regular legislative session saw passage or consideration of issues that are vital to the Alabama business community, including the 2016-17 General Fund budget. After meeting Tuesday and Wednesday, the House and Senate voted to take next week off.
The House sent the proposed $1.85 billion, 2016-17 General Fund budget back to the Senate to consider the House-amended version. On Wednesday, the Senate voted 20-13 to concur with the House version, sending it to Governor Robert Bentley, who has vowed to veto it.
The Senate on Tuesday passed HB 34, the Alabama Renewal Act, sponsored by Rep. Mac McCutcheon, R-Huntsville. It offers tax credits for using Alabama’s port facilities.
And also on Tuesday, the Senate passed SB 270, by Sen. Phil Williams, R-Rainbow City, which reestablishes the original legislative intent of provisions in the Alabama Deceptive Trade Practices Act that bars private parties from bringing class action law suits.
On Tuesday, the Alliance for Alabama’s Infrastructure hosted a Montgomery Drive-In, which drew a large crowd of business, community and civic leaders who support investing in Alabama’s infrastructure.
At the BCA’s Tuesday Briefing, sponsored by The Laclede Group, Sen. Jabo Waggoner, R-Vestavia Hills, provided a look at the remainder of the session.
The Alabama House and Senate will reconvene April 5 for the 19th day of the 2016 regular session that cannot last beyond 30 legislative days.
JUDICIAL AND LEGAL REFORM
Effort to Protect Alabama Business Progresses in Legislature
The Senate took up the Business Council of Alabama-backed SB 270 by Sen. Williams and passed it 31-1. It now goes to the House for consideration.
This BCA-supported bill is necessary due to a recent opinion from the 11th U.S. Circuit Court of Appeals that threatens to expose Alabama businesses to class-action lawsuits brought by private parties under the Alabama Deceptive Trade Practices Act (ADTPA).
SB 270 simply reestablishes the original legislative intent of the ADTPA that the limitation barring private parties from bringing class-actions is a “substantive” limitation. The 11th Circuit, in its ruling that created this problem, interpreted this aspect of the statute to be “procedural” rather than “substantive,” which created a serious threat of increased litigation for business.
Read more about this issue on the BCA Blog.
Consumer Lawsuit Lending Act Gets Committee Nod
HB 395, the Consumer Lawsuit Lending Act, by Rep. Chris Pringle, R-Mobile, was favorably reported by the House Financial Services Committee on Wednesday, putting it in place for the full House to consider.
The BCA, working with the U.S. Chamber of Commerce’s Institute for Legal Reform, supports HB 395 and the Senate version, SB 67 by Sen. Cam Ward, R-Alabaster.
This bill would extend fair-lending laws and subject consumer lawsuit lenders to licensure requirements and to oversight by the State Banking Department. The bill has broad support among both Republicans and Democrats.
Consumer lawsuit lending is the unregulated practice of loaning money at exorbitant interest rates to plaintiffs who might receive large settlements or judgments. A plaintiff must repay the lender if any settlement or judgment is received at an interest rate that can exceed 100 percent. This practice targets a vulnerable population, introduces third-party interests into the attorney-client relationship, and both slows the pace of and increases the cost of litigation for plaintiffs and defendants.
In the 2015 regular legislative session, a BCA-supported lawsuit lending bill passed the House on a bipartisan 98-1 vote. The Senate Judiciary Committee has favorably reported the bill twice.
Committee Approves Bill That Would Provide Workers’ Compensation Relief for Small Businesses
The House Commerce and Small Business Committee on Wednesday favorably reported HB 359 by Rep. Barry Moore, R-Enterprise, which deals with the number of employees required before a business must provide workers’ compensation insurance to employees.
Under current law, employers are not required to provide workers’ compensation insurance if they regularly employ fewer than five employees in any one business. HB 359 would exclude the owner of a business or any other person owning 50 percent or more of the business as being counted as one of the four.
TAX AND FISCAL POLICY
Alabama Renewal Act Passes
Under the terms of Rep. McCutcheon’s HB 34, qualifying Alabama businesses that use Alabama’s port facilities will be able to get a tax credit beginning Oct. 1, 2016.
The House previously passed HB 34, the Alabama Renewal Act, 102-0. The Senate approved it 31-2 on Tuesday and it returned to the House for consideration of Senate changes. The House concurred 102-0 and the bill was sent to the Governor’s office for consideration.
The BCA supports this legislation.
HB 34 will create a number of new programs to enhance Alabama as a place to do business by authorizing a tax credit for increased use of the state’s port facilities, create the Growing Alabama Act tax credit to address economic development, and create the Renewal of Alabama Commission that will consider the credit applications.
Port credits issued for economic development project agreements may have allocations made by the governor and approved by the Renewal of Alabama Commission if a company commits to invest at least $20 million and create 75 jobs. The nine-member Renewal of Alabama Commission would oversee and approve the administration of the credits and would annually report to the Legislature.
Historic Tax Credit Bill in Position for Passage in House
HB 62 by Rep. Victor Gaston, R-Mobile, was brought up on the House floor on Wednesday and was temporarily carried over. It is in second place on the House special order calendar when the House returns from spring break.
HB 62 would extend the current state tax credit for qualified rehabilitation expenditures on qualified historic and non-historic structures.
The BCA is part of a coalition supporting this legislation. Please visit advancealabama.org for more information.
The current tax credit ended Dec. 31, 2015, but HB 62 would extend the credit through 2022. Any unused credit portion may be carried forward for up to 10 additional tax years and credits may also be transferred and assigned until used.
This tax credit would incentivize the rehabilitation and reuse of historic buildings, many of which are in the heart of Alabama’s cities and small towns.
The House on Wednesday removed the committee amendment by Rep. Phil Williams, R-Huntsville, that would suspend and carry over the tax credit during any year in which the Governor declares proration in either the General Fund or the Education Trust Fund, or if either fund is level-funded based on the prior fiscal year’s amount.
This amendment was not supported by bill proponents.
The Senate version is SB 230 sponsored by Sen. Waggoner and 31 co-sponsors.
House Committee Approves Bill to Align Federal and State Tax Filing Dates
SB 263 by Sen. Quinton Ross, D-Montgomery, was favorably reported Wednesday by the House State Government Committee. SB 263 would align individual and corporate filing dates with federal business filing tax deadlines.
The House version is HB 251 by Rep. Anthony Daniels, D-Huntsville. It’s also on the House calendar.
Alabama currently requires corporate state income tax returns to be filed on or before March 15. The bills would set the filing deadline to April 15. The bills are necessary because the federal government recently changed certain filing dates for federal income tax returns. The bills also would require payments to be made on the due date of a return.
The BCA and the Alabama Society of CPAs support these bills.
Tax Incentive Cost Bill Receives Favorable Report from House Ways and Means Education Committee
SB 208 by Sen. Arthur Orr, R-Decatur, was favorably reported by the House Ways and Means and Education Committee and placed on the House calendar for consideration when the Legislature reconvenes.
SB 208 would require state agencies that offer tax incentives to report the cost of those incentives beginning in the 2018 legislative session. The head of each state agency that administers any economic tax incentive would be required to prepare and submit no later than the second day of the 2018 regular legislative session and each year thereafter a report on each incentive the agency administers.
The reports will detail whether each economic tax incentive has been successful in meeting the purpose for which it was enacted – specifically whether each economic tax incentive benefits those originally intended to be benefited, and if not, those who do benefit; whether the state receives a positive return on investment; the direct and indirect impact on state and local tax revenues from the business or industry for which the economic tax incentive is intended to benefit, and any other economic benefits produced by such tax incentive.
The bill would require reporting the economic results of each economic tax incentive and taking into account the extent to which the incentive successfully changes business behavior and whether there are unintended or inadvertent effects, benefits, or harm caused by the tax incentive including whether the economic tax incentive conflicts with other state laws or regulations.
BP Lawsuit Settlement Fund CA Begins Debate in Full Senate
SB 267 by Sen, Bill Hightower, R-Mobile, is a proposed constitutional amendment that would ask voters to create the Alabama Strategic Investment Initiative. If it passes and voters approve, SB 267 would authorize the Legislature to create a bond authority to issue revenue bonds in a principal amount not to exceed the total amount of the Deepwater Horizon Oil Spill Disaster Settlement to Alabama of $1 billion.
On Wednesday, the Senate adopted a floor substitute by Sen. Hightower that would use the funds for the repayment to the State General Fund Rainy Day Account up to $161.5 million that was borrowed in 2010, would authorize up to $260 million for projects in southwest Alabama, $5 million to the Strengthen Alabama Homes Fund, and equal appropriations to four other geographical Department of Transportation areas.
In debate on the Senate floor, Sen. Hightower said he wants the state to repay its IOUs and be “debt free” in the Rainy Day Fund. After adopting and discussing the substitute the Senate temporarily carried the bill over at the call of the chair.
$1.85 Billion General Fund Budget Goes to Governor
The Senate on Wednesday voting 20-13 approved the House version of the 2016-17 General Fund budget that funds non-education state agencies. The budget appropriates $15 million more to Medicaid for next fiscal year but the Governor said he would veto the budget in its present form due to his opinion that Medicaid will be underfunded.
The Senate approved the House version of SB 125 sponsored by Sen. Trip Pittman, R-Montrose. The House made changes to the budget, which required the Senate to approve the changes or request a conference committee.
The $1.85 billion budget for FY 2016-17 would appropriate $400,000 to the Alabama Department of Environmental Management’s Concentrated Animal Feed Operations, and $15 million more than the Senate’s $685 million appropriation to the Alabama Medicaid Agency.
The proposed budget mostly maintains the FY 2015-16 appropriation reduction to ADEM; however, unlike last year, the budget does not divert nearly $1 million in permit fees collected by ADEM, which is a positive for Alabama’s regulated community.
The BCA has been a consistent supporter of adequate state funding for ADEM in order to eliminate the need for continued fee increases imposed on the backs of Alabama’s regulated industries. All Alabamians benefit from environmental action, not just the industries that need fees to operate, fees which often cannot be passed on.
Suggested Medicaid funding of $700 million is $85 million less than the Governor requested but is $15 million more than this year’s appropriation. In February, the BCA and the Alabama Hospital Association hosted a forum to educate legislators on the current state of Medicaid and Regional Care Organizations.
The Alliance for Alabama’s Infrastructure drew about 100 supporters to the State House. They fanned out to urge their legislators to support investment in Alabama’s aging highway and bridge infrastructure. Alliance members met with House and Senate members urging support for two pieces of legislation that are vital to Alabama’s economic future.
HB 394 by Rep. McCutcheon would make Alabama’s gasoline and diesel tax competitive with our border states beginning Oct. 1, 2016. Rep. McCutcheon said rural and urban areas would share in the revenue. His bill is on the House calendar.
SB 180 by Sen. Gerald Dial, R-Lineville, would create the Alabama Transportation Safety Fund for the purpose of receiving designated revenues for maintenance, improvement, replacement, and construction of state, county, and municipal roads and bridges in the state.
This bill would specifically restrict state, county and municipal transportation authorities from using revenue for administrative salaries and benefits, purchasing or maintaining equipment, or construction of buildings not related to road and bridge construction.
The last time the Legislature increased the investment in Alabama’s highways and bridges was in 1992.
AAI spokesperson and Chamber of Commerce of West Alabama President and CEO Jim Page addressed the crowd on Tuesday, “It’s a responsible policy that’s built on accountability. Voting for HB 394 and SB 180 is a vote in favor of public safety by repairing dangerous roads, economic prosperity by sparking growth, and improving our quality of life.”
“Infrastructure investment is the key to economic growth,” Sen. Dial said. “We see this as an opportunity to move Alabama forward.”
Members of the Alabama business community, chambers of commerce, industry associations, community groups, and concerned citizens who desire to promote financially responsible investment in Alabama’s roads and infrastructure, in January created The Alliance for Alabama’s Infrastructure.
BCA President and CEO William J. Canary told the group that now is the time for action.
“We ask you to educate lawmakers on the importance of infrastructure to your community,” Canary said. “For lawmakers who may say ‘NO’ to this plan, they must have a plan of their own to fix our state’s infrastructure. Otherwise, they are not doing the job they were sent to Montgomery to do… to solve problems to fix our roads to create a better future for Alabama. Simply stated, it is their responsibility to do nothing less!”
Canary and Chamber of Commerce Association of Alabama President and CEO Jeremy Arthur sent a letter this week to every local chamber of commerce in the state encouraging them to educate their lawmakers.