Week Nine of the 2016 Session



This week’s Tuesday Briefing, sponsored by the Protective Life Insurance Corp., featured Sen. Phil Williams, R-Rainbow City, and Rep. Matt Fridy, R-Montevallo, who discussed three legal reform bills that are important to the Alabama business community

The pair kicked off the ninth week of the 2016 regular legislative session that saw action on issues that also are vital to Alabama business.

The House moved the crucial Alabama Transportation Safety Fund bill into position for a vote on Tuesday and the House and Senate voted to override Governor Robert Bentley’s veto of the 2016-17 General Fund budget. The budget becomes law without the governor’s signature.

The Senate approved legislation that would authorize an $800 million bond issue for the construction of four prisons in order to ease inmate overcrowding and dangerous employee working conditions.

The Alabama House and Senate will reconvene on April 12 for the 21st day of the 2016 regular session that cannot last beyond 30 legislative days.



Classroom Technology Bill Receives Final Passage

The House and Senate have agreed to an executive amendment to HB 41, the WIRED Act by Rep. Donnie Chesteen, R-Geneva, and sent the bill to the Governor’s office for his review. The BCA-supported HB 41 will provide technology in public school classrooms. The Senate this week approved the executive amendment that the House previously had approved.

HB 41 will amend the Alabama Ahead Act and enable high-quality Wi-Fi broadband access in all Alabama public schools. It will provide grants to local school systems to buy, install, or upgrade their wireless broadband infrastructures by leveraging available federal e-rate dollars. Remaining funds would be used to buy mobile digital devices.

School systems that already have bought wireless broadband that meets standards may use the grants to purchase wireless devices, pay off existing debt dedicated toward wireless capabilities, or buy other hardware or software needed to enhance the digital learning environment, House Speaker Mike Hubbard’s office said.

Education Savings Account Bill Filed

Sen. Dick Brewbaker, R-Pike Road, on Thursday filed SB 395, an education savings account bill that will be in the Senate Education and Youth Affairs Committee for a public hearing on Wednesday. The bill incorporates text and amendments of HB 84 by Rep. Ken Johnson, R-Moulton.

HB 84 was on the House calendar on Thursday, but it did not receive enough procedural votes to be moved into position for final passage. Several House members had received misinformation from opponents but expressed eagerness to support the bill once they were given the facts.

SB 395 is an example of another policy that emphasizes parental options for their children’s educations. SB 395 would create the Education Savings Account program and allow parents to use money in the account which would have been allocated to their child at their resident school district for an education program of the parents’ choosing.

Education saving accounts would be eligible to children who are classified as special needs with an individualized education plan “IEP” and who are currently enrolled in public schools.

If it becomes law, SB 395 will help parents move their children from assigned public schools and access 90 percent of the state’s funding allocation for a child’s public education service such as private school tuition, curriculum, learning therapies, and tutoring. The state would deposit the equivalent of 90 percent of the calculated amount the eligible student would have received in the district school to which he or she would have been assigned. The average is about $4,800.

The bill would cap eligibility at 1,000 students annually.

House Committee Vote on Virtual Schools Expected

SB 229 by Sen. Brewbaker would clarify his 2015 bill whether a student is considered a traditional student or a full time virtual student for the purpose of allowing state funding to follow the student. The Senate has passed the bill and the House Education Policy Committee conducted a public hearing this week. A vote is expected next week.

Last year, lawmakers approved a bill requiring all public high schools to have a virtual education component, either their own or contracted through another school or private company, but the bill did not specify how funding would work. SB 229 will allow state funding to follow students from their home districts to their virtual schools, provide flexibility to local school boards, and authorize student admissions from outside the local district.

PREP Act Changes Proposed

SB 316, the Preparing and Rewarding Education Professionals Act of 2016, by Senate President Pro Tem Del Marsh, R-Anniston, would update the procedure for evaluating and observing teachers and principals.

Sen. Marsh has made significant changes to the original bill and will offer a substitute as soon as next week. In the sub, Sen. Marsh in good faith changed the teacher/principal evaluations to no longer include a value-added model. It will, however, continue to require grading by student growth, two official evaluations a year, and information from parents and teacher surveys and other items to be determined by the State Department of Education.

The Alabama Association of School Boards has formally endorsed the substitute. The AASB sought to remove language dealing with reduction-in-force to allay fears it would complicate current laws.



Senate Committee Discusses Water Basin Bill

The Senate Transportation and Energy Committee this week discussed then carried over SB 367 by Sen. Arthur Orr, R-Decatur. This bill defines four basins in Alabama for the purpose of planning and management of water, specifically inter-basin transfers of water.

The BCA’s Environment and Energy Committee expressed concerns in a letter to Sen. Orr and committee members. The BCA has maintained a longstanding policy that any changes to Alabama’s water laws and policies should be based on demonstrated scientific need substantiated by verifiable data.

Currently, there is an ongoing statewide assessment of water resources including active focus panel meetings that should be completed prior to formulating or enacting any water-related legislation. The BCA supports these assessments. The basin definition in this legislation is not necessary as the federal government has already established the hydrologic unit code system for defining basins. It is this system that the agencies have reported will be the basis for the ongoing surface water assessments.

Any proposal of this nature should originate or at least be closely coordinated with the Alabama Water Resources Commission, which was established to address these issues.



Senate Passes Prison Bond Issue Legislation

The Senate on Tuesday voting 23-11 passed SB 287 by Sen. Trip Pittman, R-Montrose. It would authorize the Alabama Corrections Institution Finance Authority to issue up to $800 million in bonds to build four state prisons – three men’s and one women’s prison. The bill was assigned to the House Ways and Means General Fund Committee.

If the bill becomes law, Governor Bentley and Department of Corrections Commissioner Jeff Dunn plan to close most of the existing prisons to relieve their overcrowded and understaffed conditions. They believe consolidation and the new prisons will create savings to pay the debt.

Senate Marsh, told al.com he is confident that cost savings can amortize the debt.

“The last thing we want to do is put any additional pressure on the General Fund,” Marsh said. “But if we can have these efficiencies that they show and have a new prison system that focuses on rehabilitation and vocational training and have less people coming back to prison, that’s a win for the people of this state.”

The plan calls for closing 13 of the 15 men’s prisons and the Julia Tutwiler Prison for Women. Alabama prisons have about 24,000 inmates in facilities originally designed for about 13,000. Along with sentencing reforms passed last year, prison occupancy would be reduced to 125 percent within five years, rather than nearly 200 percent, al.com reported.



Senate Judiciary Committee Favorably Reports ‘Ban the Box’ Bill

SB 327 by Sen. Quinton Ross, D-Montgomery, as substituted and favorably reported in committee on Wednesday, would “ban the box” on applications for state employment and for licensing authorities by restricting when and how an applicant’s criminal history can be investigated. The bill also would require all contractors doing business with the state to meet these same restrictions, which BCA has objected to.

“Ban the box” refers to the process of eliminating the box on an application asking whether an applicant has ever been arrested, charged, or convicted of a crime.

The BCA does not support this bill in its current form but has actively been working to provide input how to address the numerous concerns raised by BCA members. Sen. Ross has addressed some of the concerns the business community had with earlier versions of the bill that had a much broader reach and more complicated compliance requirements. The current bill still presents concerns for businesses, particularly the many businesses that have contracts with the state of Alabama.

The motivation behind the legislation is to eliminate a barrier to help ex-offenders find permanent employment. The BCA has been supportive of similar efforts, such as the 2015 prison reform package. There are solutions that have been utilized in other states that have proven to unify stakeholders, which is a goal the business community shares. However, this is a complicated issue that, much like prison reform, deserves attention and careful study to find common ground that does not impose undue regulations or liability on the business community.

Establishing employer hiring incentives, limiting negligent hiring and other liabilities for employers, and improving workforce development and both pre- and post-release outreach for those with a criminal record are potential proactive measures that increase opportunity and remove barriers for ex-offenders while still protecting and supporting those employers that provide an opportunity for an ex-offender.



House Approves Alabama Small Business Investment Company Act

Voting 91-4 on Tuesday, the House passed HB 224 by Rep. Danny Garrett, R-Trussville, and sent it to the Senate where it was assigned to the Finance and Taxation Education Committee. The BCA supports this legislation.

HB 224 would create the Alabama Small Business Investment Company Act and provide for insurance premium tax credits to companies making contributions to an Alabama small business investment fund that has been approved by the Alabama Department of Commerce.

Qualified Alabama small business investment funds would provide access to capital for the state’s small businesses that have fewer than 250 employees or no more than $5 million in net income for the preceding taxable year. To qualify, a business must have its principal business operations in Alabama or plans to use the investment to establish their principal business operations in the state.

The program is designed to help grow small businesses, Rep. Garrett said: “It’s a way to use private money that otherwise would not be invested in Alabama. If an objective is not obtained, there’s a claw back on credits.”

The credits provided by the legislation would not be allowed to exceed $12.5 million per year up to a maximum of $100 million over the eight-year life of the program.
The credits would be nonrefundable and may not be sold, transferred, or allocated to any other entity other than an affiliate subject to insurance premium taxes. The Department of Commerce would oversee the program and establish the necessary rules and regulations for its administration.



Infrastructure Accountability and Reform bill Is in Position for Tuesday Vote

The House on Thursday moved the Alabama Transportation Safety Fund bill into position for passage when the lower chamber returns in session on Tuesday.

Business Council of Alabama and business community members are urged to contact their House members and ask them to support the bill, SB 180 by Sen. Gerald Dial, R-Lineville.

SB 180 will create a responsible and accountable fund that will receive designated revenues for maintenance, improvement, replacement, and construction of state, county, and municipal roads and bridges. The Senate previously voted 25-4 to approve the bill.

The bill is supported by the grassroots Alliance for Alabama’s Infrastructure created in January by the BCA and 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.

A well-supported surface transportation system is as important to manufacturing, wholesale, and retail businesses and industries for profitability and job creation as any other component of a successful business model.

“As arteries of commerce, safe and effective roads and bridges are essential to keeping Alabama economically competitive, attract and retain jobs, keep drivers and passengers safe, and maintain a high quality of life for our citizens,” BCA President and CEO William J. Canary said.

The bill is considered unfinished business when the House returns on Tuesday.

“I’m tired of riding on bad roads, tired of talking to industry prospects that have concerns about our roads,” Rep. Alan Harper, R-Northport, said.

“This is one of the best bills,” said Rep. Lynn Greer, R-Rogersville. “This is nothing but being fair to the taxpayers of this state.”

SB 180 precedes consideration of HB 394 by Rep. Mac McCutcheon, R-Huntsville. HB 394, which is on the House calendar. It would adjust Alabama motor fuel revenues to match the average of the user fees of bordering states beginning Oct. 1, and invest nearly $200 million into Alabama roads and bridges.

SB 180 and HB 394 will help keep drivers safe, spark economic growth and improve Alabamian’s quality of life.

Earlier this week the mayors of Birmingham, Huntsville, Mobile, Montgomery, and Tuscaloosa urged passage of responsible and accountable infrastructure legislation. The last time the Legislature increased the investment in Alabama’s highways and bridges was in 1992.

Now is the time to invest in Alabama’s infrastructure and for this to happen, it is imperative that BCA members contact their House and Senate members and ask them to support HB 394 and SB 180. Visit alabamaroads.org to help make Alabama roads and bridges safe.

Historic Tax Credit Bill Passes House, Vital to Returning Property to Tax Rolls

The House voting 91-4 passed HB 62 by Rep. Victor Gaston, R-Mobile, that would extend the historic building tax credit seven years, until 2022.

HB 62 would extend the current state tax credit for qualified rehabilitation expenditures to qualified historic and non-historic structures that was to expire after calendar year 2015 for seven additional years. Any unused portion of the credits may be carried forward for up to 10 additional tax years. If the bill becomes law, the tax credits would be applicable for the 2016 tax year.

Rep. Gaston and Sen. Jabo Waggoner, R-Vestavia Hills, who has the Senate bill, both said historic tax credits have been instrumental in revitalizing parts of their areas and have returned historic tax buildings to the tax rolls.

The BCA is a member of a coalition advocating for this important legislation. Learn more about how extending this tax credit benefits Alabama a www.advancealabama.org.

Senate Passes CA to Create Bond Issue to Leverage Oil Spill Funds to Benefit the Entire State

The Senate voted 30-5 on Tuesday to pass SB267, the Alabama Strategic Investment Initiative bill, by Sen. Bill Hightower, R-Mobile, sending it to the House. SB 267 is a constitutional amendment that would ask voters to create an authority to sell revenue bonds backed by Alabama’s $1 billion Deepwater Horizon Oil Spill Disaster Settlement.

Leveraging the money with a bond agreement would produce between $650 million and $700 million in one lump sum rather than approximately $55 million a year for 18 years.

The lump sum would retire the state’s $161.5 million debt to the General Fund Rainy Day account, invest in critical transportation projects around the state that will both boost and rebuild local economies, and leverage federal matching funds.

Full repayment of the Rainy Day fund will erase the payment obligation that weighs heavily on the General Fund budget each year and this one-time money can be focused on long-term, game-changing investments.

About $260 million would be allocated to the Alabama Department of Transportation’s Southwest Region, the area most affected by the oil spill. Another $230-plus million would be evenly split among the five ALDOT regions under an amendment by Sen. Jimmy Holley, R-Elba.

A bond issue will go a long way to help the economic viability of the coastal economies of Mobile and Baldwin counties and help the region grow and make new small business investments possible. Without passage of SB 267 and voter approval, the General Fund will receive smaller, unallocated deposits over 18 years. Sen. Hightower made the case that smaller amounts wouldn’t be as effective as a lump sum.

Legislature Overrides Governor’s General Fund Budget Veto

Governor Bentley’s veto of SB 125, next fiscal year’s General Fund appropriations bill by Sen. Trip Pittman, R-Montrose, was overridden by the Senate 22-11 on Tuesday. The House followed with a veto override vote of 71-24.

The $1.85 billion budget, which will appropriate 5 percent more money to state agencies than this fiscal year, becomes law without the Governor’s signature. He vetoed the budget document for the fiscal year beginning Oct. 1 because in his opinion it underfunded Medicaid. He told legislators that the Medicaid Agency will start looking at possible savings in order to offset his denied budget request.

The bill would appropriate $700 million for Medicaid, an increase of $15 million from the current fiscal year. Governor Bentley had requested $785 million.

House and Senate committees plan to begin looking at Medicaid funding next week. House Ways and Means General Fund Committee Chairman Steve Clouse, R-Ozark, has said the appropriation to Medicaid has nearly doubled – from $398 million to $685 million – in the last 10 years while some appropriations to other state agencies have declined or remained level.

An important aspect of the budget is that it stopped hurting the Alabama Department of Environmental Management. SB 125 will appropriate $120,000 more than the Senate-passed appropriation of $280,000 for the ADEM’s Concentrated Animal Feed Operations.

While the budget mostly maintains the FY 2015-16 appropriation reduction to ADEM, 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 which cannot be passed on imposed on the backs of Alabama’s regulated industries. All Alabamians benefit from environmental action, not just the industries that need fees to operate.

Alabama Renewal Act Signed into Law

Governor Bentley has signed the Alabama Renewal Act into law as Act No. 2016-102. HB 34 sponsored by Rep. Mac McCutcheon, R-Huntsville, authorizes qualifying Alabama businesses that use Alabama’s port facilities to get a tax credit beginning Oct. 1, 2016.

The BCA supports this legislation.

HB 34 creates a number of new programs to enhance Alabama as a place to do business, including a tax credit for increased use of the state’s port facilities, creates the Growing Alabama Act tax credit to address economic development, and 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.