TUESDAY MORNING LEGISLATIVE LEADERSHIP COMMITTEE MEETINGS
The BCA Governmental Affairs Committee will meet Tuesday, April 16, at 8:30 a.m. in the first floor auditorium of the Business Center of Alabama, 2 N. Jackson St., Montgomery. Our guest speakers will be Josh Blades, chief of staff for the Speaker of the House, and Philip Bryan, chief of staff for the Senate President Pro Tem.
Contact Pam Ware for more information.
REPAYING $437 MILLION RAINY DAY FUND IS EDUCATION BUDGET CHAIRMAN'S PRIORITY
The chairman of the Senate Finance and Taxation Education Committee told the Business Council of Alabama's Governmental Affairs Committee that he wants the Alabama Trust Fund rainy day education account repaid as quickly as possible and he said a cigarette tax increase bears consideration to help state finances.
Sen. Trip Pittman, R-Montrose, said he'd like to see at least $100 million repaid to the ATF rainy day account next year, the amount Governor Robert Bentley recommended in his proposed Education Trust Fund budget for 2013-14.
Bentley also recommended a conditional repayment of $169 million if the money is available at the end of the fiscal year. The budget bill, HB 166, by Rep. Jay Love, R-Montgomery, passed the House with $35 million appropriated to the debt.
"My priority is we repay the ATF," Pittman said. "I was advocating the highest line item, $150 million. The governor submitted $100 million."
Then-Governor Bob Riley five years ago began withdrawing from the $437 million ATF rainy day account to offset the effect of proration on education spending. The amount must be repaid by the end of the 2015 fiscal year. So far $14 million has been repaid, leaving a balance due of $423 million.
The ATF is a state savings account that receives royalty payments from offshore oil and gas exploration, payments that are invested. It contains rainy day accounts for the Education Trust Fund and the General Fund.
Pittman advocates repaying the ATF education rainy day account as soon as possible.
"There's a tremendous responsibility personally for that amendment plus my fiscal nature as a businessman (is to) make sure we repay the ATF prior to the end of the 2015 budget year," Pittman said.
Pittman said he had hoped to have a budget surplus of $200 million this year to plow back into the Alabama Trust Fund but acknowledges the surplus probably won't materialize.
Turning to the state's economy in general, Pittman said, "The reality is the economic recession is turned into somewhat of a new normal. We're not certain that we feel comfortable (that) the budget will have the overflow we need."
Pittman addressed the need for more revenue for the General Fund budget that is used to operate state government such as Medicaid and state troopers.
He said a tobacco tax proposal, HB 177, bears consideration. It's a constitutional amendment.
A proposed constitutional amendment would increase the state cigarette tax by $1 for a package of 20 cigarettes. Part of the proceeds would repay a separate $437 million that voters approved transferring from the Alabama Trust Fund last year to help the General Fund.
The legislature earlier this year passed a bill, which Bentley signed, to repay the $437 million by 2025. Hubbard's proposed constitutional amendment would repay the amount with interest by 2022.
BILL PROTECTING ALABAMA TAXPAYERS FROM EXCESSIVE LEGAL FEES ON HOUSE FLOOR NEXT WEEK
For the last two years, the BCA has been at the forefront of the TIPAC (Transparency in Private Attorney Contracting) effort to require state agencies to make a written declaration that hiring outside counsel on a contingency fee basis is cost effective and in the public's best interest. As state attorneys general become more engaged in major consumer protection issues, there has been a willingness on the part of some state attorneys general to hire trial lawyer firms to pursue litigation on behalf of the state. As payment, these attorneys receive a contingency fee, which is a percentage of whatever amount is recovered on behalf of the taxpayer. In the past, some private law firms received excessively high fees in relation to the amount of work they did on behalf of the state. In addition to excessive fees, there is a substantial risk of "pay to play" schemes that may appear when political contributions from plaintiffs firms are traded for contingent fee contracts.
It should be noted that Alabama Attorney General Luther Strange has been a model of transparency and accountability during his time in office and has not engaged in the type of private attorney contracting as stated above.
There is a high likelihood that HB 227 will come up next week for a vote on the House floor. As you may recall from your Feb. 22 Capital Briefing, former U.S. Representative and Florida Attorney General Bill McCollum visited Montgomery on Feb. 20 to testify at a public hearing before a joint House and Senate Judiciary Committee meeting in support of HB 227, explaining that TIPAC legislation has already been introduced in more than a dozen state legislatures and successfully implemented in states like Florida, Indiana, and Mississippi. You can read more about McCollum's visit to Montgomery on our BCA Blog.
To learn more about TIPAC, click here.
BCA supports this legislation.
HOUSE PASSES EDUCATION BUDGET WITH 2 PERCENT PAY RAISE AND $12.5 MILLION INCREASE FOR HIGH QUALITY PRE-K
The Alabama House, on a vote of 84-16, passed its substitute version of an education budget, HB 166, by Rep. Jay Love, R-Montgomery, for Fiscal Year 2014. The budget includes a cost-of-living increase of 2 percent for educators and support personnel, slightly below the governor's recommendation of 2.5 percent. The pay raise, authorized by HB 506, also by Love, differs from past cost-of-living increases in two important ways: 1) The pay increase authorization bill also requires the state to provide liability coverage for all K-12 educators and support personnel and 2) the pay raise only applies to K-12, where traditionally, such raises included the two-year college system (K-14). Love defended the linking of the pay increase to the liability coverage as a benefit the state is overdue in providing to education personnel, as do most employers, while Democratic representatives described the coverage as a move by Republicans to offer liability coverage to discourage membership in the Alabama Education Association (AEA). Currently, most educators receive liability coverage through their membership in the AEA.
Governor Bentley's budget totaled $5.825 billion and included a $100 million appropriation to repay the Education Trust Fund Rainy Day Account, while the House-passed version totaled $5.739 billion and repays $35 million to the Rainy Day account. The House-passed version leaves an estimated unexpended balance of $66 million which Love set aside in anticipation of negative effects on the ETF revenue due to the federal sequester and the tax credits included in the Alabama Accountability Act. Love reported that the spending plan should result in a surplus of approximately $175 million that will also be applied to repay the rainy day Account some $437 million that was transferred to the ETF to shore-up the education budget in recent years of budget proration.
The following table compares some selected appropriations in millions:
|Dept. of Children's Affairs|
|Office of School Readiness - 1st Class Pre-K||19.1||31.6||31.6|
|Dept. of Commerce - Operations |
|Workforce Development - career center & Existing training commitments||38.7||41.4||41.4|
|K-12 Education Foundation Program |
|Two-Year College System (Total)||316.1||319.3||320.1|
|AL Technology Network (ATN)||4.6||4.6||4.6|
|AL Dept of Education|
|AMSTI - Math, Science Tech Initiative||28||28||28|
|AL Reading Initiative||58.1||48.1||48.1|
|Colleges and Universities (Total)||1006.3||1025.9||1020.8|
|Alabama Innovation Fund||1.65||10||6.1|
REVAMPED MEDICAID REFORM BILLS EXPECTED IN COMMITTEE NEXT WEEK
The House sponsor of a Medicaid reform bill said he expects his and the Senate version to be on the agendas of the respective House and Senate Health Committees next week. Rep. Jim McClendon, R-Springville, the sponsor of HB 454, said his bill and the Senate version, SB 340 by Sen. Greg Reed, R-Jasper, have been reworked after negotiations with hospital and provider groups. SB 340 was on Wednesday's Senate Health Committee agenda, but the meeting was cancelled because the Senate was in session at the committee's scheduled meeting time. "The substitute has been put out there," McClendon said Friday. The bills as introduced would authorize the Alabama Medicaid Agency to establish medical service organizations in not more than eight geographic regions and provide medical services to Medicaid recipients. McClendon said negotiation subjects included the duration of the provider tax and whether "home grown" groups would be given preference over outside commercial groups in managing regional Medicaid services.
LEGISLATIVE OPERATIONS BILL SHOULD BE IN HOUSE COMMITTEE NEXT WEEK, SPONSOR SAYS
The Senate sponsor of a bill to consolidate Alabama House and Senate administrative operations said his bill should be on the agenda of a House committee next week. Sen. Jimmy Holley, R-Elba, sponsor of SB 122, said the bill was carried over in Wednesday's House State Government Committee because the House member handling the bill wants to simplify its language. Holley's bill passed the Senate and was assigned to the House committee. The bill creates a 17-member Joint Committee on Legislative Operations that would oversee the general administrative services of legislative agencies, including personnel, accounting, and purchasing functions, the bill's synopsis said. Holley said Rep. Greg Wren, R-Montgomery, wants to avoid re-writing entire statute sections simply to reflect name changes for existing functions.
THE HOUSE GIVES FINAL APPROVAL OF RED TAPE REDUCTION ACT
The House on Tuesday gave final approval to the Red Tape Reduction Act, HB 101, by Rep. April Weaver, R-Brierfield. The House voted 94-0 to approve the version that passed the Senate. The House passed HB 101 on Feb. 12, it went to the Senate where it was substituted and amended, and it was passed on April 4. Because of the Senate changes, the House had to consider them. Weaver said the bill will ease government regulations for businesses.
This bill, which now goes to Governor Robert Bentley for consideration, would require any agency that proposes a regulation that might adversely affect a business to prepare a business economic impact statement and file it with the Joint Committee on Administrative Regulation Review.
"Several business owners in my district have complained that satisfying bureaucratic red tape requirements eats up man hours, produces numerous compliance costs and takes their attention away from their main objective - keeping the doors open and providing jobs," Weaver said in February. "State government should concentrate on giving business owners the tools they need to remain successful instead of finding ways to suffocate them under the weight of needless government oversight and mounds of paperwork."
The Business Council of Alabama supported this legislation.
SALES TAX EXEMPTION PROCESS WOULD BE REVIVED ON SOME PUBLIC WORKS JOBS
The House on Tuesday approved a sales tax exemption bill for contractors who do public jobs. HB 419 by Rep. Paul DeMarco, R-Homewood, was approved 89-6. "This is a red tape reduction bill," DeMarco said of the bill that goes to the Senate.
Contractors formerly were able to get tax exemption certificates for public works projects, but the law was changed and contractors had to go through a cumbersome process to get the exemption, said Rep. Micky Hammon, R-Decatur, a former electrical contractor. He said DeMarco's bill returns the process to its former status and cuts red tape. "It became a nightmare when it was changed," Hammon said.
The bill, substituted by the Ways and Means Education Committee, would authorize the Department of Revenue to grant tax exemptions to contractors and subcontractors who are licensed by the State Licensing Board for General Contractors. Sales and use taxes would be exempt on construction material, supplies, and other tangible personal property used in public projects. Those items are tax-exempt now if the governmental entity designates a contractor as a purchasing agent and public funds are used to buy the material, the bill's fiscal explanation said.
The tax measure might reduce sales and use tax receipts to the Education Trust Fund up to $2.5 million annually and local government sales taxes by a similar amount, according to the fiscal explanation. The actual reduction would depend on whether tax-exempt process is more widely used. The bill contains accounting safeguards and enforcement power for violations. If the bill becomes law, it would take effect Oct. 1.
|BCA members, please follow the enclosed link to take part in a survey from the National Governor's Association Policy Academy on Industrial Energy Efficiency and Combined Heat and Power, which will be used in developing future strategies and programs to support Alabama's industries through energy efficiency. Your responses will be anonymous unless you choose to share your identity with us, and no individual information will be shared with anyone.|
|This week, the Senate passed the drought bill, SB 208, sponsored by Sen. Billy Beasley, D-Clayton, and the House companion bill, HB 382 by Rep. Mark Tuggle, R-Alexander City, received a favorable report by the House Committee on Commerce and Small Business. This legislation codifies the Alabama Drought Assessment and Planning Team process that has been in place through executive order for more than a decade. The bill will also require the development of drought plans for water utilities and the State of Alabama.|
|On Thursday, the State Agency Water Management Plan Resolution, HJR 286, was introduced by Rep. Chad Fincher, R-Semmes. This resolution has been referred to the House Rules Committee. The resolution expresses support for the Alabama Water Agency Working Group (AWAWG) and for the development of a comprehensive statewide water management plan. The resolution does recognize the need for further data collection - a position clearly taken by BCA. However, it does not address the fact that the proposed funding for needed data collection will not be available until Fiscal Year 2014, while the plan is expected to be delivered on December 1, 2013.|