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May 12, 2015 - 8:30 a.m. - The Business Center of Alabama
2 North Jackson St. Montgomery, AL 36104



Rep. Craig Ford, D-Gadsden
House Minority Leader

BILL TO PROTECT BUSINESSES, CONSUMERS, NEARS FINAL PASSAGE, PRISON REFORM GOES TO GOVERNOR, HOUSE COMMITTEES MOVE $136 MILLION IN TAX INCREASES

 

The important lawsuit lending bill that will protect businesses and consumers is now before the full Senate after passing a Senate Committee.

 

The Alabama House passed the Prison Reform legislation with some amendments. The Senate quickly concurred and sent this important Business Council of Alabama-supported legislation to the governor.

 

Bills to levy tax increases on select consumer products and business entities started moving out of House committees this week. If they become law, taxes would go up by at least $136 million on select businesses and products, including automobile sales and rentals, amusement games, and lubricating oil.

 

The House-passed bills go to the full body next week for consideration. Unknown is the Senate's response to the House bills that are designed to fill a hole in the 2015-16 General Fund budget that Governor Bentley said needs filling.


Senate Rules Committee Chair Jabo Waggoner spoke to the Business Council of Alabama's Governmental Affairs Committee this week and said heavyweight issues such as gaming revenue measures, tax proposals, downsizing state government, and building two state budgets will dominate the final 10 days of the 2015 legislative session.
               


Details of these and other issues are in this week's Capital Briefing that recaps the Legislature's 10th week in session.

EDUCATION/WORKFORCE PREPAREDNESS

Two-Year College Board Bill Goes to Governor

 

The Alabama House passed Senate legislation creating a new, 10-member governor-appointed board to govern the state's two-year colleges, which would remove that oversight from the state Board of Education. Governor Bentley named appointees a day after the bill creating the board won final approval in the Alabama Legislature. Four of the appointees were confirmed by the Senate on Thursday. Bentley's appointments included engineers, business owners, and executives.

 

The state Board of Education passed a resolution in March opposing the measure but there was little opposition or discussion by House members who passed the Senate version 82-11. Rep. Steve McMillan, R-Gulf Shores, who sponsored the bill in the House, said it was not a knock against the state BOE, but a recognition that the board had too much on its plate with K through 12 and two-year colleges.


The governor by virtue of his office serves as president of the 10-member board.

 

 

Senate Confirms Former BCA Chairman to USA Board of Trustees

 

On Tuesday the Senate confirmed Mobile Mayor and former BCA Chairman Sandy Stimpson's appointment to the University of South Alabama Board of Trustees. Governor Bentley nominated him to serve until Sept. 30, 2019. Stimpson was chairman of the BCA in 2010 and he was elected Mobile's mayor in 2013.

ENVIRONMENT AND ENERGY

Birmingham Water Works Board Reform Bill Goes to Governor

 

After more than three years of debate, a bill by Sen. Jabo Waggoner, R-Vestavia Hills, that reforms the make-up and compensation of the Birmingham Water Works Board, has been sent to the governor after passing the House by a vote of 70-29 on Tuesday. 

 

SB 89, if signed by the governor, will expand the board from five members to nine members by adding new members from Jefferson County and creating one seat each for Shelby and Blount counties, which are also serviced by the board.

 

Among other changes, the bill would subject board members to provisions of the Alabama Ethics Law, limit their terms, and limit compensation to no more than $1,000 per month. The bill also will require public hearings before the board can vote on rate increases. The law will go into effect immediately upon the governor's signature.


Sen. Waggoner stopped by the BCA headquarters this week to discuss this legislation which can be seen in this week's Two-Minute Tuesday (VIDEO).

Hazardous Waste Fee Bill Advances

 

The House Commerce and Small Business Committee favorably reported a substitute to HB 345 by Rep. A.J. McCampbell, D-Gallion, which would impact how hazardous waste disposal facility fees are distributed. The bill would change how these fees are divided among counties with disposal facilities, the Alabama Department of Environmental Management, and the General Fund Budget. The bill as introduced replaced the $450,000 fee distribution that was going to ADEM with $150,000 to ADEM and $300,000 to the county. The substituted bill eliminated the funding to ADEM and only has $300,000 going to the county.

HEALTH

BCA Proposes Joint Study Committee to Review Legislative Mandates

 

The 2015 State Legislative Agenda establishes that BCA will oppose mandating employer-provided health care benefits or any legislation, resolution, or regulation that would increase health plan costs. In the 2015 legislative session, there have been nine health related bills filed to date.

 

In his testimony before the committee, BCA President and CEO William J. Canary proposed a study committee for rapid legislative mandate review and assessment.

 

"At a minimum, existing industry and legislators in Alabama should be given ample time to see, react and prepare for their real costs and economic impact of legislative initiatives directing the actions of the private sector," Canary said. "However, each of us interprets important terms within legislation in widely divergent ways. Well-intentioned legislation often has a significant impact on businesses while that same common sense legislation may have a negative impact on the business community.

 

"A study committee would improve transparency and ensure that state government thoughtfully considers the impact of proposed legislation on small businesses and existing industry in Alabama," he said. "Working together we can fix almost everything!"

 

The House Insurance Committee conducted a public hearing on the vision plan, HB 540 by Rep. Matt Fridy, R-Montevallo, but did not vote. The Senate passed the vision plan SB 270, by Sen. Slade Blackwell, R-Birmingham, with a vote of 25-0. The Senate carried over SB 296, the dental plan, by Sen. Paul Bussman, R-Cullman. 

Read more about BCA's position on health mandates here.

JUDICIAL AND LEGAL REFORM

BCA Applauds Legislature for Prison Reform Legislation that has been Sent to Governor

 

Alabama businesses and consumers dodged a potential financial and legal bullet this week with final passage of important prison reform legislation.

 

The legislation that already passed the Senate was passed by the House on Thursday by a vote of 100-5. The version passed on Thursday was a substitute with three amendments added on the floor. The Senate then concurred with this House version of the bill, sending it to the governor's desk for signature.

 

SB 67 by Sen. Cam Ward, R-Alabaster, would reduce the state prison system's capacity from about 190 percent to about 160 percent over five years. If it becomes law, penalties for some minor crimes would be reduced and greater supervision of inmates would occur. It also would create a Class D felony, a new category, for some nonviolent property and drug offenses.

 

Prison reform is of vital interest to Alabama as the real threat of a federal takeover of prisons would result in more than $400 million in new taxes to build additional prison capacity.

 

"The BCA commends Sen. Ward for his leadership and the Legislature for being proactive in addressing the potentially crippling financial and legal problems from overcrowding and the moral imperative of providing adequate living facilities for Alabama's inmates," BCA President and CEO William J. Canary said. "Inaction could have led to mandates by a federal court that would have draconian financial implications for business and all Alabama taxpayers."

 

Canary previously outlined the bill's impact on business in an op-ed that was printed in several Alabama newspapers.

 

The House also passed a related bill, HB 420 by Rep. Mike Jones, R-Andalusia. The bill would authorize the Alabama Corrections Institution Finance Authority to redirect up to $60 million in bonds for a prison facility in one particular county to locations statewide in order to provide more prison capacity. 

 



Billy Canary, president and CEO of the Business Council of Alabama, follows up with Andrew Barbee from the Council of State Governments Justice Center and State Senator Cam Ward of Alabaster about Justice reform in Alabama and specifically "Project Justice Reinvestment."


A discussion with Sen. Cam Ward and Andrew Barbee from the Council of State Government's Justice Center about the current state of Alabama's prison system. This episode is the first in a continuing series on this topic.

Senate Committee Approves House Bill to Protect Business, Consumers

 

The Senate Banking and Insurance Committee favorably reported HB 160 by Rep. Chris Pringle, R-Mobile, also known as the Alabama Consumer Lawsuit Lending Act. It goes to the full Senate for consideration.

 

Consumer lawsuit lending is the unregulated practice of loaning money at exorbitant interest rates to plaintiffs who could potentially receive large settlements or judgments. The plaintiff must repay the lender if any settlement or judgment is received at an interest rate that can exceed 200 percent. This practice slows down and increases the cost of litigation, introduces a third-party's interests into the attorney-client relationship, and targets a vulnerable population.

 

The House previously passed HB 160 by a vote of 98-1. If the Alabama Consumer Lawsuit Lending Act, supported by the Business Council of Alabama and the U.S. Chamber of Commerce, becomes law, consumer lawsuit lenders would be required to obtain licensing from the State Banking Department.

 

The Senate version of this bill, SB 68 sponsored by Sen. Cam Ward, R-Alabaster, previously had been given a favorable report by the Senate Banking and Insurance Committee.

 

As part of its 2015 State Legislative Agenda's Judicial and Legal Reform section, the BCA supports efforts to provide meaningful regulation of consumer lawsuit lending in order to protect the interests of businesses, consumers and the public.

 

To learn more, please click to view a BCA blog and fact sheet on lawsuit lending.

Public Hearing on Bill to Expand Government-Run Internet Providers Ability to Compete With Private Sector

 

The Senate Transportation and Energy Committee conducted a public hearing Thursday on SB 438 by Sen. Tom Whatley, R-Auburn. SB 438 would remove existing limitations on the areas that a municipal-run telecommunications service can operate. Currently, these municipal-run entities only compete within their city jurisdiction. SB 438 would allow them to compete state wide.

 

Bill proponents, including the mayor of Opelika, argued that their municipality can provide better, faster internet service and customer service than currently offered by the private sector, and help with business recruitment. Proponents further argued that they should be able to offer their services elsewhere in the state.

 

Opponents that included representatives from the telephone, cable television, and wireless industries said the government should not directly compete with the private sector using public dollars, as this could distort the market and discourage substantial private investment in these technologies in Alabama. They argued that the government should not be both a regulator and a competitor.


SB 438 was not voted on by the committee.

TAX AND FISCAL POLICY

House Budget Committees Approve More Than $136 Million in Taxes

 

After House Republicans on Tuesday announced their tax plan to address the General Fund budget shortfall, the House Ways and Means General Fund Committee the next day approved  $136 million in tax increases, including a 25 cent per pack increase in cigarette taxes.

 

The largest tax increase would be on cigarettes, $66 million. The second largest revenue generator would be from HB 581 by Rep. Elaine Beech, D-Chatom, which would raise $39 million by increasing the business privilege tax.

 

The committee approved the bills on voice votes in rapid-fashion with little debate, a day after House Republicans announced support for a mix of $136 million in taxes and fees combined with various cost-cutting measures.

 

"We haven't presented anything that is broad-based. It's pretty targeted," Committee Chairman Steve Clouse, R-Ozark, said after the meeting.

 

Clouse said House members believe it is their responsibility to address the General Fund budget problem even though it's unclear whether the Senate will go along.  The bills are expected to come up for debate Tuesday in the full House.

 

BCA opposes this legislation per its longstanding tax policy, which states:

 

"Should any tax or tax reform initiative be proposed, BCA will not consider supporting such legislation unless it is applied fairly without levying a disproportionate burden on any individual segment of Alabama's economy.  Any tax reform proposal must be tied to governmental accountability and the elimination of wasteful spending."

A Summary of Several of the Tax Proposals:

 

Cigarette Tax

 

HB 572 by Rep. Patricia Todd, D-Birmingham, would increase the cigarette tax by 25 cents per pack and produce an estimated $66 million a year for the General Fund. HB 572 also would reduce the discount received by wholesalers from 7.5 percent to 4.75 percent.

 

Business Privilege Tax

 

HB 581 that would increase the state business privilege tax by a net amount of $39 million annually.

 

HB 581 would eliminate the annual business privilege tax on micro-businesses with an Alabama net worth of less than $10,000, change the schedule of tax rates that utilize various levels of the business's federal taxable income to a schedule based on its taxable net worth apportioned to Alabama, and raise the maximum annual BPT cap from $15,000 to $22,000. The bill would do away with the tax on roughly 107,000 small businesses but increase the maximum tax on larger businesses.


An estimated $10 million reduction in BPT tax revenue would come from excluding very small companies, but that amount is more than offset by the tax increase on larger companies, an estimated $49 million increase to the state. The new net increase would be $39 million annually to the General Fund Budget.

Automobile Rental Tax

 

HB 267 would increase the tax on automobile rentals by 33 percent, from 1.5 percent to 2 percent, producing an estimated $6 million. The bill originally called for an increase from 1.5 percent to 4 percent, reflecting the governor's desires, but an amendment capped the tax at 2 percent.

 

Automobile Title Fee

Another approved bill, HB 578 by Rep. Chris Sells, R-Greenville, would increase the title fee on automobiles from $15 to $25. The change would raise an estimated $14 million for the General Fund.

 

Lubricating Oil Tax

 

The House Ways and Means Education Trust Fund Committee on Wednesday initially rejected a bill that would change the state tax on lubricating oil, but the committee met again the next day and favorably reported the bill.

 

HB 587 sponsored by Rep. Terri Collins, R-Decatur, would replace the current excise tax of 6 cents per gallon to a state sales tax of 4 percent. It could produce $10 million which would be designated to the Education Trust Fund.

 

The $10 million would replenish transfers from the ETF to the General Fund as a part of the House Republican Caucus tax proposal.

 

During the Wednesday public hearing on HB 587, opponents stressed that a tax increase on lubricating oils would have a negative impact on businesses and consumers. Other argued that eliminating the excise tax on lubricating oils would strip $650,000 from counties and cities which are used for highways, as well as another $550,000 from the state's Public Road and Bridge Fund.

Committee Approves Other Tax, Cost-Cutting Bills

 

HB 584, by Rep. Mike Holmes, R-Wetumpka, would transfer all responsibility for preserving historic sites and structures from the Alabama Historical Commission to the Department of Archives and History and the Department of Conservation. The cumulative savings are unknown.

 

HB 595 sponsored by Rep. David Faulkner, R-Homewood, would require owners of amusement machines, such as arcade games, jukeboxes and pool tables, to pay an annual license fee for the privilege of owning and operating them.

 

Under current law, owners of such machines are required to pay a privilege license fee based on the total sales of the machine, which makes the tax difficult to calculate and collect. This bill is aimed to make the collection of the tax simpler and generate more revenue. Depending on the number of machines, owners and operators could pay a license fee ranging from $500 to $5,000.


The bill would raise an estimated $1 million for the General Fund.

Tax Bills Carried Over

 

During a week in which more bills that provide for tax increases were taken up than at any time in recent memory, the following bills were carried over in committee and will likely not be considered again this session:

 

HB 553 by Rep. Ken Johnson, R-Moulton, would eliminate a net total of $39 million in administrative discounts for businesses that remit certain taxes to the Department of Revenue in a timely manner;

 

HB 466 by Rep. Rod Scott, D-Fairfield, establishes the factor presence nexus standard for application to the income tax;

 

HB 467, also by Scott, provides for additional state reporting and disclosures of "tax avoidance transactions."

Other Bills of Interest

 

SB 260 by Sen. Greg Reed, R-Jasper, also known as the Healthy Food Financing Act, would provide for the establishment and administration of a loan fund to help finance the construction or expansion of grocery stores offering fresh produce and other nutritious foods in underserved areas.

 

The House Agriculture and Forestry Committee on Wednesday amended and favorably reported the bill. The Senate previously passed SB 260 by a vote of 31-0. It awaits a third reading in the House.


The House companion bill, HB 283 by Rep. James Buskey, D-Mobile, also was amended and given a favorable report in that committee.

YOUR BCA ADVOCACY TEAM

Dana Beyerle
Director of Communications
334.240.8768
William J. Canary
President and Chief Executive Officer
Mark Colson
Senior Vice President of Government Affairs and
Chief of Staff
334.240.8724
Anna Dobbins
Meetings/Events and Communications Coordinator
334.240.8775
Leah Garner
Director of Government Affairs and Advocacy
334.240.8726
Drew Harrell
Deputy Chief of Staff and Director of Strategic Operations
334.240.8727
Nancy Wall Hewston
Vice President of Communications, Strategic Information and Federal Affairs
334.240.8725
Nathan Lindsay
Vice President for Political Affairs, Regional Operations and Executive Director of ProgressPAC
334.240.8766
Trevor Parrish
Legislative Policy Coordinator
334.240.8773
Joshua Vaughn
Director of Visual Communications and Strategic Information
334.240.8740
Victor Vernon
Vice President for Public Policy
Pam Ware
Manager, Government Affairs and Advocacy
334.240.8719


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