NEXT TUESDAY MORNING BRIEFING


May 26, 2015 - 8:30 a.m. - The Business Center of Alabama
2 North Jackson St. Montgomery, AL 36104




Rep. Terri CollinsR-Decatur
Chairman of the House Education Policy Committee

BUDGETS NEAR FINAL PASSAGE, STATE SCHOOL BOARD TO RECONSIDER ITS CHARTER SCHOOL COMMISSION VOTE, AND MORE

 

The House amended and passed the Senate Education Trust Fund budget for 2015-16, but the Senate non-concurred, sending it to a conference committee. The Senate passed the committee report but the House had adjourned so it will be next week before the House can consider the report.

 

The House this week passed a $1.64 billion General Fund budget for 2015-16 and sent it to the Senate for consideration. The budget reflects an 11 percent cut of this year's appropriation.

 

In the wake of the State Board of Education's vote to deny appointments to the newly created Public Charter School Commission, a bill to remove the SBOE as the confirming authority advanced in the House. The SBOE scheduled a special meeting for Tuesday to reconsider its previous vote.


House Judiciary Committee Chairman Mike Jones spoke on Tuesday to the Business Council of Alabama's Governmental Affairs Committee and outlined the 2015 prison reform effort supported by the BCA. Jones said crucial funding still awaits final passage. 

   

BCA's Two Minute Tuesday with Rep. Mike Jones, R-Andalusia

A fuller explanation of these and other issues are in this week's Capital Briefing that recaps the Legislature's 12th week in session.

EDUCATION/WORKFORCE PREPAREDNESS

State Board of Education Schedules Meeting to Consider Charter School Commissioners

 

The State Board of Education has scheduled a special called meeting Tuesday to reconsider its previous vote on appointments to the Public Charter School Commission, a move that drew the ire of some legislators who created the commission.

 

The State Board of Education voting 4-3 on May 14 declined to confirm nominees to the charter school commission, resulting in the filing of a bill that would remove the board's authority to appoint members should the board not reconsider prior to a June 1 deadline.

 

That bill, HB 664 by Rep. Terri Collins, R-Decatur, would remove the SBOE as the confirming authority and would authorize appointees of the governor, lieutenant governor, Senate president pro tem, and House speaker to serve on the commission. The commission is a critical part of the Charter School Law that was enacted earlier this year.

 

HB 664 is the first bill on a proposed special order calendar when the House reconvenes on Tuesday. Collins said she would push the bill should the state school board not act.

 

Four of seven members of the board that oversees K-12 education declined to confirm the charter school commission nominees. Voting against the nominees were Ella Bell, Stephanie Bell, Betty Peters and Yvette Richardson. Mary Scott Hunter, Cynthia McCarty and Jeff Newman voted for confirmation.


The Alabama Public Charter School Commission was created by the Legislature this session when it also authorized charter schools in Alabama for the first time. 

Senate Approves Education Budget Conference Committee Report, House Next to Consider

 

The House on Thursday passed an amended $6 billion Education Trust Fund budget by a unanimous 105-0 vote, sending it to the Senate that non-concurred.

 

A conference committee was appointed to iron out differences in SB 179 that was sponsored by Sen. Trip Pittman, R-Daphne. Conferees came to an agreement and the Senate approved the conference report 30-0. The House had already adjourned so it won't be able to consider the conference report until next week.

 

The proposed budget for 2015-16 includes a number of recommendations that were identified in the Business Education Alliance of Alabama's 2014 report Obstacles Into Opportunities to improve Alabama's graduation rate.

 

These funding priorities include First Class Pre-Kindergarten, Student Assessment, Postsecondary Education Dual Enrollment, Distance Learning, Advanced Placement, At-Risk students, and Professional Development.

 

House Ways and Means Education Committee Chairman Bill Poole, R-Northport, handled the bill in the House.

 

"It's a good budget," Poole said. "In the terms of the education budget, you'll see the dollars get to the classroom, that's our goal."

 

The fact that the House approved the ETF budget by an almost unheard of vote of 105-0 did not go unnoticed.

 

"To pass a $6 billion budget unanimously is quite a testament to your leadership and the committee and the Legislative Fiscal Office," House Speaker Mike Hubbard, R-Auburn, said.

 

"Thank you for all your work you've done the conference committee," Lt. Gov. Kay Ivey told Pittman and senators.

House Approves Bill to Alter Rolling Reserve Funding Formula

 

The House voting 104-0 on Thursday approved HB 322 by Rep. Bill Poole, R-Northport, which would alter the 2011 Rolling Reserve Act and authorize a larger appropriation from next fiscal year's Education Trust Fund than the current funding formula would allow.

 

The Legislature in 2011 passed the Rolling Reserve formula to limit the amount that can be appropriated from the ETF each year, largely to avoid devastating proration, or budget cuts, to schools. In addition, the original act was designed to create a reserve.

Poole said the legislation does not change the intent of the Rolling Reserve Act.

 

"I do believe this will build up a reserve over time," Poole said. "We have not had proration for several years. I want to keep it that way."

 

HB 322 would remove the provision allowing 40 percent of the growth from the last completed fiscal year to be added to the cap when the percentage growth in the ETF exceeds the 15-year average growth rate and would transfer revenue above the cap equal to 1 percent of the ETF into the budget stabilization account until the balance reaches 5 percent of the total ETF.

 

Once the budget stabilization is filled, excess revenue would be deposited to the ETF Capital Fund until it reaches $10 million. Beyond that point funds would be available to appropriate for any expenditure other than faculty and staff salaries.

 

The substitute says that appropriation of funds for capital outlay shall be divided among the elementary/secondary and higher education sectors in accordance with the percentage split as certified by the Legislative Fiscal Office at the end of the preceding fiscal year.

Alabama Community College System Board of Trustees to Meet - Two Appointees await Senate Confirmation

 

On Wednesday, the newly formed Alabama Community College System Board of Trustees is scheduled to meet at 11 a.m. in the 5th floor board room in the Department of Postsecondary Education. Earlier this year, the Legislature created the board to oversee operation of two-year colleges, a task previously conducted by the State Board of Education.

 

The Governor serves as chair of the board. The Governor appoints other board members from the eight school board districts. There is one state-wide member and an ex-officio liaison from the State Board of Education.

 

The following members of the board have been appointed:

 

Chair - Governor Robert Bentley

District 1 - Al Thompson, owner of Thompson Properties

District 2 - Ron Fantroy, plant manager at Shaw Industries Group

District 3 - Susan Foy, marketing director for Russell Medical Center, (awaits Senate confirmation)

District 4 - Frank Caldwell, retired president of Ridgewood Healthcare Center

District 5 - Crystal Brown, business development director for the Decatur-Morgan County Chamber of Commerce

District 6 - Milton Davis, director of industrial business development for B.L. Harbert International

District 7 - Chuck Smith, retired human resources manager for RockTenn Paper

District 8 - Blake McAnally, Pugh Wright McAnally Inc., (awaits Senate confirmation)

State Board Ex-Officio Member - Mary Scott Hunter 

ENVIRONMENT AND ENERGY

House and Senate Resolution Urges Withdrawal of Federal Carbon Dioxide Regulation

 

The House and Senate approved a joint resolution by Rep. Mac McCutcheon, R-Huntsville, urging delay, withdrawal, and reconsideration of a draconian power grab attempt by the Environmental Protection Agency. The resolution says that Alabama's power production and delivery is beyond the legal scope of the EPA's authority to mandate changes.

 

The EPA is trying to force carbon dioxide reductions but doesn't take into account significant reductions in Alabama since 2005. The EPA's attempt penalizes states such as Alabama, which have nuclear and hydroelectric power capacities.

 

The Alabama Department of Environmental Management, the attorney general, and the Public Service Commission, all oppose the EPA's attempt, which is also being challenged in federal court.

 

The resolution states that if the EPA does not withdraw its plan, Alabama should be given additional time to develop a state plan to comply with emission guidelines by 2030. The resolution went to the governor's office.

 

Last year, the BCA testified at the EPA's public hearing in Atlanta in opposition to the new carbon regulation.

 

The BCA supports efforts to delay implementation of EPA's greenhouse gas regulations under the Clean Air Act and opposes caps or taxes on carbon emissions that would put Alabama businesses at a competitive disadvantage with other states or nations.

State Climatologist Office Measure Advances in Senate

 

HB 229 by Rep. Anthony Daniels, D-Huntsville, would create the Alabama Office of the State Climatologist at the University of Alabama in Huntsville. Alabama's State Climatologist has long been a rational voice in the national debate regarding climate change, and this bill would further enable research and assistance with economic development projects in the state.

 

The Senate Finance and Taxation Education Committee on Wednesday gave the bill a favorable report.

HEALTH

Medicaid Could be Adjusted to Allow More Long-Term Care

 

The Alabama Senate this week unanimously passed a major reform to the state's Medicaid program that could save $150 million a year over the next decade by utilizing more long-term care. The savings assume a 3 percent growth in the cost of the Medicaid program.

 

"Our state has an obligation to provide crucial long-term care services for the elderly eligible for Medicaid coverage, while at the same time finding ways to protect taxpayers from cost increases," said the bill's sponsor Sen. Greg Reed, R-Jasper. "My bill will help us better care for patients and cut spending."

 

SB 431 would establish integrated care networks to provide long-term care services to Medicaid-eligible recipients.

 

The bill would establish a 20-member board to act as the network's governing body, would establish a citizen's advisory committee, and would require minimum solvency and financial requirements as a condition of certification by the Alabama Medicaid Agency.

 

Savings in long-term care services such as nursing homes and in-home assistance will become particularly important as Alabamians age and require more medical care. In 2012, Reed sponsored legislation to establish Regional Care Organizations.

JUDICIAL AND LEGAL REFORM

Legislative Oversight Bills Advance

 

The Senate on Thursday approved a House bill that is part of a package of bills designed to reorganize oversight of the House and Senate, improve accountability, efficiency, and cost savings not only for the Legislature but also its staff and agencies.

 

Voting 25-2, the Senate passed HB 210 sponsored by Rep. Mike Ball, R-Madison. HB 210 amends the Administrative Procedures Act to change when a certified rule is effective from 35 days to 45 days after filing with the Legislative Reference Service.

 

A related bill, HB 211 also sponsored by Ball, is on the Senate calendar. HB 211 would revise membership of the Legislative Council, provide for membership on House and Senate legislative councils, and assume the authority of the Joint Fiscal Committee and Legislative Building Authority.

 

Both bills previously had been carried by Sen. Jimmy Holley, R-Elba, who has championed the legislation for several years.

 

The House voted 75-19 to pass HB 257 by Rep. John Knight, D-Montgomery, that would create a 12-member Permanent Joint Legislative Committee on Government Oversight and Accountability.

 

Its function would be to provide continuous legislative oversight of all state government operations; review expenditures by state agencies, departments or entities, investigate whether funds are spent for the purposes for which they were appropriated, and offer formal suggestions to state agencies, departments or entities to correct operational deficiencies identified by the committee.

 

"We owe it to the people of Alabama to ensure that the funds we appropriate are being spent as intended and that the legislation we pass is being carried out as envisioned," House Speaker Mike Hubbard, R-Auburn, said. "The Legislature is constitutionally responsible for making appropriations, and it is our obligation to ensure that government is operating as transparently and efficiently as possible." 

Restrictive Covenant Bills Advance

 

SB 367 by Sen. Phil Williams, R-Rainbow City, and its House companion, HB 352 by Rep. Chris England, D-Tuscaloosa, relate to restrictive covenants, like non-compete clauses, in contracts between businesses and their employees, business partners, buyers and sellers, and others.

 

These bills would replace existing law with a more specific list of protectable interests and presumptively reasonable restraints on length-of-time and geographic area.

 

The Senate passed SB 367 on Tuesday and it was sent to the House Judiciary Committee. The House passed HB 352 the same day.

 

SB 367 and HB 352 originate from proposals by the Alabama Law Institute. The ALI supports these bills because of the lack of clarity in Alabama law on these types of restrictive covenants.

 

Currently, disparate results flow from various Alabama courtrooms. Current law is not consistent and judges have significant discretion in their reasoning and decisions. A new law would provide a guide for judges to follow in interpreting these covenants and add clarity for those in the business community who not only draft these agreements but also face the potential of costly litigation over them.


BCA members are encouraged to review this legislation to analyze its impact on their particular industries.

SMALL BUSINESS

Committee Approves Tax Deduction Bill for Contributions to Health Savings Accounts

 

SB 9, sponsored by Sen. Paul Sanford, R-Huntsville, was introduced as a state income tax credit for contributions to health savings accounts. But during the Senate Finance and Taxation Education Committee meeting, the committee's chairman, Sen. Trip Pittman, R-Daphne, substituted the bill to change a credit to a deduction.

 

The deduction would be allowed beginning tax year 2017 and would mirror a similar deduction allowed under federal law.


The committee voted 12-0 to favorably report Sanford's bill, which is on the Senate calendar for consideration. The BCA supports this legislation that would benefit small business owners, the self-employed, and others.

Small Claims Court Amount Adjustment Pending in Governor's Office

 

HB 232 sponsored by Rep. Jack "J.D." Williams, R-Vestavia Hills, would increase the eligible amount-in-controversy in small claims court from $3,000 to $6,000. The Senate passed the bill on Tuesday and sent to the governor for consideration.

TAX AND FISCAL POLICY

House Passes BCA-Supported "Alabama Renewal Act"

 

The House on Tuesday voting 101-0 approved HB 416, sponsored by Rep. Chris Pringle, R-Mobile. The Alabama Renewal Act would authorize a port credit, create the Growing Alabama Act tax credit to meet economic development needs that cannot be solved with traditional tax incentives.

 

The port credit, if approved by the Alabama Renewal Commission, would be granted to users of Alabama's publically owned ports based on qualifying increased cargo shipments and would offset a company's income tax liability. The port credit, with an aggregate annual cap of $8 million, is designed to match incentives offered by other states and spur increased shipments of certain types of cargo through Alabama's ports.


The Growing Alabama Act would allow individual and corporate contributors of funds or property to economic development organizations to receive an income tax credit that is the lesser of 50 percent of the contributor's tax liability or the full amount of the contribution. The aggregate contribution cap would increase from $5 million in 2016 to $10 million in 2017 and top out at $15 million in 2018 and each year thereafter.

General Fund Bill Goes to Senate; Deep Cuts Remain in House Version

 

The House on Tuesday passed a bare-bones General Fund budget for 2015-16 that would make major cuts to every agency, including Mental Health, Medicaid, Law Enforcement, ADEM, and the courts. This budget, as is, is not popular, but it is an alternative to arbitrary tax increases.

 

The bill reflects an overall budget cut of 11 percent, or $204 million, of this year's General Fund appropriation. The exceptions are Medicaid, Corrections, Mental Health and the Department of Human Resources; each would get 5 percent less than this year's appropriation.

 

Rep. Steve Clouse, R-Ozark, chairs the House Ways and Means General Fund Committee. He says this budget is simply a vehicle to send a budget to the Senate and allow for more time to look for ways to avoid drastic cuts. "I don't think any House member is satisfied with this because you look at all the work we did on the prison reform and we're not going to be able to move forward with that if we don't have additional revenue," Clouse said.

 

The bare-bones budget heads to the Senate. Senate President Pro Tem Del Marsh, R-Anniston, has said he believes this budget has enough support to pass the upper chamber. On Tuesday morning, Governor Robert Bentley reiterated his plans to veto this budget.

 

The Business Council of Alabama continues to talk with the House and Senate leadership and the Governor to explore options that should include Alabama's excessive earmarking of tax revenue. It remains a priority in the remaining six legislative days to find a path leading to a more streamlined, more growth-oriented state government and stable budgets in the future.

 

The BCA's long-standing tax policy states: "Should any tax or tax reform initiative be proposed, the BCA will not consider support 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."


In the final days of the 2015 legislative session a public/private sector solution needs to be actively encouraged.

Committee Reports Bill to Provide Infrastructure Funding to State and Localities

 

The Senate Fiscal Responsibility and Accountability Committee favorably reported SB 475, by Sen. Trip Pittman, R-Daphne, which would remove the exemption of local government road and bridge projects from the contractors' gross receipts tax.

 

It also would hold-harmless current recipients of the tax revenue and direct the additional revenue, presumably from the removal of the exemption, to be distributed as gasoline and fuel tax monies. Current recipients and their percentages are the Alabama Department of Transportation at 45 percent and cities and counties at 55 percent.


The actual amount of additional revenue to be distributed will depend upon the total local road and bridge projects that would become subject to the tax.

Senate Passes Resolution to Create Flat Tax Study Commission

 

On Thursday, Sen. Bill Hightower, R-Mobile, offered Senate Joint Resolution 81 on the Senate floor, which would create the Alabama Simplified Tax Study Commission. This commission would be charged with evaluating and making recommendations to the Legislature in regards to simplifying and lowering Alabama's personal and corporate income tax rates by implementing a flat tax.

 

SJR 81 passed the Senate chamber unanimously. The resolution states that the goal of the commission is to examine and determine if Alabama's income tax structure should be simplified and modified to achieve a more predictable result in filing, computing, and collecting income taxes.

 

If the House passes it, the resolution would require the members of the commission to schedule an initial meeting upon adjournment of the 2015 Legislative Session, and also would require the commission to publish its findings by the first day of the 2016 Legislative Session.

 

Sen. Hightower introduced SB 409 earlier in the legislative session, which called for reform of Alabama's tax code by replacing Alabama's current income tax with a flat tax. A public hearing was held in the Senate Finance and Taxation Education Committee on SB 409 but a vote was not taken.


You can read BCA's article on SB 409 in the Tax and Fiscal Policy section of the April 24 issue of the Capital Briefing.

Other Bills of Interest

 

The Healthy Food Financing Act, SB 260 by Sen. Greg Reed, R-Jasper, would establish and provide for 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 Senate passed the bill 31-0 on March 31, and the House voting 100-0 passed the bill on Tuesday.

 

Rep. James Buskey, D-Mobile, the sponsor of HB 283, the House companion bill, was successful in substituting SB 260 for his HB 283 on Tuesday on the House calendar.

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