March 20, 2015

IN THIS ISSUE

Federation Seeks to Clarify Proposed Tax Exemption Bill

Insurance Premium Tax Bill Filed

National Ag Week Honored by Legislators

Bills at a Glance

Legislature on Spring Break

Federation Seeks to Clarify Proposed Tax Exemption Bill

The Alabama Farmers Federation legislative team is working to clarify a bill introduced last week on behalf of the Alabama Department of Revenue to determine any impact it could have on farmers.

"I have spoken with the bill's sponsor, Sen. Arthur Orr, (R-Decatur) and he said the bill was never meant to affect farmers," said Federation Executive Director Paul Pinyan. "I've also spoken with representatives in the Senate Fiscal Office who wrote the proposed bill, and they also assured us it was not their intention to remove tax exemptions farmers receive for agricultural input items. Discussions with the fiscal office included an offer to write an amendment to specifically exclude those items in the proposed bill."

Drafters of SB245, which was introduced by Orr March 17, said the bill was designed to clarify state sales tax exemptions for specific "entities," and was never intended to affect farmers.

The Legislature began the session March 3 and is on break this week. Lawmakers return to Montgomery March 31 when the House of Representatives convenes at 1 p.m. and the Senate at 2 p.m.

"We look forward to working with Sen. Orr when the Legislature returns next week to ensure farmers are protected in the proposed legislation," Pinyan said. "Agriculture is our state's leading industry, and I know Sen. Orr recognizes the huge economic impact agriculture has in his district as well.

AFF monitoring. The Federation will continue to monitor this bill and notify members of it and other legislation.

Insurance Premium Tax Bill Filed

Rep. John Knight, D-Montgomery

A bill that would discourage job creation and investment by insurance companies and ultimately increase policyholders' premiums was introduced in the House of Representatives March 12.

HB277 by Rep. John Knight, D-Montgomery, would repeal premium tax credits insurance companies receive for hiring Alabama workers and owning real estate. The bill is part of Gov. Robert Bentley's tax package, which he said would generate $541 million for the General Fund budget. The bill has been assigned to the House Ways and Means General Fund Committee and has no co-sponsors.

Alabama Farmers Federation State House Legislative Programs Director David Cole said the bill would especially hurt Alabama-based companies that have a large workforce and substantial investment in the state.

"Alfa has more than 2,000 employees and offices in all 67 counties," Cole said. "For almost 70 years, it has invested in Alabama by creating good-paying jobs, paying taxes, contributing to charities, paying claims and buying or renting office space. Eliminating these premium tax credits would discourage that kind of investment and could result in higher rates for insurance customers."

More than 1,100 insurance companies take advantage of premium tax credits. Despite these credits, premium taxes remain the largest contributor to the general fund budget - about $257 million in revenue per year. Because premium taxes are a gross tax, insurance companies are required to pay, even if they lose money.

"The premium tax credits that have been in place since 1995 are equitable because they are available to any company willing to create jobs and invest in Alabama," Cole said. "As the Legislature works to grow the economy with its 'Alabama First' agenda, it would be counterproductive to repeal credits that encourage investment in the state."

Federation members are encouraged to contact members of the House Ways and Means General Fund Committee and thank them for supporting Alabama companies and opposing HB277. Committee members are Chairman Steve Clouse, R-Ozark; Vice Chairman Ken Johnson, R-Moulton; Rep. Laura Hall, D-Huntsville; Rep. Elaine Beech, D-Chatom; Rep. Napoleon Bracy, D-Mobile; Rep. Victor Gaston, R-Mobile; Rep. Lynn Greer, R-Rogersville; Rep. Mike Holmes, R-Wetumpka; Rep. John Knight, D-Montgomery; Rep. Paul Lee, R-Dothan; Rep. Mike Millican, R-Hamilton; Rep. Arnold Mooney, R-Birmingham; Rep. Chris Sells, R-Greenville; Rep. Pebblin Warren, D-Tuskegee; and Rep. Rich Wingo, R-Birmingham.

The House Ways and Means General Fund Committee will hold a public hearing on HB277 April 1 at 1:30 p.m. in State House room 617.

AFF opposes. Federation members are encouraged to contact their representatives concerning this legislation.

National Ag Week Honored by Legislators

Sen. Tom Whatley, R-Auburn, and Rep. David Sessions, R-Grand Bay, filed HJR25, a resolution recognizing March 18 as National Agricultural Day in Alabama.

Sen. Whatley chairs the Senate Agriculture, Conservation and Forestry Committee, and Rep. Sessions chairs the House Agriculture and Forestry Committee.

Sen. Whatley, left, stands with Rep. Sessions.

Bills at a Glance

The Legislature is on spring break through March 31.

The next edition of Capitol Connection will be released April 3.

The Senate reconvenes at 2 p.m. Tuesday, March 31.

The House reconvenes at 1 p.m. the same day.

For questions or comments on newsletter content, email:

Matthew Durdin - State Legislative Programs Director for the Senate

David Cole - State Legislative Programs Director for the House

For distribution questions or media inquiries, email:

A.J. Watson - Ag Communications Specialist