Friday, February 23, 2018
2018 LEGISLATIVE UPDATE: WEEK SEVEN
Alabama’s constitution only absolutely requires the Legislature to do one thing during every Regular Session: pass the State’s budgets. Thus, while the number of days used so far—14 of 30 available this session—is worth noting, the actual progress of the session is perhaps better gauged in any given year by the posture of the budgets. Both of the budgets have now passed their chamber of origin, earlier in the session than has become typical in recent years. The budgets’ progress is a strong indicator that, while some discord may slow down the pace of legislation, Leadership’s stated goal of a short session is still within reach.
This session’s disharmony has mostly—and uncharacteristically—flared in the House, which shut down again this Thursday over a bill to require headlights to be turned on from sunset to sunrise. By contrast, the Senate has continued to work swiftly through largely uncontroversial calendars, with many unanimous or near-unanimous votes.
This week saw many different groups and agendas jockeying for the Legislature’s attention. Tuesday was Small Business Day in the House, where the day’s first calendar items focused on various bills that would help small businesses. Thursday was Higher Education Day as well as NASA Day, which brought students and scientists to the halls of the State House.
General Fund Budget Passes Senate
The Senate passed the state’s General Fund budget on Tuesday by a vote of 26–2. The General Fund budget, SB178, sponsored by Senator Trip Pittman (R–Daphne), allocates all non-educational state spending for next year.
The General Fund budget is in better shape than it has been in recent years. Last year, the Legislature set aside roughly $92 million towards this year’s budgeting process. Additionally, roughly $40 million more in revenue is projected to be collected for next year. These two major factors, combined with several other smaller ones, allowed the state to budget a total of just more than $2 billion for next year—roughly $158 million more than the budget for this year. The largest part of the additional funds will go towards a $50 million increase to the budget for the Department of Corrections. This increase is expected to be used largely for prisoner healthcare and for the hiring of additional staff. The Department faces several lawsuits relating to the treatment of prisoners. Other key funding increases include an additional $8 million for the Department of Mental Health, an additional $4.7 million for the Department of Economic and Community Affairs, and an additional $3.2 million to be used to hire 30 new state troopers. The Senate has considered, but has not yet passed, a separate bill that would give a 3% raise to state employees.
On Wednesday, the Committee on Finance and Taxation General Fund gave a favorable report to a supplemental appropriation bill that would set aside more money for the Department of Corrections for the current fiscal year. SB175, also sponsored by Senator Pittman, now moves to the Senate as a whole for consideration.
Ethics Law Reform Introduced
On Thursday, Senator Del Marsh (R–Anniston) introduced a bill that would substantially revise the Alabama Ethics Act. SB383, which was drafted by the office of Attorney General Steve Marshall, would make a series of changes to the law that governs the ethical conduct of public officials and public employees in the state. Of particular note are efforts to clarify the definition of a “principal,” which is a person or entity that employs a lobbyist, and of “thing of value.” The bill would also seek to exempt some public education, law enforcement, and first responder employees from some of restrictions and requirements of the law. The bill has been referred to the Senate Committee on Constitution Ethics and Elections.
New, New Version of Simplified Seller Use Tax Remittance Act
On Wednesday, Senator Trip Pittman introduced a substitute for the new version of his bill that would make changes to the Simplified Seller Use Tax Remittance Act (“SSUT”). SSUT, which passed the Legislature in 2015, currently allows for online sellers—such as Amazon—to lock in a lower sales tax of 8% if they opt in. SB307, as substituted, would clarify that sellers remain eligible to pay the simplified tax even if they acquire a brick-and-mortar presence in the state, and clarifies that purchases at those brick-and-mortar locations do not qualify for SSUT. The bill would also impose an additional 1% tax on online sales that would be distributed to each municipality in the state at a rate based on population. The introduction of the bill was prompted by Amazon’s acquisition of Whole Foods last year, which triggered a review of whether the online retailer could continue to pay the flat 8% tax. The Committee on Finance and Taxation General Fund, which is chaired by Senator Pittman, favorably reported SB307 after adopting his substitute.
Data Breach Bills Move out of Committee
Two identical bills that would create penalties for failure to notify affected individuals that their personal data has been compromised moved out of committee this week. SB318, sponsored by Senator Arthur Orr (R–Decatur), and HB410, sponsored by Representative Phil Williams (R–Huntsville), and both known as the Alabama Data Breach Notification Act, require both public and private entities that hold sensitive information to establish reasonable security measures for protecting it. Furthermore, the bills would require any entity that has been breached to conduct an investigation and, upon determining that any breached information is “reasonably likely to cause substantial harm” to notify the affected individuals as “expeditiously as possible.” Under the proposed law, knowing or willful failure to notify could result in the imposition of significant penalties under Alabama’s Deceptive Trade Practices Act of up to $500,000. Alabama is one of only a handful of states that does not have some form of data breach law on its books. Proponents of the legislation, including Attorney General Steve Marshall, have worked with the business community and other branches of state government to craft a bill that is widely seen as fair and reasonable. The Senate Committee on Governmental Affairs favorably reported SB318 on Tuesday after a accepting a substitute making largely technical changes to the bill. The House Committee on Technology and Research favorably reported HB410 on Wednesday after accepting the same substitute.
Daycare Regulation Bill Moves to Senate for Final Passage
On Wednesday, the Senate Committee on the Judiciary unanimously voted to give a favorable report to a bill that would increase regulation of daycares affiliated with religious organizations in Alabama. Under current Alabama law, any daycare that is affiliated with a church or religious nonprofit school is exempt from licensure and regulation by the state’s Department of Human Resources (“DHR”). Considerable media attention focused on the mistreatment of children at some daycares that avoided licensure and regulation by claiming such an affiliation have prompted efforts in the Legislature to eliminate or modify the exemption. HB76, sponsored by Representative Pebblin Warren (D–Tuskegee), would not require that all daycares be licensed and regulated. Instead, the bill would only require that daycares that are currently exempted to post a notice to that effect and to forward annually all records of health and fire inspections as well as the names and criminal background checks of all employees to DHR. Furthermore, the bill would empower DHR to inspect any exempted facility if there is reason to suspect a threat to child safety or if the facility has not supplied the required documentation. The bill now moves to the Senate as a whole for final passage.
Tax Amnesty Bill Receives Final Passage
On Thursday, the Senate gave final passage to a bill that would create an amnesty program for all unpaid taxes other than motor fuel, motor vehicle, and property taxes. HB137, sponsored by Representative Ken Johnson (R–Moulton), would create a three-month window—from July 1st through September 30th of this year—during which Alabama taxpayers could pay any taxes owed from before January 1, 2017 without penalties or interest. In order to be eligible for the program, the participating taxpayer cannot have already been audited or contacted about the unpaid taxes by the Department of Revenue. The taxpayer would also be required to waive any right to dispute the amount of the taxes owed. The bill now goes to the Governor for her signature.
Tax Cut Moves to House for Final Passage
The House Committee on Ways and Means Education favorably reported SB76, sponsored by Senator Del Marsh (R–Anniston), on Wednesday. The bill, which is part of the Senate Republican Caucus agenda, would raise the threshold for claiming the maximum exception for state income taxes for low- and middle-income earners. For married couples filing jointly, heads of households, and single filers, the income threshold for claiming the maximum exception would be raised from $20,000 to $23,000. For married couples filing separately, the threshold would be raised from $10,000 to $10,500. The overall impact of the bill is projected to be a $4 million savings for taxpayers annually. The Republican Caucus has cited increased fiscal discipline at the state level and the improving economy as the reasons for the cut. Proponents champion the bill’s targeted relief for individuals and families who earn the least. The bill now moves to the House as a whole for consideration and final passage.
The Legislature has used 14 of its available 30 meeting days for the 2018 Regular Session. The House will reconvene on Tuesday, February 27th at 1:00 p.m. The Senate will reconvene on the same day at 2:00 p.m. Next week is anticipated to be a two legislative day week, with Wednesday reserved for committee meetings.
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