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Newsroom
Friday, April 29th, 2016
LEGISLATIVE UPDATE WEEK 13

With the close of business in the Alabama House at 9:35 PM on Thursday, all bills that had not passed their house of origin officially died. All bills require three readings—on different days—in both houses to pass, and only two days remain in this session. House bills still in the House can no longer achieve final passage, nor can Senate bills still in the Senate. So, just like that, 601 of the 1004 bills introduced this session ended their journey for this year. Of the remaining 403 that have passed at least one body, there have been 93 bills enacted into law – and 37 that have passed both houses, but are not yet law – either because they are Constitutional Amendments awaiting ratification by the people, or because they are awaiting the signature of Governor Robert Bentley. The rough math leaves “only” about 270 bills that can be considered in the final two days of the Session.

Prison Construction

The House spent most of the day on Thursday debating and then passing Governor Bentley’s massive prison construction plan. The debate in the House began at approximately 10:00 AM, and continued through until the final vote at about 6:45 PM. The bill allows for an $800 million bond issue in order to construct four mega-prisons in the state. Three of these prisons would house male inmates, and one would replace the troubled Tutwiler women’s prison in Wetumpka. Proponents of the bill argue that the construction is needed to relieve the state’s overcrowding problems in its fourteen existing prisons. Most of the existing prisons would be closed under the Governor’s plan, and the debt service on the bonds would be paid from the anticipated savings that could result from the consolidation. The bill must go to the Senate for concurrence with the House changes, including a change that may effectively delay any progress on the prison projects for a full year. Representative A.J. McCampbell (D–Livingston) successfully moved to include a provision that requires the Joint Legislative Prison Committee to produce a detailed report on the prison construction plan by the 25th day of the 2017 regular session. The Legislature would then vote on that plan, and if it is rejected, the bonds would not be issued—and none of the planned new prisons would be built.

Medicaid Funding

A joint House and Senate committee led by the Chairs of the House and Senate General Fund budget committees, Representative Steve Clouse (R–Ozark) and Senator Trip Pittman (R–Montrose), continued meeting this week to examine the state’s Medicaid program in detail. This week’s hearing, held on Wednesday, focused on hospitals and their role in the program. Medicaid Commissioner Stephanie Azar described the method by which hospitals actually provide the matching funds for the payments that they receive through the hospital assessment. The total contribution from hospitals is approximately $650 million, which is used to draw down about $1.5 billion in federal funds.

Earlier this session, the Legislature passed the General Fund budget and then overrode Governor Bentley’s veto. That budget provides $700 million from the General Fund for Medicaid, or $85 million less than Commissioner Azar has stated is necessary. In the Wednesday hearing, Commissioner Azar again set forth the possible cuts that might be implemented if the additional $85 million is not provided. These include the elimination of out-patient dialysis treatment, the elimination of prescription drug coverage and the reduction of payments made to providers—in particular to primary care physicians. According to the Commissioner, the Governor has not yet determined which of these cuts he would choose in order to balance the Medicaid budget. A third joint hearing regarding the Medicaid program is scheduled for next Tuesday at 9:00 am.

BP Settlement Allocation

On Wednesday, the House Committee on Ways and Means General Fund reported a bill that was introduced Tuesday by Chairman Steve Clouse (R–Ozark) and that would allocate the funds due to the state under the BP settlement. On Thursday night, the House voted 82-12 to approve Representative Clouse’s bill and send it to the Senate. Representative Clouse’s bill was the last House bill to be transmitted to the Senate for the 2016 Session.

Earlier this year, the U.S. District Court for the Eastern District of Louisiana gave final approval to the settlement reached between BP and the states affected by the 2013 Deepwater Horizon oil spill. Under the settlement, Alabama is scheduled to receive $1 billion spread out over 20 years. A bill sponsored by Senator Bill Hightower (R–Mobile) and passed earlier this Session by the Senate would have authorized bonds that would have allowed the State to receive a lump sum of approximately $650 million right away, rather than receiving the payments over time. Senator Hightower’s legislation, SB267, which was a Constitutional Amendment that would have required approval by the people, would have allocated approximately $161 million to repay a portion of the funds taken from the Alabama Trust fund in previous years. Hightower’s plan would then set aside about $260 million for Mobile and Baldwin County infrastructure projects, with the rest of the state receiving about $230 for the same purpose.

The bill introduced by Representative Clouse, HB569, would use $448 million to pay back money taken from the Trust Fund. It would then allocate close to $200 million for road and infrastructure projects in Mobile and Baldwin Counties. Clouse’s plan would free up approximately $70 million for Medicaid. Of this, $55 million would come from funds budgeted in this year’s and next year’s General Fund budgets that were intended to pay back the Trust Fund. Representative Clouse’s plan would therefore bring Medicaid to within $15 million of the $785 million that Commissioner Azar has stated is needed to maintain the current level of Medicaid services without cuts. Representative Clouse’s bill, which has the support of legislators from South Alabama, still must receive a committee hearing in the Senate and must be voted on by the full Senate in the final two days of the Session. HB569 is not a Constitutional Amendment and therefore would not have to be voted on by the people.

CBD Oil

The Senate passed a revised measure to permit medical treatments in the state using cannabidiol oil (CBD oil), which is an oil derived from marijuana that contains low levels of THC. The bill was sponsored by Senator Paul Sanford (R–Huntsville) in the Senate and by Representative Mike Ball (R–Madison) in the House. In its final form, the bill allows CBD with a strength as high as 3%. CBD oil is believed by proponents to provide the most effective treatment for certain illnesses, and particularly for conditions that cause seizures in children. During the 2014 session, the Legislature approved a pilot program through the University of Alabama at Birmingham for the use of CBD oil. That legislation, under which a 2% grade of CBD oil is being tested at UAB, was known as “Carly’s Law.” This new measure, named “Leni’s Law” for a child born with a rare epilepsy and severe cerebral palsy, likely will significantly increase the use and availability of CBD oil by decriminalizing its possession.

Apprenticeship Tax Credit

Late in the day Thursday, the House took up and passed SB90 by Senator Arthur Orr. The bill provides a $1,000 tax credit for companies that hire a qualified apprentice. The tax credit is capped at $3 million in any one particular year. The bill now goes to the Governor for his signature.

Payday Lending

On Wednesday, the House Financial Services Committee approved an amended bill to regulate the payday lending industry in Alabama. The bill that came to the committee would have extended the loan term for the small-dollar, short-term loans from 14 days to six months. It also would have reduced permitted effective interest rates from as much as 455% per year to 133%. As approved by the House Committee, the bill would require a minimum term of 28 days, and would lower the APR to about 180%. The bill was on the House calendar on Thursday, but the House adjourned prior to reaching it. It is currently listed as fifth on the House Special Order Calendar for Tuesday’s Session. If the bill approved by the House Committee passes the full House, it will have to go back to the Senate for concurrence by that body with the House changes.

Historic Tax Credit

Included in the list of bills that died when the Senate adjourned on Thursday was the Historic Tax Credit Legislation, HB62, sponsored by Representative Victor Gaston (R–Mobile). The bill passed the House by a vote of 91–4 several weeks ago, and the Senate version, sponsored by Rules Committee Chair Senator Jabo Waggoner (R–Vestavia Hills) had 32 of the 35 Senators listed as co-sponsors. Nevertheless, the bill was derailed in the Senate, and was never assigned to a committee after it passed the House. Unfortunately, the successful and popular program, which has resulted in the renovation of historic buildings around the state—many of which had fallen into disrepair and were vacant—expires in May. Proponents pointed to an independent study that found that for each tax dollar invested the return to the state was as much as $3.90. Proponents have also begun plans to bring the legislation back at the next opportunity, whether in a summer special session or in the 2017 Regular Session.

Conclusion

As noted above, there are just two legislative days remaining in the 2016 Regular Session. It is expected that both the House and Senate will meet next Tuesday and Wednesday, which would be the 29th and 30th (and final) days of the Session. Assuming that the Representative Clouse’s BP Settlement bill is passed by the Senate in the final days, bringing the Medicaid appropriation to $770 million, the likelihood of a summer Special Session seems remote at this point. Both the Senate and the House will reconvene on Tuesday, May 3rd, at 1:00 PM.

For more information please contact Ted Hosp or Edward O’Neal.