The Alabama Legislature met for two days this past week in Montgomery—the third and fourth days of the 30-day Regular Session. Tuesday was the first day that the House and Senate could pass their first bills of the year, sending them to the other chamber. Wednesday was a very busy committee day, although the Legislature did not actually convene. Thursday was mostly uneventful, with the Senate working on sunset legislation and the House stalling on the first bill it took up.

Medicaid Section 1115 Waiver Approved

Perhaps the biggest news of the week from Montgomery was not legislative. On Tuesday, Governor Robert Bentley held a press conference in the Old House Chamber to announce that the federal government’s Centers for Medicare & Medicaid Services (“CMS”) has approved the state’s Section 1115 waiver proposal. The waiver is a key part of Alabama’s several-year-long transition of the state’s Medicaid program from a traditional, fee-for-service model to a managed care model that is operated by provider-dominated Regional Care Organizations (“RCOs”). With the waiver approval comes approximately $750 million in additional federal funds to support the RCO transformation and to establish programs designed to improve healthcare efficiency and outcomes. This money will be paid out over five years, and its use by the state will be significantly restricted. Most importantly, funds tied to the waiver can only be used to implement the RCO program, and cannot be used to help fund the existing system. Further, state and federal officials have indicated that the waiver can be withdrawn if it appears that the state is not “adequately” funding the program. However, exactly what would constitute “adequate” funding is not clear.

Taxpayer Advocate

The first bills addressed by the House this week were items on the House Republican Caucus agenda, including the Taxpayer Advocate bill (HB38), sponsored by Representative Mark Tuggle (R–Alexander City). The bill is designed to make Alabama’s existing Taxpayer Advocate, who is charged with attempting to resolve ambiguities in the state’s tax laws on behalf of taxpayers, more independent from the Department of Revenue. Under current law, the Commissioner of the Department of Revenue appoints the Taxpayer Advocate from within the Department. Representative Tuggle’s bill would create a nominating committee that would send a list of potential candidates to the Governor, who would make the final selection from that list. The bill passed the House by a party-line vote of 70–33 and was sent to the Senate where it was assigned to the Committee on Finance and Taxation Education.

Small Business Tax Credits

Another House Republican Caucus agenda item, the Small Business Jobs Act (HB36), sponsored by Representative Kyle South (R–Fayette), received final passage in the House and was sent to the Senate on Tuesday. The bill would create a $1,500 tax credit for small businesses—defined as those that employ fewer than 75 people—for each new job added with an annual salary of more than $40,000. The bill, which passed the House 88–12, was assigned to the Senate’s Committee on Fiscal Responsibility and Economic Development, chaired by Senator Phil Williams (R–Rainbow City).

Right to Work Legislation

Another House Republican Caucus agenda item suffered a slight setback on Thursday when Representative Arnold Mooney’s proposed Right to Work constitutional amendment failed to pass the House. The measure fell just short of the 63 votes required to pass, failing 60–24. More than 30 members did not vote. The vote came late in the afternoon on the Legislature’s last day before the Presidents’ Day weekend. As a result, quite a few members had left the State House. The amendment, which would further solidify Alabama’s status as a right to work state, is expected to be brought back up shortly after the House reconvenes next week.

Minimum Wage Pre-Emption Bill

The Alabama Uniform Minimum Wage and Right to Work Act (HB174), sponsored by Representative David Faulkner (R–Mountain Brook), would provide that minimum wage laws in Alabama may only be set by the state, and not by individual counties or municipalities. The bill was introduced last year by Representative Arnold Mooney (R–Helena), who is a primary co-sponsor of this year’s legislation. On Tuesday evening, the Birmingham City Council voted to accelerate the implementation of its minimum wage ordinance, which will now begin to phase in on March 1st. The Birmingham ordinance was previously scheduled to take effect on July 1st. On Thursday morning, the House Committee on State Government held a somewhat uncommon pre-session meeting, and favorably reported Representative Faulkner’s bill by a vote of 10–3. The bill can now be voted on by the full House, and it is expected to come to the floor at some point in the near future.

Lottery Legislation

On Wednesday, Alabama moved one small step closer to becoming the 47th State to adopt a lottery (only Alabama, Mississippi, Utah and Nevada currently do not have lotteries). Both the House and Senate versions of proposed constitutional amendments that would allow the Legislature to create a lottery were heard in their respective committees. In the Senate Committee on Tourism and Marketing, chaired by Senate President Pro Tem Del Marsh (R–Anniston), a lengthy public hearing was held on SB19, sponsored by Senator Jim McClendon (R–Springville). The committee did not vote on the bill. In the House’s Committee on Economic Development and Tourism, a bill sponsored by the committee’s Chairman, Representative Alan Harper (R–Northport), was favorably reported by a voice vote. The two bills are identical, and would simply give the Legislature the authority to establish a lottery. If passed by a three-fifths majority in both the House and Senate, and then approved by the people, the Legislature would still need to pass additional legislation addressing the details of how the lottery would be run and where the money raised would go.

Hospital Assessment Introduced

Every three years, the Legislature must reauthorize the state’s “hospital assessment.” The hospital assessment is essentially the mechanism by which hospitals pay the state’s share of Medicaid coverage for hospital visits. Although it goes largely unnoticed by the public, no state General Fund dollars are used for hospital services provided to Medicaid enrollees in Alabama. On Thursday, Representative Steve Clouse (R–Ozark) introduced the reauthorization bill (HB191), which was sent to the House Committee on Ways and Means General Fund that he chairs. Because of the ongoing transition to RCOs, this year’s legislation is slightly different from prior reauthorization bills. Nevertheless, the underlying need to pass the legislation by September 30 remains unchanged. Without the reauthorization, a significant blow—likely crippling—would be dealt to the Medicaid program.

Mandatory Unitary Combined Filing

A bill that most in the economic development community say would severely damage Alabama’s ability to recruit and retain companies to the state was introduced on Thursday in the Senate. The Mandatory Unitary Combined Filing (“MUCR”) bill (SB202), sponsored by Senator Linda Coleman-Madison (D–Fairfield) has been assigned to the Senate Committee on Finance and Taxation Education, now chaired by Senator Arthur Orr (R–Decatur). Many argue that the bill would amount to a tax increase on multistage businesses. The bill is understood to be favored by the Commissioner of the Department of Revenue, Julie Magee, and therefore is one that will be closely watched.

Fantasy Sports

Two bills that would clarify the legal status and provide for the regulation of fantasy sports games in Alabama are making their way through the Legislature. HB56, sponsored by Representative Connie Rowe (R–Jasper), was favorably reported by the House Committee on State Government on Wednesday. It can now be voted on by the full House. In the Senate, a companion bill, SB114, was introduced by Senator Paul Sanford (R–Huntsville) and is scheduled for a hearing in the Senate Committee on the Judiciary next Wednesday. Lawsuits against the major fantasy sports companies were filed last fall, and several Attorneys General around the country have attempted to shut down the popular games.

Sunset Bills

On Thursday, the Senate began its somewhat tedious trek through the dozens of sunset bills that must be passed each year. Most state agencies, boards, and commissions are authorized only for a three year period; if they are not each reauthorized by the Legislature before that period expires, they cease to exist. There are 28 government entities that are up for reauthorization this year. The Senate passed seven of these bills on Thursday and sent them to the House before going home for the weekend.

Broadband

The House Committee on Ways and Means Education voted unanimously to report favorably HB41, sponsored by Representative Donnie Chesteen (R–Geneva). The bill tweaks the Alabama Ahead Act, which the Legislature first passed 2012. The changes would direct roughly $35 million of state and federal money toward the installation of high density Wi-Fi in schools. The bill’s funding model, known as the WIRED (for Wireless Infrastructure Renovation for Education) plan, will require a supplemental appropriation of $6 million from the Education Trust Fund. The committee’s Chairman, Representative Bill Poole (R–Tuscaloosa), stated during the committee meeting that a vote on the appropriation come as early as next week.

Gas Tax

The much discussed increase on fuel taxes has not yet been introduced. Nevertheless, Senator Gerald Dial (R– Lineville) has introduced a bill that would limit the distribution of any new funds from a fuel tax only to infrastructure investment. The bill (SB180), would establish the Transportation Safety Fund, and would use the same allocation formula between counties and the state as the current fuel taxes do. This allocation scheme unexpectedly became the center of a flurry of debate this week in the Senate’s Committee on Transportation and Energy. Ultimately, the bill was not voted on by the committee. It is expected to be reconsidered in the near future.

Alcohol Beverage Study Commission Legislation

Two of the three changes to the law recommended by the Alcohol Beverage Study Commission have now been introduced as bills. The first change would allow licensed manufacturers of spirits in Alabama to sell up to 750 milliliters of liquor per year directly to consumers for off-premises consumption. It has been introduced in the House by Representative Alan Boothe (R–Troy) as HB46, and in the Senate by Senator Bobby Singleton (D–Greensboro) as SB132. The second change would allow a winery to obtain an additional license to operate an off-site tasting room. It has been introduced in the House by Representative David Faulkner (R–Mountain Brook) as HB83, and in the Senate by Senator Coleman-Madison (D–Birmingham) as SB166. The third change recommended by the Study Commission, which would allow licensed breweries to sell up to 288 ounces of beer per customer per day for off-premises consumption, has not yet been introduced.

Conclusion

The Alabama Legislature has met for four days of its 30-day regular session. The House of Representatives will reconvene at 1:00 PM Tuesday, Feb. 16. The Senate will reconvene on the same day. The Legislature plans to meet for three days next week: Tuesday, Wednesday, and Thursday.

For additional information contact Ted Hosp, Jay Mitchell, Peck Fox, Edward O'Neal, or Nichelle Nix.