Wednesday, May 24, 2017
2017 Legislative Update: Sine Die
The final week of the 2017 Regular Session was an unusual one. As a result of delaying tactics—that were symptomatic of contentiousness that gradually mounted during the session—the Legislature was actively in session for four days last week. Alabama’s constitution requires that any bill being considered for final passage be read at length if a member of the Legislature requests it. As part of a broader effort to slow down legislation with which their caucus had significant issues, Democrats in both chambers requested that virtually every bill be read at length. The result was a cumulative delay of more than 40 hours.
The price of these delays was high. Many uncontroversial bills died simply because there was no time to take final votes on them. Nevertheless, several bills of note did pass.
On Thursday morning, both the House and the Senate approved a conference committee’s version of the state’s Education Trust Fund budget for next year. The $6.4 billion budget is similar to one passed by the House earlier this month. It is $90 million larger than last year’s and maintains funding levels for most programs. The budget also includes increased funding for the state’s widely acclaimed Pre-K program of $13.2 million, an additional $3 million for the Department of Mental Health, and funds to hire 150 new elementary school teachers, but no increase for higher education. The budget passed with very little debate, and has gone to Governor Kay Ivey for her review.
The focus of much of the Democratic Caucuses’ discontent was redistricting. The highly controversial and political process is the result of a Federal Court’s ruling that race was impermissibly used as a factor in drawing the state’s current legislative districts several years ago. Much of the Democrats’ ire was focused on the number of legislators representing Jefferson County. Under the maps as proposed by the Republicans, Democrats would have a fewer districts in the county than Republicans in both the House and the Senate. The number of districts representing a county is significant, because all local legislation is routed through a committee made up of every member of the Legislature that represents any part of that county, no matter how small. Democrats argued that by drawing districts that give Republicans a majority of the votes affecting Jefferson County, they have violated the same federal law that led to the invalidation of the current districts.
On Tuesday, the Senate passed HB284, by Representative Patterson (R–Huntsville). The bill would require many businesses in Alabama that provide health care to their employees to purchase and pay for coverage for Applied Behavioral Analysis, which is a treatment for Autism Spectrum Disorder. That coverage is currently required to be made available in Alabama, but few purchasers have chosen to include it in their plans. Representative Patterson’s bill would require that the coverage be included and paid for in those plans going forward. Official cost estimates for the bill are not available, but in addition to requiring private businesses to purchase the coverage, it would also require the plans that insure state employees (SEIB) and public education employees (PEEHIP), Medicaid, and ALLKids to pay for it as well. Senator Trip Pittman (R–Montrose) defended the two amendments his committee added to the bill last week. The Senate approved one of them, which would limit the mandate to children under eighteen. In the end, the Senate voted to pass the bill 33–1. The House concurred in the Senate amendment on Thursday and Governor Ivey signed the bill into law on Friday.
Historic Tax Credit
On the last day of the session, the House voted to concur in the Senate’s version of HB345, the bill that would reinstate Alabama’s Historic Tax Credit program. HB345, sponsored by Representative Victor Gaston (R–Mobile), passed the House by a wide margin several weeks ago. As with the version originally introduced, the final version of the bill would allow for $20 million in refundable tax credits each year. HB345 retains the evaluating committee recommended by the comprehensive study of the program conducted over the summer by University of Tennessee economists. There are two significant changes in the bill from the version previously approved by the committee.
First, the substituted bill would set aside 40%—or $8 Million—of the available credits for the first six months of each year for projects in counties with populations of fewer than 175,000 people. The largest counties (Jefferson, Mobile, Madison, Montgomery, Tuscaloosa, Shelby, and Baldwin) would still be able to apply for the remaining 60% in the first six months. Any credits not claimed by the smaller counties in the first six months would then be made available for projects statewide. The goal of this set aside is to make these credits available outside the major urban areas of the state.
Second, the minimum age of a structure to be eligible for credits was dropped from 75 years to 60 years. The federal historic tax credit program requires a building to be at least 50 years old, so the committee’s change brings Alabama closer to that standard. Governor Ivey signed the bill into law this week.
Jobs Act Tweak
On Tuesday, the Senate gave final passage to HB574, sponsored by Representative Baker (R–Brewton). The bill extends the life of one of the state’s must useful economic development tools, the Alabama Jobs Act. Under current law, the Jobs Act, which empowers the State to negotiate with businesses interested in investing in Alabama using tax credits, would sunset on December 31, 2019. Furthermore, the total credits that may be distributed under the Act are capped at $850 Million, of which only $64 Million remain. HB574 would extend the life of the Act to December 31, 2020. It would also change the nature of the cap from a running total for the life of the law to an annualized limit of $300 million. The law already requires that every incentive be revenue-positive and that limits the application of the credits to new jobs and new investment. The bill awaits Governor Ivey’s signature.
A bill dealing with college scholarships for veterans received final passage on Friday after several rounds of amendments and two trips to conference committees. SB315, sponsored by Senator Gerald Dial (R–Lineville), modifies the Alabama G.I. and Dependents' Educational Benefit Act, which provides scholarships to veterans and the spouses or dependents of veterans killed or disabled in action. SB315 would cap the program’s payouts going forward, but grandfathers in all current beneficiaries through 2023.
The bill also expanded the Guard’s Education Assistance Program. Most notably, the bill would significantly increase the cap on tuition assistance to members of the Alabama National Guard from the current $2,000 per semester. Alabama’s program is considerably less generous than other states’ and the increase is widely considered to be long overdue. The increase is expected to increase enrollment in the Guard, which proponents argue benefits all Alabamians.
Furthermore, the current disparity between Alabama’s funding for scholarships for members of the National Guard and other states’ funding levels is seen as a major hurdle to attracting federal defense investment in the state. Montgomery’s Maxwell Air Force Base is one of five bases nationwide being considered as a home for the Air Force’s fifth generation fighter, the F-35. Of those five finalist bases, the Pentagon will choose two. The State’s below average support for the education of the members of its National Guard has negatively impacted Montgomery’s rating. The bill awaits Governor Ivey’s signature.
Alabama Accountability Act Changes
The House voted down SB123, sponsored by Senator Del Marsh (R–Anniston), on Friday. The bill would have tweaked the Alabama Accountability Act, which provides scholarships for children in failing public schools to attend private schools. Under existing law, both corporations and individuals receive a state income tax credit for any donation to the scholarship program. The bill would have allowed a credit against utility taxes for entities with utility tax liability in excess of $100,000 annually and would have raised the limits on the credits that individuals may receive. The aim of the legislation was to help scholarship granting organizations to more easily raise funds up to the statutory limit of $30 million total, so that they could provide even more scholarships for low income schoolchildren.
While the 2017 Regular Session is complete, there are already rumors that Governor Ivey will call a special session to address prison construction. The next Regular Session of the Alabama Legislature will convene in January of 2018.
If you have any questions or would like to reach out for more information, please contact Edward A. "Ted" Hosp or Edward A. O'Neal. To read more about Maynard's Governmental and Regulatory Affairs Practice, please click here.
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