Friday, May 12, 2017
2017 Legislative Update: Week 12
With only one week of the 2017 Regular Session remaining, several long-awaited and highly contentious measures have finally been pushed to center stage. The House and Senate have now both approved their respective reapportionment plans. One budget has been sent to the Governor, and the other is only one step from final passage. The Autism insurance mandate moved out of its last committee. With only four days remaining in the session, legislation can no longer be introduced and passed.
As is so often the case, however, with only a few days left in the session, efforts to kill legislation share a common strategy: wasting time. Procedural tactics that cause delay, including demands to have every word of bills read aloud and filibusters, often have nothing to do with the bill on the floor, and much to do with bills on the calendar for later in the day. Next week, which may see the Legislature meeting as many as four consecutive days, will likely have several late nights and lead to very frayed nerves.
The Legislature has been working to redraw legislative districts after a Federal court found in January that race was impermissibly used as a factor in establishing them. The process of approving legislative districts is inherently highly political and therefore contentious. After months of work, the House finally took up a reapportionment plan on Tuesday that would redraw 70 of the House’s 105 districts. The Democratic Caucus strongly opposes the proposed map, and after a lengthy filibuster, during which they reiterated their commitment ultimately to challenge the new districts in court, they requested that the bill be read at length. At 539 pages, the bill took 16 hours to read—a process which consumed the rest of Tuesday night and roughly the first 12 hours of the next legislative day, Thursday. When the bill did finally come up for a vote late Thursday night it passed easily, 70–30.
General Fund Budget
The House concurred in the Senate’s version of the General Fund budget late on Thursday evening, sending it to Governor Ivey for her consideration. The budget appropriates state funds for all non-education state services. The vote to concur is somewhat unusual. Typically, the budget is sent to a conference committee that works to produce a compromise budget that both the House and the Senate then agree to. The General Fund is historically the subject of significant debate, since the revenue streams allocated to that budget are relatively static, while the demands on the budget—particularly Medicaid and prison-related costs—increase every year. Indeed, coming fiscal year’s budget will be $1.85 Billion, which is almost exactly the same size as this year’s. Virtually every agency will be funded at the same level. The budget does include a $93 Million reserve for next year to cover a projected increase in the amount needed by Medicaid in the 2019 budget. It also contains a $3.3 Million increase for the Alabama Law Enforcement Agency for the hiring of 30 new state troopers.
Education Trust Fund Budget
The House acceded to the Senate’s requires to send the ETF budget to a conference committee late on Thursday evening. As currently written, the budget would be the largest in the several years at $6.4 Billion—increasing last year’s budget by $90 Million. That extra money would increase the number of teachers in grade schools throughout the state by around 150, expand the teacher professional development program, go to community colleges, and fund further Advanced Placement offerings. The State’s widely acclaimed Pre-K program would see an increase in funding of $13.5 Million. Three Senators and three Representatives will now work to draft a budget that will be sent to both chambers for final approval next week.
Alabama Jobs Act Extension
The Senate General Fund budget committee favorably reported HB574, sponsored by Representative Baker (R–Brewton), on Tuesday. The bill would extend 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.
Autism Insurance Mandate
The Senate Finance and Taxation General Fund Committee held a lengthy hearing on Wednesday afternoon in which it debated 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) introduced a substitute bill, which the committee declined to adopt. The committee then discussed seven proposed amendments to the bill, two of which it ultimately adopted. The first caps the age of individuals who qualify for coverage at 16. The second clarifies and reaffirms that the bill’s requirements do not apply to small businesses. The committee ultimately voted to give the bill a favorable report, 14–2. The bill is expected to come to the Senate floor next Wednesday.
Historic Tax Credit
On Tuesday the Senate passed a slightly revised 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 current 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. The House of Representatives must now concur with the Senate’s changes to the bill or send it to conference before it can be sent to the Governor for her signature or veto.
Medicaid False Claims Act
The Senate Finance and Taxation General Fund Committee favorably reported a bill on Wednesday that would seek to provide a state-based remedy for false claims made to Medicaid. SB367, known as the Alabama Medicaid False Claims Act and sponsored by Senator Trip Pittman (R–Montrose), would allow the state to recover up to three times the amount of a fraudulent claim for reimbursement made to Medicaid. The bill would also empower individuals to bring suits in the name of the state. If successful, those individuals would receive a bounty. The legislation mirrors existing federal false claims law, including the right for private individuals to sue on behalf of the government. As a result, some of the bill’s opponents have argued that the legislation is unnecessary, and will only lead to frivolous litigation in state courts. Senator Pittman has actively sought input from all stakeholders, and a substitute or amendment on the floor that would address their concerns remains a possibility.
The Legislature has met for 26 of the 30 possible meeting days for this Regular Session. Next week is expected to be either a three-day or four-day week, with both the House and Senate meeting in session on Tuesday, Wednesday, Thursday, and possibly Friday and holding committee meetings around votes on the floor.
The House will convene at 11:30 a.m. on Tuesday, May 16th. The Senate will convene at 2:00 p.m. on the same day.
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 Cooper's Governmental and Regulatory Affairs Practice, please click here.
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