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2018 LEGISLATIVE UPDATE: SINE DIE

The 2018 Regular Session of the Alabama Legislature is over. The State’s Constitution limits every Regular Session to 30 days. In recent sessions, the Legislature has used all of them. But this past Thursday, the Legislature adjourned sine die after only 26. The relative brevity of this session is largely due to the Legislature’s avoidance of controversy—particularly in the Senate—for its first few months in Montgomery. But towards the end of the session, and certainly in its last few days, controversy seems to have been unavoidable. This week, which had originally been intended to end Wednesday, spilled over to Thursday. Both Tuesday and Wednesday went well into the night, with lengthy filibusters and an almost palpable frustration from the members over several pieces of legislation. The shutdown in both chambers seemed to focus on the House’s failure last week to pass SB84, sponsored by Senator Rodger Smitherman (D–Birmingham). SB84 would have prohibited traffic stops based on racial profiling by law enforcement officers and would have required police departments and the Alabama Law Enforcement Agency to produce and keep statistical data about traffic stops, including the race of the detainee. The Senate unanimously passed SB84 earlier in the session, but the bill failed its first procedural hurdle in the House.

Both the House and Senate seemed to grow increasingly frustrated with each other for the first two days of the week. This frustration manifested itself in an extremely time consuming pattern of trading recesses on Wednesday, which many had hoped would be the last of the session. First, one chamber would come in and recess, then the other would do the same. Just before 10:00 p.m., the Senate voted to adjourn for the night, and the House quickly followed suit.

Despite a general feeling of aggravation at the slowness of the last few days of the session, the Legislature actually did manage to complete all of its most important tasks. The budgets both passed, most agency supported bills passed, and the bulk of leadership’s agendas passed before the Legislature adjourned on Thursday. Since the Governor must affirmatively sign all legislation passed in the last few days of a session, we will not know for certain until 10 days from yesterday which bills will become laws.

The Education Trust Fund (“ETF”) Budget Passes

The Senate’s last act before adjourning sine die on Thursday morning was to concur with a conference committee report on HB175, sponsored by Representative Bill Poole (R–Tuscaloosa), by a vote of 28–0. HB175, better known as the ETF budget, allocates all of the State’s education spending for next fiscal year. The budget, which originated in the House this year, is the largest in a decade at $6.6 billion and exceeds this year’s by roughly $216 million. The budget includes significant increases to various programs, including an additional $18.5 million for Alabama’s highly regarded Pre-K program, $4 million for the Alabama Reading Initiative, $1.3 million for Career Tech, and $1 million for National Board Certified teaching standards. The budget still awaits Governor Ivey’s signature.

Economic Development Ethics Clarification Passes

The Senate repeatedly took up and carried over a bill that would clarify that economic development officials are not lobbyists on Tuesday and Wednesday before finally passing it by a vote of 15–14 late on Wednesday night. HB317, sponsored by Representative Ken Johnson (R–Moulton), addresses a concern raised in recent years that individuals hired to negotiate economic development packages as part of efforts to recruit business investment to the state might arguably be engaged in lobbying activities. Proponents of the bill argue that economic developers have never been required to register as lobbyists in the past, and that requiring them to do so going forward would disadvantage Alabama in its efforts to attract business investment to the state. In short, they argue that because most economic development deals are highly controversial, a legal requirement to disclose that a deal is in the works would drive potential investment to neighboring states. The Senate substituted the bill before the final vote, and so it returned to the House for a vote to concur on Thursday. Because the Senate had already adjourned by the time the House took up the bill, the House had only two options: concur or let the bill die. After several hours of debate, the House voted 52–22 to send the bill to the Governor. 22 Representatives abstained from the vote. It is widely expected that Governor will sign the bill into law in the next few days.

Hospital and Nursing Home Assessments Pass

The Senate passed two of the session’s most critical pieces of legislation on Wednesday. HB321 and HB322, both sponsored by Representative Steve Clouse (R–Ozark), are reauthorizations of the nursing facility and hospital assessments used to fund Medicaid. Due to the highly unusual way that Alabama funds its Medicaid program, nursing homes and hospitals are authorized to pay annual assessments to the state that are then used to draw down federal matching funds before they are returned to the nursing facilities and hospitals. This odd arrangement is fundamental to the funding of the Alabama Medicaid program overall and so neither bill is inherently controversial. Had either failed to pass, a special session of the Legislature would have been all but inevitable. Because of how critical they are to the state, however, they are often used as political leverage to force the passage of other legislation. Both bills now await the Governor’s signature.

SSUT Fix Receives Final Passage

The Senate quickly passed HB470, sponsored by Representative Rod Scott (D–Fairfield), on Wednesday morning by a vote of 25–1. The bill amends the existing Simplified Sellers Use Tax program, which passed the Legislature in 2015 and currently allows for online sellers to lock in a lower sales tax of 8% if they opt in. Several versions of a fix for the current law have been introduced this session, 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. HB470 would keep the SSUT rate at 8% for sellers, but would extend the application of the program to so-called “marketplace” transactions, thus including sales by third parties on websites like Amazon. For these sales now captured by the law, revenues would be split 60%–40% between cities and counties respectively. The final version of the bill also includes a provision for SSUT program participants to retain a “discount” of 2% of the tax collected under some circumstances. The House concurred with the Senate’s changes to the bill on Wednesday, and the bill now awaits the Governor’s signature.

Data Breach Bill Signed into Law

On Tuesday, the Senate concurred with the House’s changes to SB318, sponsored by Senator Arthur Orr (R–Decatur), which creates penalties for failure to notify affected individuals that their personal data has been compromised. The Governor signed the bill into law on Wednesday. The law, which is known as the Alabama Data Breach Notification Act, requires both public and private entities that hold sensitive information to establish reasonable security measures for protecting that information. Furthermore, the law requires 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,” but in no case later than 45 days after discovery. Under the new 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. The new law also largely exempts entities that are subject to federal regulations or requirements in the event of a breach from many of the law’s requirements. Alabama was the last state to pass a data breach law, only a few days behind South Dakota.

Conclusion

The 2018 Regular Session concluded with four of 30 possible session days unused. Absent a Special Session, which the state’s constitution empowers the Governor to call under extraordinary circumstances, the Legislature will not reconvene this year. Because of the general election this November, a new Legislature will meet in January of 2019 to organize formally itself, adopt rules, and elect leadership. The next Regular Session will convene in March of 2019.

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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