2017 Legislative Update: Week 10

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This week marked the beginning of the end of the 2017 Regular Session. The Legislature now has less than a third of its 30 session days remaining; and every indication is that the session will draw to a close after only three more weeks. It was the House of Representatives’ turn to take up highly controversial legislation this week. On Tuesday, the House went late into the night debating HB353, by Representative Givan (D–Birmingham). Known as the “brunch bill” or the “mimosa bill,” HB353 would allow counties and cities the power to legalize alcohol sales on Sunday as early as 10:30 a.m. On Thursday, the House spent hours debating SB60, by Senator Gerald Allen (R–Tuscaloosa), that would prohibit the unauthorized removal or modification of historic monuments. The mimosa bill drew a filibuster from Republicans, and the monuments bill drew a filibuster from Democrats. Both bills passed after amendments were added on the floor.

With so much time consumed by relatively few bills in the House, much of the progress this week was made in committees. Neither of the budgets has passed all the way through the Legislature, although the Education Trust Fund budget did pass out of committee this week. Both budgets are expected to come up for debate—if not final passage—next week. The last few weeks of the session will likely also be significantly affected by redistricting, required by a recent federal court order that found that race was impermissibly used as a factor in setting legislative districts. Legislation proposing new districts was introduced on Thursday, and is expected to generate significant controversy and debate.

Education Trust Fund Budget

The ETF budget that has moved to the full House for final passage would be the largest in the State’s history at $6.4 Billion—increasing last year’s record 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, which is just slightly less than the $15 Million than the Senate budgeted. While the House may pass the current version of the budget as soon as Tuesday, the final markup will likely come in a conference committee, made up of both Representatives and Senators, that will work out a compromise between the two chambers’ respective versions.

Veterans’ Scholarships

A bill dealing with college scholarships for veterans passed out of committee in the House on Thursday, and could now come to the floor of the House for final passage. 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 by limiting them to the same level as the Department of Defense Tuition Assistance Cap, require that recipients maintain a 2.0 GPA, and would only allow for the use of the funds after all other state, federal, and third party benefits had been applied to a beneficiary’s tuition.

The current version of the bill also includes language that expands 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 score.

Historic Tax Credit

The House’s version of the bill that would reauthorize the popular and successful historic tax credit is expected to be in committee in the Senate this coming week. HB345, sponsored by Representative Victor Gaston (R–Mobile), was co-sponsored by 86 of the other 103 members of the Alabama House. The bill incorporates several changes recommended by a study conducted by economists with the University of Tennessee, although the fundamental aspects of the program, including the $20 million per-year cap in the amount of credits, remain the same. Under the bill the tax credits would be refundable, meaning that the holder would receive cash back from the state in the event that their income tax liability was less than the amount of the credit. HB345 also limits transfer of the credits to one time, and prohibits transfer at a price less than $0.85 per $1.00. HB345 differs in several respects from its Senate companion, SB262, by Senator Jabo Waggoner (R–Vestavia Hills), which was previously reported from its Senate committee. As a result, it is widely expected that HB345 will be amended before the Senate votes on it.

Medicaid False Claims Act

Senator Pittman (R–Montrose) carried over a bill in committee this week 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 Pittman himself, 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 in an effort to address their concerns. It was to allow further time to work on the bill that Senator Pittman delayed a vote on it this week. He is committed to introducing a substitute—and voting on it—in committee next week.

Child Placement Agencies

The House concurred in the Senate version of a bill that would limit the state’s ability to enforce standards for child placement in Alabama. HB24, sponsored by Representative Rich Wingo (R–Tuscaloosa) in the House and Senator Bill Hightower (R–Mobile) in the Senate, prohibits the state from taking any adverse action against adoption or foster placement agencies for discriminatory actions taken by that agency that are based on a religious belief. The bill only applies to agencies that do not accept federal or state funding, but opponents have voiced concern that as passed the bill could violate federal regulations resulting in the possible loss of funding for Alabama's Department of Human Resources. The current administration has not weighed in on the possible impact of the legislation, though. The bill has now been sent to Governor Ivey for her review.

Alabama Jobs Act Extension

SB373, sponsored by Senator Pittman, would extend the life of the 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. SB373 would extend the life of the Act to December 31, 2023. It would also provide more room under the cap by exempting so-called “megaprojects” that provide more than 500 new jobs or $100 Million in investment from being counted against the $850 Million total. The law already requires that every incentive be revenue-positive and that limits the application of the credits to new jobs and new investment.

Fantasy Sports

The Senate Committee on Tourism and Marketing held a public hearing on Wednesday on a bill that would clarify the legal status of fantasy sports, HB354, sponsored by Representative Alan Boothe (R–Troy). The Alabama Constitution prohibits lotteries, and gambling is prohibited by statute. However, proponents of HB354 point out that games that are skill-based, like fantasy sports, are not considered gambling. Representative Boothe’s bill would clarify the legality of fantasy sports following an opinion letter issued by then-Attorney General, and now-U.S. Senator, Luther Strange classifying them as gambling. Under this legislation, only fantasy contests that are based on the skill of the players would be allowed. The bill likely will be voted on in Senate Committee the coming week.

Conclusion

The Legislature has met for 21 of the 30 possible meeting days for this Regular Session. Next week is expected to be a three-day week, with both the House and Senate meeting on Tuesday, Wednesday, and Thursday and holding committee meetings on in and around votes on the floors of both chambers. It is widely expected that the House and Senate will meet for three session days for each of the remaining weeks of the session, which will allow legislation to move through the process much more quickly than usual.

The House will convene at 1:00 p.m. on Tuesday, May 2nd. 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's Governmental and Regulatory Affairs Practice, please click here.

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