2015 Legislative Update: Week 10

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The first year of a quadrennium the Regular Session of the Legislature starts later than any other year. One consequence of this late start is that the one-week legislative spring break, timed to coincide with many schools’ Spring Break, occurs very near the beginning of the session. After the way things went this past week in Montgomery, that early break seems unfortunate, as the Senators and Representatives seem to need some time away from each other right now. The moods in both House and Senate are sour, as frustrations over the State’s budget crisis and how to deal with it grow.

The House Pulls Its Budget Plan
The House entered the week hoping to pass a series of revenue raising measures that—combined with spending cuts and other efficiency measures—were projected to close the budget gap by about $200 million. However, on Tuesday, House leadership pulled back on the package and substituted a new calendar that did not contain those revenue items. In part because the revenue measures stalled on Tuesday, the House General Fund Budget Committee’s Wednesday meeting was postponed to Thursday morning before the day’s legislative session began. The Committee voice voted out a bare-bones budget, which is now first on the agenda when the House reconvenes on Tuesday.

The Committee budget, which the Governor has threatened to veto, would cut spending by $204 million as compared to the current year, and impose drastic cuts on many state agencies. For example, the Alabama Department of Environmental Management would receive no State funding. The Department of Public Health would be cut by almost 80%. Medicaid, the agency Legislators are trying to shield from cuts as much as possible, would still lose approximately $100 million when the State cuts are combined with lost matching federal funds.

The proposal by the Poarch Band of Creek Indians (PCI) to provide the state with $250 million upfront in exchange for the exclusive rights to conduct gaming in Alabama is still very much under consideration, and is part of the approach favored by House leadership. In addition to the upfront payment, the PCI have offered the state a yearly payment in lieu of taxes of 15% of their revenue if they are permitted to expand to include Class III (casino-style) gaming. The PCI’s three facilities currently offer electronic bingo, which is considered under federal law to be Class II gaming.

The Senate Struggles Through the Week
Meanwhile, debate in the Senate broke down both days in what appeared to be personal disagreements between some of the members. As a result, very little progress was made in the Senate this week.

Senate Pro Tem Del Marsh (R–Anniston) did hold two meetings of the Committee on Tourism, which he chairs, to address his plan to let the people vote on a lottery and expanded casino gaming in Alabama. The proposed constitutional amendment was reported favorably by the Committee by a vote of 5 to 3. A study commissioned by the Pro Tem and conducted by Auburn University at Montgomery estimates the potential revenue generated by Senator Marsh’s plan at $400 million. The Committee rejected an amendment to add Houston County—the home of Country Crossing—as a site for an additional casino. The Lottery/Casino Amendment can now be taken up by the full Senate, though it is unclear whether it has the three-fifths support that is necessary to pass a proposed constitutional amendment. The Pro Tem has stated that the House leadership’s proposed revenue measures have no chance of passing in the Senate.

No Movement on the Governor’s Tax Plan
As for the Governor’s $541 million proposed revenue package, another week went by without any of those bills being addressed by either chamber of the Legislature.

Education Budget Nearly in Line to Pass
Unlike the General Fund budget, the Education Trust Fund budget has sailed through the legislative process without much controversy. The House Committee on Ways and Means Education held a public hearing on the proposed budget, known as SB179, on Wednesday. The Committee is expected to vote on the budget and to send it to the floor of the House on Tuesday.

What if We Just Asked Them to Pay?
An interesting bill regarding online sales and use tax has now been introduced in both bodies. HB660, sponsored by Representative Rod Scott (D–Fairfield) and SB437, by Senator Trip Pittman (R–Daphne) would give tax breaks to large online retailers who voluntarily collect sales and use tax due from their Alabama customers. While online retailers with no connection to the State are not required to collect and remit Alabama sales tax, the purchaser is still legally required to report and pay the that amount on their own. However, many consumers don’t pay this tax, which is already required, because they either do not know about the requirement or because the process is too cumbersome. The estimated loss in revenue to the State in uncollected online sales and use tax approaches $200 million annually.

Next Week
The Legislature has met 22 of the constitutionally permitted 30 days this Session. Both chambers will reconvene on Tuesday, May 19. The House will convene at 1:30 PM and the Senate will convene at 2:00 PM.