2015 Legislative Update: Week 12

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It now appears all but inevitable that lawmakers will return to Montgomery for a portion of their summer for a Special Session to address budget and revenue measures. There are now only four legislative days remaining in the 2015 Regular Session, and none of the suggested approaches for fixing the General Fund budget shortfall seems to have gained the traction needed to pass both chambers of the Legislature and then to win the approval of Governor Bentley.

The General Fund Budget Problem
Thursday, the 26th legislative day of the Session, ended abruptly in the Senate when a filibuster mounted by Senator Gerald Dial (R–Linville) shut the body down. Senator Dial used his encyclopedic knowledge and understanding of the Senate Rules to wrest control of the floor and talk until the House had closed its journal for the day. Because the House Journal had closed, no Senate bills could be sent to the House until next week. After the 26th Legislative Day, the Senate Rules require unanimous consent to transmit Senate bills to the House, meaning that just one Senator can block any—or all—Senate bills. Senator Dial’s filibuster was designed to prevent the passage of a bill sponsored by General Fund budget Chair Arthur Orr (R–Decatur) that would have transferred roughly $80 to $100 million in use tax revenue from the Education Trust Fund to the General Fund. With the conclusion of the 26th day, other Senate measures, such as the plan by President Pro Tem Del Marsh (R–Anniston) to allow casinos at the state’s four dog tracks and to institute a state lottery, also almost certainly died.

The House leadership has apparently resigned itself to a Special Session, and on Thursday House Speaker Mike Hubbard (R–Auburn) said that he believes it will start in mid-August. On Tuesday, Speaker Hubbard announced the appointment of a commission to study state budgets. Among the issues that the “Commission on Earmarking and Budget Reform” will examine is the state’s dual budgetary system and the state’s practice of earmarking nearly all of its revenue for particular purposes or funds. The members of the House Commission are Rep. Will Ainsworth (R–Guntersville), Rep. Elaine Beech (D–Chatom), Rep. Terri Collins (R–Decatur), Rep. Steve Clouse (R–Ozark), Rep. Allen Farley (R–McCalla), Rep. Bill Poole (R–Tuscaloosa), and Rep. Rod Scott (D–Fairfield). A Senate bill proposing a constitutional amendment to unify Alabama’s two budgets likely died on Thursday when the Senate adjourned without passing it.

Other Issues of Note
SB437, sponsored by Senator Trip Pittman (R–Montrose), which offers tax incentives to major online retailers like Amazon in exchange for the collection of Alabama use tax from their customers, received committee approval in the House and is in line for consideration by the full House.

Before shutting down on Thursday, the Senate passed a bill that would establish a new factor presence nexus standard for business activity in Alabama for the purposes of state income tax. SB497, by Senator Greg Albritton (R–Bay Minette) passed by a vote of 28–2 and will now move to the House. Representative Rod Scott (D–Fairfield) sponsored the House version of the bill.

A bill to increase the provider tax on pharmacies that was just introduced on Tuesday appears to be moving very quickly through both bodies. House Bill 698 by Representative Elaine Beech (D–Chatom) was reported out of committee on Wednesday and is ready to be voted on by the House. The Senate version of the bill, SB507 by Senator Rodger Smitherman (D–Birmingham) was also reported out of committee on Wednesday. The Senate version likely cannot pass, both because of the rule requiring unanimous consent to send Senate bills to the House, and because the Alabama Constitution requires revenue raising bills to originate in the House of Representatives. However, the House bill could receive final approval in the remaining four days of the Regular Session. The bill would raise the privilege tax on prescriptions from $0.10 to $0.25. This would generate approximately $13.5 million in additional revenue for Medicaid. Medicaid would use those new funds to draw down approximately $27 million in additional matching money from the Federal Government. Most pharmacies paying the additional tax would be made whole by an increase in the Medicaid prescription dispensing fee. In order for this plan to take effect, however, it would require the approval of the Federal Centers for Medicare and Medicaid Services.

In spite of the minor blowup created at the start of the Session by an increase to the fees for drivers licenses, on Thursday the Senate approved a measure that would allow state agencies to increase fees without legislative approval—under certain conditions. SB216, sponsored by Senator Dial (R–Linville), would allow agencies to increase fees by an equal to the increase of the Consumer Price Index, so long as that increase did not exceed 2% per year. The bill is now in the House Committee on Ways and Means General Fund.

New Education Bodies Begin Work
Two new education-related governing bodies were confirmed this week in Montgomery. After some hiccups, the State Board of Education confirmed the State Charter School Commission on Tuesday. The Commission will oversee the implementation of the charter school legislation that passed earlier this session, though the great bulk of the infrastructure work that is required will be handled by the State Department of Education. The Board of Education’s delay in confirming appointments to the Commission had prompted the proposal of legislation that would remove the Board from the confirmation process. That legislation was tabled when the Commission was confirmed.

On Tuesday, the Senate confirmed the Governor’s appointments to the new State Two-Year College System Board, and on Wednesday that Board was sworn in by the Governor. The Community College system had been under the authority of the elected State Board of Education until legislation passed this year took that responsibility away and vested it in the new—appointed—board.

Schedule
There are four meeting days remaining in the 2015 Regular Session. The current plan, which is subject to change, is for the Legislature to meet three days next week—Tuesday, Wednesday and Thursday—and then to break for a week and adjourn sine die on Thursday, June 11. Given how much remains unresolved, however, a change in the schedule would not come as a surprise. The Session must conclude no later than midnight on June 15. On Tuesday, June 2, both the House and Senate are scheduled to reconvene at 2:00 pm.