2015 Legislative Update: Week 13

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There were many twists and turns in the last (sort of) week of the 2015 Alabama Regular Legislative Session, which ended (sort of) with no General Fund budget in place to start the 2015–16 fiscal year. That fiscal year begins October 1 of this year, so lawmakers will be brought back to Montgomery at least once between now and then to put together a budget, and likely a package of revenue measures of some sort. Many speculate a Special Session would begin in mid-August, but when it will be called is up to Governor Robert Bentley. On Thursday, Governor Bentley stated, “I really will not bring the Legislature back until they have their minds right.”

In an unusual conclusion to the Regular Session, the Legislature has used only twenty-nine of the constitutionally permitted thirty meeting days. The Senate has adjourned sine die and will not meet again until a Special Session. The House, on the other hand, intends to meet on Thursday, June 11 beginning at 9:301 It is somewhat unclear what the House is able to accomplish with the Senate not is Session, though the House Speaker, Mike Hubbard (R–Auburn) has indicated that they intend to begin budget and revenue discussions in preparation for the Special Session.

The General Fund Budget

On Thursday, June 4, the Senate passed the General Fund budget that it had received from the House with some changes. That budget cut approximately $204 million—or about 11%—compared to the current fiscal year’s budget. Immediately upon passage of the budget, the Senate adjourned sine die, leaving few options for the House and for how the Regular Session would end. The House concurred with the Senate’s changes with a vote along party lines of 61-39 and sent the budget to the Governor for his signature or veto. As he had promised, the Governor vetoed the bill and sent it back to the House. The House was still in session at the time and overrode the Governor’s veto. The effort was futile, however, since the Senate was no longer in session and could not act. Because the Governor’s veto could not be overridden by both chambers, the state was left without any budget at all. As a result, a Special Session, already a forgone conclusion, became a certainty.

What’s Next

Though a Special Session is needed, it is not clear what the result of that session will be. The Governor proposed a tax and revenue package of approximately $541 million in February (add LINK to description). With only minor exceptions, the items in that package failed to generate meaningful support throughout the Regular Session.

The House leadership seemed at one point to be in favor of a smaller package of revenue measures that would have generated close to $200 million, but those bills were tabled when Senators made it clear that they had no intention of approving them in the upper chamber. The one idea that the Governor’s package and the House’s package had in common was an increase in the amount of the tax on cigarettes. As such, it appears likely that some sort of tobacco tax increase will be considered this summer.

Meanwhile, Senate President Pro Tem Del Marsh (R–Anniston) introduced a bill that would have allowed the state’s four existing dog tracks to offer casino gaming, and would have instituted a state-run lottery. Senator Marsh’s legislation, which would have taken the form of an amendment to the state’s constitution, would have required approval by state’s citizens in a referendum. Like the Governor’s package and the House measures, Senator’s Marsh’s bill failed to make it out of its original body. Nevertheless, it also should be expected that gambling, in the form of casino gaming at dog tracks, a lottery, and a compact with the Porch Band of Creek Indians, which operated three Class II gaming facilities in the State already, will be a part of any Special Session.

Some of What Happened

Although the failure to complete work on a General Fund budget obviously overshadows the rest of what occurred this Session, there were some significant legislative items that made it into law this year that should be noted:

Prison Reform: Though in danger of not being implemented if the funding cannot be found, the Legislature passed a truly major prison reform package this year that is designed to relieve overcrowding in the State’s correctional institutions. SB67, sponsored by Senator Cam Ward (R–Alabaster) became Act 2015-185.

Economic Development: Governor Bentley was successful in passing the two major pieces of his Economic Development package. The centerpiece of the Governor’ s package was HB58, sponsored by Rep. Alan Baker (R–Brewton), and known as The Alabama Jobs Act. The legislation provides tax credits for job creation and capital investment in new projects in Alabama, as long as those projects meet specific, targeted job-creation goals. After some quarreling over what “rural” meant, the Legislature also gave approval to HB57, sponsored by Rep. Elaine Beech (D–Chatom), and known as The Alabama Veterans and Rural Jobs Act. That legislation provides added incentives for projects that are either located in rural areas or that employ a specified percentage of veterans.

HB304, sponsored by Rep. Phil Williams (R–Huntsville), and known as The Alabama Innovation Act, would have established research and development tax credits for certain businesses. That bill and HB416, the Alabama Renewal Act, sponsored by Representative Chris Pringle (R–Mobile), which would have established Angel Investment credits, failed to win final approval.

Charter Schools: After many years of trying, the Legislature passed a measure that would allow for public charter schools to be established in Alabama. The legislation made Alabama the 43rd State to allow the formation of charter schools. Under the new law, a total of ten new public charter schools can be created each year. However, an unlimited number of existing public schools can be converted to public charter schools. An application to form a charter school must be reviewed and approved by the local board of education. Denials are appealed to a newly created Public Charter School Commission. The charter schools receive the same per-pupil funding as other public schools in the state.

Long Term Care Medicaid Reform: A bill by Senator Greg Reed (R–Jasper) extended the state’s Medicaid reformation project to long term care. When legislation was passed two years ago transitioning Alabama’s Medicaid program from a traditional fee-for-service program to a capitated program, long term care such as nursing homes and assisted living facilities were carved out. SB431, sponsored by Senator Reed, brings such care under the same basic structure as the rest of Medicaid. The bill is projected to cut Medicaid spending by as much as $1.5 billion over the next ten years.

Conclusion (Really Intermission)

Because the General Fund budget has not been adopted, the end of the Regular Session is more of a brief intermission than any sort of conclusion. What remains to be done is, quite frankly, the stuff that most people and businesses tend to care about the most: spending and taxes. There remains a basic agreement among most of the state’s elected leadership that there is a need to close a General Fund budget shortfall of at least $200–$250 million, or as much (according to the Governor) as $700 million. The middle of August, the time most expect a Special Session to be called, is just ten weeks away. That is roughly half the amount of time the Legislature spent in Montgomery for the just-concluded Regular Session. In other words, the Special Session, and a major debate and possible battle over who is going to pay more—and who is going to get less—(or both) is literally just around the corner.

We will send out an update in the coming weeks with the rules for a Special Session, and with a preview of what is anticipated.

[1]Strictly speaking, by rule it appears that the Session has concluded for both houses, sine die, because one house cannot adjourn for more than three (3) consecutive days without the agreement of the other. Thus, three days after the Senate adjourned without giving the House permission to adjourn longer than three days, the House’s time to meet ended and the last day was used.