2015 Legislative Update: Week 9

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If Week 9 of the 2015 Regular Session proved anything, it proved that it is possible to get agreement on something in Montgomery. The House, Senate and the Governor are all in agreement that Alabama has a serious budget problem. What all three have not yet agreed upon, however, is how to solve that serious budget problem. As a result, with two thirds of the session complete, there are now three very different revenue plans being proposed in the Legislature. One by the House Republican Caucus, one by the Senate Republican Leadership, and the original tax plan, proposed ten weeks ago by the Governor.

The Revenue Plans

The House Caucus Plan
On Tuesday this week, the House Caucus released a detailed plan to raise approximately $150 million in revenue. When combined with cost cutting measures endorsed by the Caucus, this plan would appear to cut the budget hole by about $200 million. The revenue raising elements of the Caucus plan include:

HB72, sponsored by Representative Patricia Todd (D-Birmingham)
-Raises taxes on cigarettes by $0.25 a pack
-Projected Revenue $60 million

HB581, sponsored by Representative Elaine Beech (D-Chatom)
-Raises the maximum business privilege tax from $15,000 per entity to $22,000, while at the same time exempting many small businesses from the minimum threshold payment of $100 per year
-Projected Revenue $39 million

HB578, sponsored by Representative Chris Sells (R-Greenville)
-Increases the cost to title a vehicle by $10 from $15 to $25
-Projected Revenue $14 million

HB267, sponsored by Representative Steve Clouse (R-Ozark)
-Increases the motor vehicle rental tax by 0.5% from 1.5% to 2%.
-Projected Revenue $6 million

HB587, sponsored by Representative Terri Collins (R-Decatur)
-Switches the tax on motor lubricating oil from an excise tax to a sales tax
-Projected Revenue $6 million

All of these bills are on the House Special Order Calendar for Tuesday, May 12.They are all expected to pass. If they do, they will move to the Senate for consideration.

In addition to the revenue proposals endorsed by the House Caucus, the group has also thrown its support behind entering into a gaming compact with the Poarch Band of Creek Indians (PCI). Under the terms of that plan, the PCI would make an upfront payment to the State of $250 million, with annual payments based on a percentage of revenue each year thereafter. Most likely, the PCI would in return receive the exclusive right to Class III casino gaming in Alabama. A compact would be negotiated by the Governor, but might then need to be ratified by the Legislature. Some have suggested that a compact to allow Class III gaming may also require a Constitutional Amendment.

The Senate Plan
The Senate Leadership plan focuses primarily on gaming, with the introduction of a lottery and casino gaming at four locations in the state. The plan, sponsored by Senator Del Marsh (R-Anniston), will be heard in the Senate Tourism Committee, which he chairs, on Tuesday, March 12. If voted out of committee that day, the bill, which is a Constitutional Amendment requiring approval by the voters, could be taken up by the full Senate as early as Thursday, May 14. Senator Marsh has released a study conducted by Auburn University at Montgomery estimating the revenue that could be generated under his plan at $400 million per year. Most of this revenue would come from the lottery, about $300 million. Senator Marsh’s plan also encourages the Governor to enter into a compact with the PCI.

The Governor's Plan
The Governor’s $541 million tax proposal has yet to move, although his plan did include increases in the cigarette tax and car rental tax—similar to the measures that the House will take up on Tuesday. A detailed look at the elements of the Governor’s proposals can be found in our previous update »

Prison Reform Legislation
While we quite often take great pleasure in tearing down our elected officials, the prison reform legislation that was sent to the Governor late Thursday may be an opportunity to heap praise upon Alabama’s leaders. As has been noted previously, the legislation was recommended by the Prison Reform Task Force—a project that lasted close to a full year prior to the 2015 Session. On Thursday, House Judiciary Committee Chair Mike Jones (R-Andalusia) finished shepherding the House version of the previously passed Senate bill through the process. After the bill was read at length, it passed by a vote of 100-5. The Senate, at the urging of the bill’s sponsor Senator Cam Ward (R-Alabaster), concurred in the House changes to the bill, which was then sent to the Governor. It is expected that he will sign it into law. Senator Ward, who chairs the Senate Judiciary Committee and chaired the Prison Reform Task Force, took a brief moment following final passage to note all the different groups and stakeholders who worked together to develop and pass the bill. Senator Ward also thanked his colleagues in both the Senate and the House for their patience and hard work, singling out the work of Representative Jones for his efforts in getting the bill through the House.

Schedule
The Legislature is expected to meet two days next week, on Tuesday and Thursday. The House reconvenes on Tuesday at 1:00 PM. The Senate reconvenes at 2:00 PM on the same day. There are 10 legislative days remaining in the 2015 Regular Session.