2015 Legislative Update: Week 3

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The Alabama Legislature met this week for the sixth, seventh, and eighth legislative days of the 2015 Regular Session. Neither the House nor the Senate will meet next week.

The House Republican Caucus Agenda
As in each session since Republicans took control of the Legislature in 2010, the House GOP Caucus has successfully passed all of its agenda items early. This year, the Caucus endorsed nine measures collectively referred to as the “Alabama First Agenda.” One of these items, the School Choice and Student Opportunity Act, which provides for the creation of a public charter school system in the state, was introduced in both the House and the Senate. The House passed the Senate’s version of the bill this week, and on Thursday it became the third bill signed into law by Gov. Robert Bentley this year.

Governor’s Economic Incentives Package
Some of the other items included in the House agenda are part of the Governor's economic development package. One of these measures, House Bill 59, sponsored by Rep. Paul Lee (R – Dothan), passed the Senate on Thursday and is awaiting the Governor's signature. The bill, known as The Alabama Reinvestment and Abatements Act, provides incentives for reinvestment in existing businesses.

Two additional pieces of the Governor’s economic development package have cleared the House and are pending before the Senate. The centerpiece of the Governor’s package, House Bill 58, sponsored by Rep. Alan Baker (R – Brewton) and known as The Alabama Jobs Act, would provide credits for job creation and capital investment in new projects in Alabama, as long as those projects meet specific, targeted job-creation goals. House Bill 57, sponsored by Rep. Elaine Beech (D-Chatom) and known as The Alabama Veterans and Rural Jobs Act, would provide added incentives for projects that are either located in rural areas or that employ a specified percentage of veterans. The Senate carried over Rep. Beech’s legislation on Thursday to allow more time to work through the measure’s definition of "rural.” It is anticipated that the bill will be brought back to the floor on Tuesday, March 31st, when the Senate reconvenes.

The two remaining pieces of the Governor’s economic development package are still before committees in the House. House Bill 214, sponsored by Rep. Victor Gaston (R – Mobile), extends the tax credit for the use of historic structures by seven years. House Bill 304, sponsored by Rep. Phil Williams (R – Gadsden) and known as The Alabama Innovation Act, establishes research and development tax credits for certain businesses.

Governor’s Revenue Proposals
All eight of the Governor’s proposed tax increases were introduced in the House and are still pending in House Committees:

Corporate Income Tax, House Bill 142, sponsored by Rep. Mike Hill (R – Columbiana)
Estimated increase in revenue – $20 million
Requires combined income reporting for corporations that do business in other states.

Financial Institution Excise Tax, House Bill 201, Rep. Lynn Greer (R – Rogersville)
Estimated increase in revenue – $1 million
Removes the credit that financial institutions receive for sales taxes paid.

Insurance Premium Tax, House Bill 277, sponsored by Rep. John Knight (D – Montgomery)
Estimated increase in revenue – $25 million
Removes the credit for state privilege tax paid by insurance companies.
Removes the credit for ad valorem tax paid by insurance companies.
Removes the office facilities and real property investment credits made by insurance companies.

Individual Income Tax, House Bill 240, sponsored by Rep. Ken Johnson (R – Hillsboro)
Estimated increase in revenue – $12 million
Eliminates income tax withholding exemption certificates.

Sales Tax for Automobiles, House Bill 268, sponsored by Rep. Steve Clouse (R – Ozark)
Estimated increase in revenue – $200 million
Increases the rate for automobile sales to 4%.

Rental Tax for Automobiles, House Bill 267, sponsored by Rep. Steve Clouse (R – Ozark)
Estimated increase in revenue – $31 million
Increases the rate for automobile rental to 4%.

Cigarette and Tobacco Tax, House Bill 139, sponsored by Rep. Steve McMillian (R-Bay Minette)
Estimated increase in revenue – $205 million
Increases the tax per pack by $0.825 to $1.25.
Increases tax on other tobacco products proportionately.
Does not change wholesalers’ discount.

Public Utilities License Tax, House Bill 276, sponsored by Rep. Chris England (D – Tuscaloosa)
Estimated increase in revenue – $47 million
Removes exemption that applies to municipal utilities.

A public hearing on many of the Governor’s revenue measures has been scheduled for Wednesday, April 1.

Prison Reform
Senate Bill 67, sponsored by Sen. Cam Ward (R – Alabaster), received a favorable report from the Senate Judiciary Committee this week. The bill is expected to be brought to the floor of the Senate when it reconvenes the week after next. The bill is the product of the Alabama Prison Reform Task Force, which was created last year and was assisted by the Council of State Governments. The measure addresses a wide variety of issues, including sentencing guidelines, parole, and the construction of new prisons. These policy changes are intended to forestall federal intervention, which could result in mass release of prisoners or mandated construction of new prison facilities. The Alabama prison system is currently operating at an occupancy rate in excess of 190% of capacity.

Data Breach Legislation
Senate Bill 106, sponsored by Sen. Arthur Orr (R – Decatur) and known as the Alabama Information Protection Act of 2015, would require businesses and governmental entities that maintain databases of personal information to report data breaches. The bill would also require the State to track data breaches and impose penalties on any entity that failed to report them. The bill, which has been significantly altered since introduction in response to input from various stakeholders—including industry groups such as the BCA and the Alabama Retail Association—is pending in the Senate Judiciary Committee. Alabama is currently one of only three states without a data breach notification law.

Schedule
As noted above, the Alabama Legislature has met for eight days thus far. The Legislature must meet for thirty days during a 105-calendar day period. The House of Representatives is scheduled to reconvene on Tuesday, March 31st at 1:00 PM. The Senate is scheduled to reconvene on the same day at 2:00 PM.