2015 Legislative Update: Week 2

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This week was the second of the 2015 Regular Session of the Alabama Legislature. The Legislature met for three days: Tuesday, Wednesday, and Thursday.

After just five legislative days, Alabama has two new laws. Acts 2015–1 and 2015–2 were signed by Gov. Robert Bentley on Thursday afternoon. These two bills, sponsored by Rep. Jimmy Martin (R – Clanton) were passed in response to an Alabama Supreme Court decision issued on February 27th of this year. In its decision, the Supreme Court struck down a 2009 law that allowed municipalities with populations of more than 1000 to vote on whether to allow alcohol sales in their jurisdictions. Rep. Martin’s legislation ratified the prior elections held by as many as thirty-five cities. The new laws also change the original 2009 legislation so that cities may elect to allow sales of alcohol in the future.

THE HOUSE
In the House, Leadership focused on its agenda items. Chief among these were three economic development bills proposed by Gov. Bentley:

The Alabama Jobs Act, sponsored by Rep. Alan Baker (R-Brewton)
Provides companies locating in Alabama with a credit equal to 3% of the payroll for new jobs created. The bill would also provide a capital investment credit of 1.5% for a ten-year period.

The Alabama Veterans and Rural Jobs Act, sponsored by Rep. Elaine Beach (D-Chatom)
Supplements the credits available under The Alabama Jobs Act for projects in rural counties and for projects that hire veterans.

The Alabama Reinvestment and Abatements Act, sponsored by Rep. Paul Lee (R-Dothan)
Provides tax incentives for reinvestments in existing business and for the abatement of non-educational ad valorem taxes and sales and use taxes.

All three bills passed the House and were sent to the Senate for consideration. Rep. Victor Gaston (R – Mobile), also introduced a fourth economic incentive bill, House Bill 214, extending the tax credit for the use of historic structures by seven years.

On Wednesday, the House passed a bill by Rep. Lynn Greer (R – Rogersville) which would allow for execution by electric chair in the event the state is unable to obtain the drugs necessary to carry out an execution by lethal injection. On the same day, the House passed the Student Religious Liberties Act, sponsored by Rep. Mack Butler (R – Rainbow City), which prohibits public schools in the state from discriminating against students or parents on the basis of a religious viewpoint. On Thursday, the House spent several hours debating and then finally passing a measure, sponsored by Rep. Jim Hill (R – Moody) that would allow ministers and judges to choose not to participate in weddings if they object to the wedding on religious grounds.

THE SENATE

In the Senate, legislation to allow public charter schools was a top priority. After significant debate, the Senate passed the School Choice and Student Opportunity Act, sponsored by Senate Pro Tem Del Marsh (R – Anniston). The Senate did not invoke cloture and members were allowed to speak and introduce amendments.

The Senate sent the School Choice and Opportunity Act to the House, which referred it to its Committee on Education Policy. The Committee, chaired by Rep. Terri Collins (R – Decatur), held a hearing on Thursday afternoon after the House adjourned. The Committee amended the measure to alter the composition of a panel overseeing charter school applications before reporting it favorably to the House. The bill is in line to pass the full House on Tuesday of next week. If the Education Policy Committee’s amendment is adopted by the full House, the bill will return to the Senate for conference.

The Senate seemed to bog down towards the end of the week over Senate Bill 89, sponsored by Sen. Jabo Waggoner (R – Birmingham). The bill, which was passed by the Senate last year only to stall in the House, would alter the composition of the board of the Birmingham Water Works. The Senate Committee on Fiscal Responsibility and Economic Development, chaired by Sen. Phil Williams (R – Gadsden), favorably reported the bill on Wednesday by a vote of seven to four with one abstention. On Thursday, Sen. Rodger Smitherman (D – Birmingham) took to the floor to delay the consideration of other measures ahead of the Water Works bill in apparent protest. As was the case last year, it is possible that this bill will be contentious enough to result in considerable delays in the Senate.

REVENUE INCREASES
By the end of the week, all eight of Gov. Bentley’s eight proposed tax bills were introduced:

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.

Each of these bills is pending in committee. There have been no hearings scheduled to date.

SCHEDULE
The Alabama Legislature has met five of its thirty days thus far. The Legislature is scheduled to meet for three days next week. The House of Representatives is scheduled to reconvene on Tuesday at 1:00 PM. The Senate is scheduled to reconvene on the same day at 2:00 PM.