2017 Legislative Update: Week 7

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Although the Legislature met this week—and conducted business fairly smoothly—the primary topics of discussion were the ethics complaint and the Ethics Commission hearing regarding Governor Robert Bentley. With the finding by the Commission on Wednesday that they believe there to be probable cause that four violations of ethics and campaign finance laws took place, this subject will likely continue to be at least a distraction for the next several weeks.

The Legislature met in session on Tuesday and Thursday, the 14th and 15th legislative days of the 2017 Regular Session. This means that the session has officially reached the half-way point, with 15 Legislative Days remaining. The session, which must be concluded within 105 calendar days from its February 7 start, will end not later than May 22.

Ethics Matter & Impeachment Proceedings (On Hold?)

As noted above, the Alabama Ethics Commission held a hearing on Wednesday that took essentially all day and into the evening. The Commission took testimony from witnesses regarding an ethics complaint filed against the Governor. Because the Commission was acting in a function similar to a grand jury, the hearing was held behind closed doors. The Governor was present for at least a portion of the hearing, though it is not known whether he testified or not. At about 7:10 p.m., the Commission voted on the charges, and found probable cause that the Governor committed one violation of the Ethics Act and three violations of Alabama’s Fair Campaign Practices Act. The vote on the Ethics Act charge was 3–1 with one abstention. The votes on the FCPA charges were 4-0 with one abstention. Commissioner Butch Ellis abstained from the votes because he is related by marriage to Governor Bentley. The Commission’s decisions are not findings of guilt. They are just findings of probable cause—a much lower standard than guilt. Under the Ethics Act, the matters are now referred by the Commission to the Montgomery County District Attorney, Daryl Bailey, who has the discretion as to whether or not to charge the Governor.

The findings of the Ethics Commission likely will give new momentum to the impeachment proceedings in the House. Prior to the Commission’s decision, the Special Counsel for the House Judiciary Committee had proposed a schedule for hearings and resolution of the proceedings in the House, including the release of his initial report today—Friday, April 7. On Thursday, Judiciary Committee Chair Mike Jones (R–Andalusia) announced that the committee would proceed with the proposed schedule, meaning that it will meet each day next week to hear testimony and arguments from the Special Counsel and from the Governor and his attorneys. A final report from the committee is expected by April 21, although the Governor will be allowed to respond by April 28. The committee is expected to vote on a recommendation to the full House on May 1, and then would forward its report and recommendation to the House on May 4.

If the Committee recommends that the House adopt articles of impeachment, the House would vote on that recommendation on May 9. Under rules adopted by the House last year, it would require 63 votes to bring any impeachment articles to the floor of the House. The vote on articles of impeachment themselves would only require a majority, however. If the House approved the articles of impeachment, the Governor would be immediately suspended from office, and the Senate would conduct a trial. Removal from office by impeachment would require a two-thirds vote of the Senate. That Senate trial would be presided over by the acting Chief Justice of the Alabama Supreme Court.

On Friday, the Governor’s attorneys filed an action in Montgomery County Circuit Court seeking to block the impeachment proceedings on the grounds that it did not provide the Governor due process of law. At 5:00 on Friday, the second judge assigned to the case issued a Temporary Restraining Order blocking the House from proceeding with impeachment proceedings. As a result, the status of the impeachment proceedings is unclear at this time.

Adding to the Governor’s troubles, on Thursday, Senate President Pro Tem Del Marsh (R–Anniston) held a press conference and stated his belief that the Governor should resign. After the Governor held a press conference Friday morning stating that he had no plans to resign, the House Speaker, Mac McCutcheon (R–Capshaw) held an afternoon gathering in which he also urged the Governor to resign.

Mandatory Unitary Combined Reporting

On Wednesday, the Senate Committee on Fiscal Responsibility and Economic Development, chaired by Senator Phil Williams (R–Rainbow City), held a three hour committee meeting. The last bill addressed SB62. The bill, sponsored by Senator Linda Coleman-Madison (D–Fairfield), would have required Mandatory Unitary Combined Reporting (“MUCR”) in Alabama. Many in the business community have argued that MUCR amounts to a tax increase on multistate businesses, and that it would damage Alabama’s ability to recruit and retain companies to the state. Proponents have stated that the bill is needed to close loopholes in the tax code used by these some multistate companies. After hearing from both sides, the Committee voted down the bill by a vote of 12–2, killing it for this session.

Historic Tax Credits

On Wednesday, April 5, the House Ways & Means Education Committee held a meeting and voted on HB345, sponsored by Representative Victor Gaston (R–Mobile). The bill, which would re-institute the state’s historic tax credit, is co-sponsored by 86 of the other 103 members of the Alabama House. The bill incorporates several changes recommended by a study conducted by economists with the University of Tennessee, although the fundamental aspects of the program, including the $20 million per-year cap in the amount of credits, remain the same. Under this bill the credits would be refundable, meaning that the holder would receive cash back from the state in the event that their income tax liability was less than the amount of the credit. HB345 also limits transfer of the credits to one time, and prohibits transfer at a price less than $0.85 per $1.00. The bill was favorably reported by voice vote and is now in a position to be voted on by the full House. The Senate companion, SB262, by Senator Jabo Waggoner (R–Vestavia Hills) was previously reported from its Senate committee.

Government Owned Broadband Networks

Also in committee on Wednesday were several measures sponsored by Senator Tom Whatley (R–Auburn) that would allow the City of Opelika to expand its operations and offer telecommunications services and broadband connectivity outside of city limits. Joe Lovvorn (R–Auburn) has filed similar bills in the House. The sponsors argue that private companies are not serving the citizens that the city-owned network would cover. Opponents argue that using taxpayer dollars to fund these services is a bad risk, particularly given how quickly telecommunications technology is changing. Free-market advocates also oppose the government entering into—and competing with—private service providers. In a close vote, the Senate Transportation & Energy Committee voted down the version of the bill that would have only applied to Class 6 municipalities, such as Opelika, 7-6. The House version of this legislation is scheduled for the House Commerce and Small Business Committee next Wednesday.

Judicial Override

On April 4, the House passed the Senate’s version of a bill that would eliminate judicial override of jury-recommended sentences in capital cases. Currently, Alabama is the only state in the country that allows a judge to overturn a jury recommendation of life without parole to impose a death sentence. Proponents of the legislation, which was sponsored by Representative Chris England (D–Tuscaloosa) in the House and Senator Dick Brewbaker (R–Montgomery) in the Senate, argued that Alabama’s law is virtually indistinguishable from other states’ laws that the United States Supreme Court has struck down as unconstitutional. They pointed out that continued challenges to Alabama’s law were likely to be costly and time consuming for the state. The bill has been sent to the Governor, who has signaled his eagerness to sign it into law. He has not yet done so.

Education Trust Fund Budget

On Tuesday, the Senate approved the Education Trust Fund budget by a vote of 29–2. Before reaching a vote, the Senate rejected an amendment from Senator Paul Bussman (R-Cullman) to take $20 million from higher education. Senator Bussman has been in a weeks-long feud with higher education over their opposition to a bill he sponsored that would remove the authority from universities to decide residency policies for their campuses.

As passed, the ETF budget, sponsored by Senator Arthur Orr (R–Decatur), would provide an additional $46 million to K–12 schools, to be used to hire 150–160 new teachers in grades 4–6. The bill would also increase funding for Pre-K programs by $15 million, to a total funding level of $79 million. This increase would be $5 million less than the amount requested by the Governor, but would allow a 14% expansion of the program. The ETF budget would not include an increase in teacher pay, but it would fully fund any increases in insurance costs for education employees.

The overall budget is $90 million more than last year’s ETF budget. The increase was capped at $90 million by the Rolling Reserve Act, instituted several years ago in an effort to prevent proration. The ETF budget now moves to the House.

General Fund Budget

There was no movement on the General Fund budget this week. That budget was approved by the House prior to the Legislature’s two-week recess. It is pending in the Senate Finance & Taxation General Fund Committee, chaired by Senator Trip Pittman (R–Daphne).

Prison Construction Plan

As with the General Fund, there was no movement for the prison construction legislation that also passed the Senate just before the recess. Given that the bill has been assigned to the House Judiciary Committee, which may be occupied with impeachment proceedings for the foreseeable future, it may be that the prison construction plan does not come up anytime soon.

Health Insurance Mandates

On Wednesday of the coming week, the House Insurance Committee will hold a vote on what is understandably an emotional issue. HB284, sponsored by Representative Jim Patterson (R–Meridianville), would require virtually all Alabama businesses and individuals with healthcare coverage to purchase insurance coverage for treatment for Autism Spectrum Disorder, regardless of whether they want to purchase that coverage or not. Alabama law currently requires this coverage to be offered, though few consumers have chosen to purchase it. HB284 would change that, requiring the purchase of this coverage by over 1 million Alabamians.

The bill would not include health insurance plans governed by the Federal law known as ERISA—which includes most large employer plans. The bill would require the state’s two largest public plans covering teachers and universities and state employees to pay for the benefit. However, the legislation also does not include any provision to require the state to pay for this coverage under Medicaid or through the Children's Health Insurance Program known as ALL Kids. Advocates argue that Federal law already requires this coverage under Medicaid and ALL Kids, though it does not appear that the state is currently providing it.

Conclusion

In the House, the week may be dominated by the possible impeachment hearings in the House Judiciary Committee. Those hearings, if they proceed, would alter the regular schedule of that body—possibly beyond this week. The House will reconvene on Tuesday at 4:30 p.m., significantly later than normal. The Senate will reconvene at 2:00 p.m. on Tuesday. Next week is expected to be a two Legislative Day week with committee meetings on Wednesday, and both House and Senate meeting on Thursday.

If you have any questions or would like to reach out for more information, please contact Edward A. "Ted" Hosp or Edward A. O'Neal. To read more about Maynard's Governmental and Regulatory Affairs Practice, please click here.

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