2017 Legislative Update: Week 8

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Governor Bentley Resigns

Unsurprisingly, the Monday evening resignation of Governor Robert Bentley overshadowed everything else this week in Montgomery. The House of Representative’s schedule was unusual this week—with many committees meeting on Tuesday and an unusually late start—because it had been designed to accommodate lengthy impeachment hearings by the Judiciary Committee. Nevertheless, the House and Senate were both actually in session on Tuesday and Thursday, the 16th and 17th days of the 2017 Regular Session.

Governor Bentley’s resignation was part of an agreement that the Governor’s lawyers and prosecutors worked out over the weekend. The deal also required Governor Bentley to plead guilty to two misdemeanor violations of the state’s Fair Campaign Practices Act and to give up his state pension. The Governor’s resignation was not entirely unexpected—particularly considering that there were three simultaneous investigations into his conduct by the Attorney General, the Ethics Commission, and the House Judiciary Committee—but it was sudden. On Friday, April 7th, Governor Bentley staunchly rejected the idea of stepping down in a press conference.

Kay Ivey Sworn In As Alabama’s 55th Governor

On Monday, April 10th, Governor Kay Ivey was sworn into office in the State Capitol. Governor Ivey has been the state’s Lieutenant Governor since 2010, and before that, she served for eight years as state Treasurer. She is originally from Camden, Alabama and is a graduate of Auburn University. As Treasurer, Governor Ivey was responsible for considerable modernization of the state’s bookkeeping. At her swearing in as the state’s second female Governor, Governor Ivey pledged that her administration would be “open, transparent, and honest.”

The following morning, Governor Ivey requested that each member of the Bentley cabinet, many agency heads, as well as every member of the former Governor’s staff tender letters of resignation by the close of business. Many of the letters have not been accepted at this point, though. The new Governor appears to be proceeding deliberately in deciding how to fill out her staff and administration - a positive given the turmoil that the State and the government has been through over the past year or more.

At her first press conference as Governor on Thursday, Governor Ivey signaled that the Executive branch’s legislative priorities were likely to change, but gave very few details about her agenda. She did speak in support of prison reform, and noted her opposition to expanding Medicaid. She also indicated an openness to reexamining the state’s rapidly unraveling transition to Regional Care Organizations. She has not yet stated whether she would run for a full term as Governor in 2018.

Alabama’s Constitution does not provide a mechanism for filling a vacancy in the office of Lieutenant Governor. The office will remain empty until the next statewide election in 2018. Until then, Senate President Pro Tempore Del Marsh (R–Anniston) will serve as the presiding officer of the Senate. As a practical matter, there will be little noticeable change to the functioning of the Senate; since 1999, the President Pro Tem has exerted considerably more power over the body than the Lieutenant Governor, who is nominally its President. Nevertheless, even more authority is now consolidated in Senator Marsh.

Failure of Infrastructure Improvement Legislation

On Thursday, the House carried over HB487, sponsored by Representative Bill Poole (R–Tuscaloosa). The bill would have authorized an increase in motor fuel taxes of up to $0.09. The tax would have gone up gradually over time: three cents per gallon this year, two cents in 2019, and an optional three cents in 2024. This modest increase—the first on fuel since 1992—would have supported a $2.4 billion bond issue, all of which would have been used solely for the repair and expansion of Alabama’s roads and bridges. A broad coalition supported the bill, including much of the business community, the new Governor, counties and municipalities. Even the trucking association, whose members pay 40% of the total revenue generated by fuel taxes, testified in support of the measure.

In the end, however, an unusual combination of conservative Republicans, who oppose any new revenue measures, and senior Democrats, who were apparently frustrated over their treatment by the Republican majority, kept the bill from reaching a vote. The bill was the first on the House’s agenda for the day, but the body adjourned immediately upon carrying it over. In a press conference held after adjournment, Speaker Mac McCutcheon (R–Monrovia) declared the gas tax dead—not only for this session but for next year - an election year - as well.

Medicaid Fraud Bill

Senator Trip Pittman (R–Montrose) introduced new legislation this week that would seek to provide a state-based remedy for false claims made against Medicaid. SB367, known as the Alabama Medicaid False Claims Act, mirrors the existing Federal False Claims Act. As with the Federal law, it would allow the state to recover up to three times the amount of a fraudulent claim for reimbursement made to Medicaid. The bill would allow individuals to bring suits in the name of the state, for which they would receive a share of the damages if successful. Because the bill deals covers the same claims permitted under federal law, some have argued that it is unnecessary, and will only lead to frivolous litigation in state courts. The bill is similar to one that was advanced last year by then-Attorney General Luther Strange. Senator Pitman, who chairs the committee responsible for Medicaid’s budget, is the bill’s sponsor., held a public hearing on the bill this past Wednesday and is likely to put the bill up for a Committee vote this coming week.

Health Insurance Mandate - Autism

HB284, sponsored by Representative Jim Patterson (R–Meridianville), was voted out of the House Insurance Committee on Tuesday by voice vote after lengthy discussion. Under existing law, health insurance providers in Alabama must offer coverage for Applied Behavior Analysis (“ABA”), which is a particular treatment for Autism Spectrum Disorder. But because treatment for ABA is expensive, very few businesses or individuals choose to buy that coverage. HB284 eliminates that right to choose for many businesses and individuals by requiring all health insurance policies to include coverage for ABA. In other words, many plans in Alabama will now be required to purchase coverage for ABA. HB284 does not include small plans for businesses with 49 or fewer employees. It also does not affect large plans that are covered by federal benefits-related laws such as ERISA. An amendment adopted by the Insurance Committee would require Medicaid and ALL Kids to cover the treatment, which the committee’s chair noted could cost the state a considerable amount of money. State employee health insurance and the insurance provided to education employees through PEEHIP would be covered by the mandate. While there are significant disagreements about the level of cost that will be borne by employers or their employees, it is not disputed that HB284 will require an increase in health insurance premiums across the state.

Rural Broadband Incentives

On Tuesday, the Senate passed SB253, sponsored by Senator Clay Scofield (R–Guntersville), on Thursday and sent it to the House. The bill would incentivize private investment in broadband in the most rural parts of the state. If the bill becomes law, companies that install broadband internet access would be eligible to receive state income tax credits, an exemption from ad valorem taxes, and an exemption from relevant sales and use taxes. Proponents of the bill argue that access to broadband internet has become a critical part of economic development efforts in rural areas of the state. The bill has been assigned to the House Committee on Commerce and Small Business.

Alabama Accountability Act Revisions

The House Ways and Means Education Committee favorably reported SB123, sponsored by Senator Del Marsh (R–Anniston), on Tuesday. The bill would make some changes to the Alabama Accountability Act, which provides scholarships for children in failing public schools to attend private schools. Under existing law, both corporations and individuals receive a state income tax credit for any donation to the scholarship program. The bill would allow a credit against utility taxes for entities with utility tax liability in excess of $100,000 annually and raise the limits on the credits that individuals may receive. Representative Craig Ford (D–Gadsden) offered an amendment to the bill, which was adopted by the committee. Representative Ford described the intent of his amendment as an increase in reporting and transparency for the Accountability Act. In fact, however, the amendment would make substantive changes to the program, and would prohibit any student not currently enrolled in a “failing school” - including those already enrolled in a private school who are zoned for a failing school - from receiving a scholarship. Opponents of the amendment point out that since every child technically reapplies for a scholarship every year, the amendment would require every student currently enrolled in the program who lives in a failing school district to return to that failing school next year. The bill has now moved to the full House for final passage.

Conclusion

The Legislature has used 17 of 30 possible meeting days for this Regular Session. Next week is expected to be a two-day week, with both the House and Senate meeting on Tuesday and Thursday and holding committee meetings on Wednesday. The House will convene at 1:00 p.m. on Tuesday, April 18th. The Senate will convene at 2:00 p.m. on the same day.

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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