2023 Legislative Update: Regular Session Week Ten

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Port Incentives

A bill sponsored by Representative Chip Brown that modifies the current tax benefits given to companies transporting goods through Alabama's ports passed the Alabama House this week. Under this bill, the tax credits for companies utilizing the state’s ports would be tied to their cargo volume. In other words, the credits increase as cargo volume increases.

Representative Brown has been a strong advocate for the Alabama State Port Authority, headquartered in Mobile, and has stated that citizens of Alabama “should all want as many goods being shipped in and out of our port as possible, and…want to take advantage of the jobs and economic impact that would be created by those increased inflows and outflows of goods.” He believes this legislation is necessary for the Alabama State Port Authority, headquartered in Mobile to compete with the Ports of Savanah and Charleston.

Cellphone Filter Bill - The Protection of Minors from Unfiltered Devices Act

On Tuesday, the Alabama House passed a bill sponsored by Representative Chris Sells requiring cellphone and tablet manufacturers to activate a filter blocking sexually explicit content and pornography on their devices. It would be mandatory for manufacturers to activate this filter only if the device user is under 19, not emancipated, married, or an armed forces member.

The bill's supporters believe it will help prevent minors from being exposed to obscene content, while the opponents question the feasibility of activating such a filter on the mentioned devices. This bill has been sent to the Senate for further consideration.

ESG

On Thursday, the Alabama Senate passed a bill sponsored by Senator Dan Roberts that prohibits the state of Alabama from doing business with entities that boycott certain industries. This bill requires companies doing business with the state to verify they are not boycotting the timber, mining, fossil fuel, and firearm industries. It also requires verification regarding stances on environmental standards, board composition, sex-change surgery, and/or abortion care. Senator Roberts amended the legislation after discussions with the business and economic development communities. A small amendment from the Department of Finance was also adopted on the Senate floor.

Senator Roberts stated that Alabama “want[s] businesses to focus on growing and expanding and not working to push any political agenda with left-wing ESG policies.” Democrats view the bill as an “anti-business” piece of legislation. This bill now goes to the House for review.

Foreign Land Ownership

The foreign land ownership bill sponsored by House Majority Leader Scott Stadthagen passed the Senate on Thursday. This bill previously applied to only Chinese land ownership, but significant changes were made.

Under the modified version of the bill, foreign governments, such as China, Iran, North Korea, Russia, and those mentioned on the United States Department of the Treasury's Office of Foreign Assets Control's sanctions list, are not permitted to purchase agricultural or forestry land in Alabama, as well as land located within 10 miles of military bases and vital infrastructure such as power plants, refineries, seaports, and airports.

Senator David Sessions spearheaded the changes made to the bill in the Senate, and he received praise from his colleagues on the Senate floor for how he conducted the amendment process. This bill will now go back to the House for review.

Coal Production Tax Credit

A bill relating to coal production tax credits, sponsored by Senator Arthur Orr, passed the Senate on Thursday.

Under this bill, the coal production tax credit could now be applied toward income and utility services taxes. Secondly, individuals or entities that boost their coal production in Alabama compared to the previous year would be eligible to claim the credit. Any unused credits could be carried forward for up to five years. Additionally, the bill includes sunset provisions and reporting guidelines to regulate economic tax incentives.

On Thursday, Senator Arthur Orr stressed the importance of establishing sunset dates for the coal production tax credits to his Senate colleagues. He emphasized the importance of the legislature being able to evaluate how successful these credits are and the return on investment in the utilization of the credits.

Growing Alabama Credit

A bill sponsored by Representative David Faulkner has passed the House and received a favorable report from the Senate Finance and Taxation Committee. This bill would allow subsidiaries to claim the Growing Alabama Credit from a parent or holding company, provided both the parent or holding company and subsidiary are filing as part of an Alabama consolidated return. If passed, this provision is retroactively effective. This legislation is expected to make it to the Senate floor in the coming weeks.

State Income Tax Exemption

On Tuesday, the House passed a bill, sponsored by Representative Danny Garrett and Senator Arthur Orr, that increases the tax exemption for 401(k) type withdraws. Currently, $6,000 of taxable retirement income is exempt from state income taxes for individuals 65 and older. However, this proposed bill would raise the exemption to $10,000 of taxable retirement income. The Senate is currently reviewing this bill.

Status of the Legislature

The Legislature used three legislative working days this week and has used twenty-three of its allotted thirty legislative working days. It is important to note that this week, the legislature took up its first Wednesday working calendar this session. As of May 19th, there have been 502 bills filed in the House and 342 bills filed in the Senate during the regular session. The House will reconvene on Tuesday, May 23rd, at 1:00 p.m., and the Senate will reconvene on the same day at 12:00 p.m. Next week the legislature is expected to use three legislative working days.