As Legislative Day 24 ended, both the General Fund budget and Education Trust Fund budget moved closer to passage, although not without controversy. The House sent a severely-cut General Fund budget as a vehicle for the Senate to begin deliberations. It contained no revenue increases. Governor Bentley has made it clear that he will veto any budget that does not contain increases in revenue. The House also amended and passed the Senate Education Trust Fund budget. The Senate non-concurred with the House amendments, thus forcing transfer to a conference committee The Senate later adopted the conference committee report and since he House had adjourned, the conference committee report is expected to be approved by the House as well. There was also movement on legislation related to employment, guns and charter schools, among others, and final passage of comprehensive prison reform.

House of Representatives Slashes and Passes General Fund

With a clear message from Senate leadership that tax increases would not pass their chamber, the Alabama House, where the General Fund budget is required to originate, passed a 2016 budget that incorporates over $250 million in cuts. The budget allocates approximately $1.6 billion to various agencies. It does not include a single tax increase proposal, either from Governor Robert Bentley or from the House leadership. The budget passed primarily on party lines, 66-36, with four Republicans voting against the legislation. Corrections, Medicaid, the Departments of Mental Health and Human Resources will be cut 5 percent. Every other General Fund agency will be cut 9 percent. For some agencies, the cuts will be compounded due to a lack of federal matching funds.

House members rejected a substitute budget proposed by the House Black Caucus, which would have increased funding to Medicaid and Corrections, among others, by shifting money from other agencies. Steve Clouse, the Chairman of the Ways and Means General Fund Committee, expressed dissatisfaction with the budget and remains hopeful that the Legislature will ultimately approve revenue increases. “I’m trying to be optimistic because it was very hard to put lipstick on this pig today,” Clouse said. Senate Finance and Taxation General Fund Chairman Arthur Orr has not ruled out the possibility of new revenue bills.

Governor Bentley has promised to veto the austere budget, calling it unworkable. A simple majority, however, is all that is needed to overturn his veto. The General Fund now goes to the Senate for consideration. Governor Bentley and legislative leaders admit a special session is a possibility.

House Committee Approves Education Budget Totaling Almost $6 billion

The House Ways and Means Education Committee passed a $5.9 billion education budget. The Senate, where the education budget originated, already passed its own version of the budget. The version passed by the House committee includes a $13 million increase for textbooks, a $3 million increase for professional development, a $3 million increase for technology and $5.3 million increase for dual enrollment for high school students in two-year colleges. It reduces an increase in transportation by approximately $800,000. The Senate non-concurred with the changes in the House-approved budget, sending it to a conference committee. Although the Senate unanimously passed the conference report shortly thereafter, the House had already adjourned. Today, it concurred with the Senate and sent the ETF budget to the Governor.

Governor Signs Sweeping Prison Reform Legislation

After months of work by the Prison Reform Task Force that led to final passage by the Legislature, Alabama took the first step to address its prison crisis with the stroke of Governor Bentley’s pen. The Department of Corrections has suffered from overcrowding for years, with over 24,000 inmates housed in facilities designed for approximately 13,000. Such numbers puts the state at risk for possible federal intervention. The approved legislation is projected to reduce the prison population by about 4,200 inmates over five years. It will also reduce punishments for some property and drug crimes, creating a new low-level felony classification, Class D. Additionally, the bill expands parole and other supervision efforts and redirects certain nonviolent offenders in the hopes of safer prisons and lower recidivism rates. Although the House-approved budget included no funding for the prison reform measures, Senator Cam Ward, sponsor of the bill, has commitments from legislative leaders that it will be funded. The reforms are estimated to cost about $26 million a year. If funding comes through, the law will take effect on Jan. 30.

Senators Pass Gun Bill To Allow Loaded Handguns In Vehicles Without A Permit

According to a bill passed by the Senate, gun owners will be able to carry and transport loaded handguns in their vehicles without a concealed carry permit. According to Senator Gerald Allen, who sponsored the bill, none of Alabama’s bordering states require a concealed carry permit for individuals to transport a handgun in a vehicle. The legislation only applies to handguns and prohibits persons under the age of 18 to knowingly carry a handgun in a vehicle. Firearms would not be allowed on the property of others, including vehicles, without permission. The bill now moves to the House of Representatives for consideration.

Legislation To Define Restrictive Covenants

Two companion bills to replace vague existing employment law related to restrictive covenants are moving forward. The legislation aims to provide more clarity and definition by specifying a list of protectable interests and presumptively reasonable restraints on length-of-time and geographic area. The Senate and House have both passed their versions.

Tax Deduction Legislation for Contributions to Health Savings Accounts Clears Committee

By unanimous vote, the Senate Finance and Taxation Education Committee substituted a bill to change a state income tax credit for contributions to health savings accounts credit to a deduction. The deduction would be allowed beginning tax year 2017 and would mirror a similar deduction allowed under federal law. It now goes to the Senate for consideration.

“Alabama Renewal Act” Advances

Without a dissenting vote, the House passed the Alabama Renewal Act. The legislation will authorize a port credit that, if approved by the Alabama Renewal Commission, would be granted to users of Alabama’s publically owned ports based on qualifying increased cargo shipments and would offset a company’s income tax liability. The port credit, with an aggregate annual cap of $8 million, is designed to match incentives offered by other states and spur increased shipments of certain types of cargo through Alabama’s ports. It will also establish The Growing Alabama Act, which would allow individual and corporate contributors of funds or property to economic development organizations to receive an income tax credit that is the lesser of 50 percent of the contributor’s tax liability or the full amount of the contribution. The aggregate contribution cap would increase from $5 million in 2016 to $10 million in 2017 and reach its limit at $15 million in 2018 and each year thereafter. The Growing Alabama Act tax credit is designed to meet economic development needs that cannot be solved with more traditional tax incentive vehicles.

Bill Would Remove State of Board Of Education From Charter School Process

After the Alabama State Board of Education refused to confirm a list of nominees for the Public Charter School Commission by a vote of 4-3, the House Education Policy Committee approved a measure to remove the Board from the process and authorize appointments. The commission is responsible for hearing appeals of charter school applications rejected on the local level. Board members maintain they need more time to research candidates that are nominated by the Governor, Lieutenant Governor, Speaker of the House and Senate President Pro Tem. Bill sponsor Terri Collins said the measure was necessary to have the commission in place by the June 1 deadline. The State Board of Education scheduled a meeting today and confirmed the appointments.

Alabama To Participate In “SEC Primary” for 2016

The Alabama Legislature passed a measure that will allow the state to become a bigger player in the 2016 Presidential primary elections by participating in the”SEC presidential primary” on March 1, 2016, one week earlier than before. The legislation is now awaiting Gov. Robert Bentley’s signature.

Throughout the session, the Bob Riley and Associates team will monitor all proposed and pending legislation and maintain a presence in the Statehouse to protect our clients’ interests. Should you have any questions or concerns, please do not hesitate to call on us.

Minda Riley Campbell

Bob Riley and Associates

3530 Independence Drive

Birmingham, Alabama 35209

205-484-0099 (office)