As Legislative Day 26 came to close on Thursday, two facts were clear: there is still no consensus, between the Legislature and the Governor, between the House of Representatives and Senate, on how to fix the problematic General Fund and a special session this summer is virtually certain. The General Fund faces a deficit of over $200 million. The House and Senate Ways and Means General Fund committee have approved a $1.6 billion budget that calls for more than $200 million in cuts for non-education state agencies. It is pending before the Senate. Governor Bentley has already promised to veto. Legislators return on Tuesday for an expected three-day work week. Only four legislative days remain with significant legislation still waiting in the wings.
Senate To Debate House-Cut General Fund Budget
The Senate Finance & Taxation Committee General Fund approved a slightly changed version of the slashed General Fund passed by the House earlier this month. Neither chamber is operating on the assumption that any additional revenue will be forthcoming.
The Senate committee restored $4.2 million to the Department of Commerce by cutting funding to the Alabama Law Enforcement Agency by $4.2 million. The House approved $0 for the Department of Commerce. The committee also included over $200 million in conditional appropriations.
The Senate is expected bring the General Fund budget up for debate this week.
Senate Adjourns Without Transmittal Of Revenue Bill
Thursday was the last day to transmit bills from the Senate to the House without unanimous consent. After that date, the Senate can pass its own bills, but a single senator can prevent transmittal to the House. On Thursday, the Senate was considering a bill that would have moved an additional 25 percent of the use tax from the Education Trust Fund budget to the General Fund. The proposal would have increased funding to the General Fund by approximately $106 million next year. Before the Senate approved the measure, however, the House adjourned. Rachel Adams, a spokeswoman for Speaker of the House Mike Hubbard, released a statement saying that Senate President Pro Tem Del Marsh’s office had requested the House journal remain open, and it did. “As a legislative courtesy, we honored the request, and the House Clerk has confirmed that the Journal remained open until after the Senate adjourned for the day,” the statement said.
Revenue measures proposed by Governor Bentley and, to a lesser extent, by the Alabama House Republican caucus are dead after senators made it clear none would pass. With only four legislative days left, and without the Alabama Legislature passing any major revenue bills to shore up the General Fund, debate on increased revenue effectively ended during this regular session. A gambling bill from Senator Marsh with a lottery and expanded casino gaming dedicated to the General Fund died as well.
Education Budget On The Way To Governor
The Education Trust Fund Budget, totaling almost $6 billion, passed the House of Representatives when lawmakers unanimously voted to concur with the conference committee’s report. There was no teacher pay raise and no increase in funding for the state’s Public Education Employee Health Insurance Plan (PEEHIP). Colleges and universities are level-funded.
The budget includes almost $50 million more in direct classroom funding, including:
- $13 million in increased funding for textbooks
- $10 million of additional funding for First Class Pre-K
- $4.5 million in increased funding for transportation
- $3 million in increased funding for classroom supplies
- $3 million in additional funding for classroom technology
- $1.3 million in additional funding for distance learning programs
- $1 million in additional funding for Advanced Placement courses
Speaker Appoints Commission To Study Budget Reform; Senate Committee Passes Budget Unification Measure
Currently, Alabama earmarks more than 80 percent of its revenues, preventing legislators from shifting resources to address different challenges, and is one of only three states that has two operating budgets. Efforts in both the House and Senate could pave the way to change that.
Speaker of the House Mike Hubbard has formed the Commission on Earmarking and Budget Reform. Hubbard said that the commission will be tasked with studying every aspect of the budget process including earmarking, appropriations and spending oversight. Hubbard hopes the task force will have some recommendations when the Legislature is called into special session.
The Senate General Fund committee has already approved a constitutional amendment to consolidate the state’s two separate budgets, the General Fund and the Education Trust Fund, into one.
The General Fund pays for most non-education agencies and mostly flat revenue sources, and has seen explosive growth in Corrections and Medicaid programs. The Education Trust Fund, however, has growth revenue sources, but the money is earmarked for education alone. In the past, legislators and political experts have expressed concern that Medicaid and prisons would devour education spending without safeguards.
The amendment would have to be approved by voters as early as next year. If approved, it would go into effect on Jan. 1, 2017. The first unified budget would be effective fiscal year 2018.
Legislature Unanimously Passes Bill To Reform Medicaid Long Term Care
In an effort to rein in Medicaid costs, the Legislature previously approved Regional Care Organizations (RCOs) through a managed-care model, replacing the fee-for-service model.
Senate Bill 431 would establish Integrated Care Networks (ICNs), similar to RCOs, and provide nursing homes or in-home care at a fixed rate per patient. The bill could allow more Medicaid recipients to stay in their homes instead of nursing homes. Senator Greg Reed, who sponsored the bill, said his legislation allows for a 50-50 split between nursing home-care and home-based care. Currently, about 75 percent of long-term care Medicaid patients are in nursing homes. He estimates that the legislation could cut Medicaid costs by $1.5 billion over 10 years. State Health Officer and Chair of the Medicaid Transition Task Force Don Williamson said it costs the state’s Medicaid program around $65,000 for a person to be in a nursing home, but only between $10,000 and $12,000 to be cared for in a community setting. Medicaid beneficiaries would be prohibited from participating in both a regional care organization and an integrated care network. The bill now goes to the governor for his signature.
Legislation Approves Measure To Allow Terminally Ill Patients Access To Experimental Drugs
The Gabe Griffin’s Right To Try Act is one step away from being law. The bill, named after the Shelby County boy who suffers from a genetic mutation called Duchenne Muscular Dystrophy and is caused by an absence of dystrophin, a protein that helps keep the muscles intact, will provide terminally ill patients with access to drugs that have successfully completed phase 1 of a clinical trial but have not yet been approved for general use by the U.S. Food and Drug Administration. 18 other states have reportedly passed similar legislation. Danne Howard, senior vice president of the Alabama Hospital Association, worked with the Griffins on language to help protect medical workers and institutions from adverse results that could occur with experimental drugs.
Michael Staley, Chief of Staff to former Congressman Spencer Bachus brought attention to Gabe’s battle when he and others rode bicycles coast-to-coast to raise funds for research. The Ride-For-Gabe drew attention to the 9 year old’s cause during the trek from Astoria, Oregon to Mobile, AL.
House Approves Changes To Accountability Act; Bill Sent To Conference Committee
By a vote of 68-26, the House of Representatives passed changes to the Alabama Accountability Act. The Alabama Senate sent the bill to conference committee after non-concurrence over a House change that will require the Department of Education to maintain a database of scholarship recipients’ test scores.
The original legislation allows families with students in schools designated as failing to claim tax credits to help pay tuition in private schools. The bill also allowed the creation of nonprofit organizations called scholarship granting organizations (SGOs) that would help qualifying students pay those cost and allows income-tax credits in exchange for donations to the scholarship-granting organizations. Under current law, families making up to 150 percent of the median income — about $65,000 a year — can qualify for grants from SGOs. The legislation defines a failing school as one that ranks in the bottom six percent of standardized testing in the state, with the exception of schools serving special education students.
The new bill would change the qualification threshold to 185 percent of the poverty level, or $29,470 a year for a family of two and $44,863 for a family of four. Students currently receiving scholarships under the original law will be grandfathered in until their households reach 275 percent of the poverty level, or $43,807 a year for a family of two and $66,688 for a family of four. Families may receive scholarships of up to $10,000 a year for high school students; $8,000 a year for middle school students and $6,000 a year for elementary school students. The bill also raises the cap on tax credits that can be claimed under the act from $25 million to $30 million. Individual donors were originally capped at $7500. The new bill removes that limitation. Additionally the bill requires reports on the number of scholarships awarded and the number of eligible students receiving scholarships each quarter.
Bill To Define Restrictive Covenants Moves Ahead
Both the House and Senate Judiciary committees approved companion bills from the opposite chamber related to restrictive covenants in employment law. These bills would replace existing law that is often vague and lends to disparate results with a more specific list of protectable interests and presumptively reasonable restraints on length-of-time and geographic area. The bills await a third reading in the second house.
Legislature Passes Local-Preference Bill
Lawmakers passed a bill to authorize cities and counties to award competitive bids to local businesses under certain circumstances. The legislation would allow an award of a competitive bid to a responsible bidder having a place of business in a local preference zone if that bid is no more than 5 percent greater than the bid of the lowest responsible bidder.
It would also would allow a county or municipality to award a competitive bid to a responsible bidder whose bid is no more than 10 percent greater than the lowest bid if the responsible bidder can show it has a place of business within the local preference zone or is a responsible bidder from a business within the state that is a woman-owned enterprise, an enterprise of small business, a minority-owned business enterprise, a veteran-owned business enterprise, or a disadvantaged-owned business enterprise, and if the lowest bid was made by a business entity that does not have a place of business in the state.
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