A New Partnership Benefit: The BCA Capital Briefing is a publication of the BCA/CCAA Partnership. It is produced by the Business Council of Alabama's Public Affairs Department for distribution to the members of the Chamber of Commerce Association of Alabama, who represent local chambers across Alabama. Released each Monday when the Alabama Legislature is in session, it is designed to serve as an informational resource addressing timely legislative issues and activities of particular concern to Alabama's business community and your chamber members.

 

This Week's Top Story

 

 

Discussions Continue as Senate Prepares for Final Day Action on HB 350

The Alabama Legislature left the education budget and the attempt to rewrite the state's 2001 "add-back'" statute for the final day of the 2008 regular session. HB 350 by Rep. Richard Lindsey, D-Centre, will be on the Alabama Senate's agenda for Monday, May 19, the final legislative day.

Throughout the three-month session, the Business Associations' Tax Coalition, a group of 30 business and trade associations, including the Business Council of Alabama, which is committed to supporting responsible tax policy, has been trying to amend HB 350 to make it workable for business. Until last week, bill proponents have been unwilling to give any meaningful consideration to the business community's proposed solutions.

Last Tuesday, the Senate Finance and Taxation-Education Committee approved Lindsey's bill and HB 144 by Rep. Jay Love, R-Montgomery, which provides small business and employee tax credits for health insurance coverage, as approved by the Alabama House of Representatives. As we previously reported in the BCA Urgent Alert, BCA and BATC strongly oppose the House versions of these bills, which the House adopted without the input of the business groups concerned.

Your calls, e-mails, visits and support from our chamber partners appear to have been heard in the Senate. Under the guidance and leadership of Sen. Del Marsh, R-Anniston, senate leaders have included the business community, with representation by BCA and other BATC member organizations, in productive discussions with the Alabama Education Association, which has been pushing HB 350 as a mechanism to balance the state's education budget. After a week of intense negotiations, the prospects for an agreement that addresses our concerns and incorporates the fair and constructive plan offered by BATC appear good.

While one legislative day remains and there is still work to be done, BCA is grateful to Sen. Marsh for his leadership; we applaud the Riley administration for its steadfast commitment to much-needed tax credits for Alabama's small businesses; and we are proud that BATC members have maintained a focused and united stand in opposition to this legislation. Once again, the business community is working determinedly to be "part of the solution," as the BATC plan now being considered in the Senate will help address the state's education budget shortfall, but will do so without setting dangerous tax policy precedent, treating some companies less fairly than others, and doing irreparable harm to the state's business climate.

BATC supports the original version of HB 144, which allows qualifying businesses and their employees to deduct twice (200 percent) the amount they pay for health insurance. Businesses that employ 25 or fewer employees and spend $10,000 now on their health insurance coverage would be able to deduct $20,000 from their income tax, resulting in a $650 tax savings for your business, once this legislation is fully implemented.

BATC also supports the phase-in included in the original HB 144 bill, which calls for a 20 percent increase in the deduction each year that the Education Trust Fund grows three percent until the deduction reaches 200 percent.

 

State Government

"Bare-Bones" General Fund Budget Now Awaits Governor's Signature

The Fiscal Year 2009 General Fund budget, which totals $2.018 billion and funds most non-education agencies and functions of state government, was extremely difficult to craft and will likely be even more difficult to administer.  Tuesday night, the Alabama House concurred, by a vote of 78 to 26, to changes made by the Senate to an extremely tight budget marked by uncertain revenue sources.  The Senate passed its changed version earlier in the day by a vote of 29 to 4.
 
Because of the uncertainties surrounding the revenue sources, the budget may actually total $180.5 million less than the amount stated.  Legislative budget writers sought to protect the funding of agencies that have health and social services missions by making their full funding "absolute", while making as much as 17.8% of the funding to all other state agencies "conditional", meaning dependent upon whether the money actually becomes available.  Those agencies could receive the full amounts of funding shown in the budget, or their funding could be reduced by as much as 17.8%, if the projected revenue does not actually materialize.
 
In addition to the uncertain funding sources, the House and Senate budget writers had to contend with other challenges.  They had to come up with a $150 million increase in funding for Medicaid, fund a promised 3.5% pay raise for state workers and fund the increased costs of providing health insurance for state workers.  The task of putting the budget together was made even more difficult when a BCA-opposed bill that would have selectively levied a $40 million annual severance tax increase on offshore natural gas failed to pass.
 
For more information on state budget issues, contact Victor Vernon at victorv@bcatoday.org or call(334) 240-8722.

Taxation

 

BCA-Supported SUTA Bill Finally Passes, Saving Business Hundreds of Millions

A bill to bring Alabama into compliance with regulations of the U.S. Department of Labor has finally wound its way through the legislative process, passing the House by a vote of 103 to 1.  Along the way, the noncontroversial bill that only makes a minor federally mandated technical correction, found itself linked to unrelated unemployment compensation legislation supported by organized labor. 

Passage of SB 147 by Sen. Roger Bedford, D-Russellville, assures that Alabama employers will not bear the burden of some $700 million in additional FUTA (Federal Unemployment Tax Act) taxes.  Failure to pass the act would have raised the FUTA tax paid by employers on each employee from $56 to $434, resulting in an estimated $700 million FUTA increase on employers.  The state had received a one-year waiver from the Department of Labor after the bill died in the legislative logjam during the remaining days of the 2007 Regular Session. 

Sen. Bedford and Rep. Frank McDaniel, D-Albertville, who sponsored the companion bill, HB 40, are due thanks from all Alabama employers for their persistence in enacting this legislation.

Business Denied Bonus Depreciation; Stimulus Checks to Go Untaxed

Businesses will not be entitled to take a bonus depreciation on their state income tax returns, if a bill which that excludes federal stimulus rebate checks from state income tax passes the Senate, as expected.  HB 455, by Rep. Terry Spicer, D-Elba, provides a one-time exclusion of federal stimulus rebate checks from the state income tax, a move that saves individual taxpayers and reduces state  income tax revenue by some $57 million.  The bill also de-couples Alabama from the federal depreciation schedule, thereby denying Alabama business the benefit of bonus depreciation on their equipment purchases, which increases income tax revenue by an estimated $59 million.

Several pro-business House members offered amendments that would have= provided business tax relief. The links below show the votes as taken on motions to table the three pro-business amendments. House members voting "No" on the tabling motions were casting a vote for business. If your House member is among them, please thank him or her for their support.

Vote on HB 455 Amendment by Rep. Greg Canfield, R-Vestavia Hills. 
Vote on HB 455 Amendment by Rep. JimMcClendon, R-Springfield. 
Vote on HB 455 Amendment by Rep. Cam Ward, R-Alabaster.  

For information, call Victor Vernon at (334)240-8722 or victorv@bcatoday.org.


Worker's or Unemployment Compensation

Agreed-to Unemployment Compensation Bills Pass the Senate

Two other unemployment compensation bills that became tied to the "SUTA" bill also passed the Legislature last Thursday.  HB 427, by Rep. Jack Page, D-Gadsden, and HB 428 by Rep. Frank McDaniel, D-Albertville, and the SUTA bill were part of an agreement hammered out by the BCA.  The agreement adds a one-week "non-compensable" waiting period to the unemployment compensation benefit payment process after the worker receives benefits for the first 13 weeks.  The agreement further increases the maximum unemployment benefit payment by $20 in 2008 and by $10 in 2009, and extends the special assessment for the Employment Security Enhancement Fund until September 30, 2010.

For more information on these and other unemployment compensation issues, contact Victor Vernon at victorv@bcatoday.org or call (334) 240-8722..

Labor or Employment

House Committee Reviews Senate Immigration Proposals

Last week the Senate passed two measures related to illegal immigration. First, on a vote of 31-0, the Senate approved SB 451 by Sen. Larry Means, D-Gadsden, which bars any municipality in Alabama from being declared a "sanctuary city" for anyone illegally in the U.S.

The Senate also approved SB 226 by Sen. Arthur Orr, R-Decatur, by a vote of 33-0.  This measure requires persons 19 or older to provide documentation that proves they are legally in the U.S. to receive public benefits from a city, county or state agency.  The bill includes exceptions for emergency medical care, prenatal care and short-term disaster relief.

During debate on SB 226, Sen. Scott Beason, R-Gardendale, attempted to substitute his comprehensive immigration bill, SB 426 that is opposed by BCA, for Sen. Orr's bill on the Senate Calendar.   After losing that vote 16-12, Sen. Beason began offering amendments intended to transform SB 226 into his comprehensive bill.  The Senate defeated four of his amendments and accepted three dealing with criminal aspects of the law.

Under SB 226, beginning in October 2009, individuals would be required to show a valid Alabama driver's license or Alabama non-driver ID card, a U.S. military ID card, a Native American tribal document, or an affidavit saying the person is a U.S. citizen, legal permanent resident or otherwise lawfully present in the United States.  Lying in an affidavit would be a misdemeanor punishable by a year in jail.

SB 451 and SB 226 will be in position to be considered by the full House on the final day of the session.  In the Senate, only one immigration-related bill is in position to be considered before the session ends.  HB 74 by Rep. Ron Grantland, D-Hartselle, prohibits an employer or business from receiving any state contract if that employer or business has hired a worker known to be an illegal immigrant.  Additionally, the bill requires the prospective contractor to certify this in writing before being awarded a competitively bid or no-bid contract.

For more information on this and related legislation, contact Elizabeth Kennedy Lawlor, 334-240-8721, or elizabethl@bcatoday.org.

Environment and Energy

BCA-Supported Alternative and Renewable Energy Act Becomes Law

HB 234, enacted as Act #2008-275, by Rep. William Thigpen, D-Fayette, and others passed the Senate last week and the governor has signed it into law.

The "Alternative and Renewable Energy Act of 2008" is the product of the Joint Permanent Committee on Energy Policy.  As has been pointed out previously, several BCA member company representatives were on advisory committees assisting the Joint Committee and BCA supports their efforts.  This bill provides alternative energy incentives and tax credits to assist in the development of clean fossil fuels, renewable sources and nuclear energy to meet the state's future industrial and residential needs.  In addition, the bill provides requirements for the Alabama Public Service Commission's approval of utility programs for the purchase of electricity from distributed generation facilities and similar governing boards of other electric service suppliers. 

For more information on these and other environmental issues, contact BCA Environment and Energy Committee Chairman David Roberson at david@alcoal.com or phone (205) 871-3734.

 

Health

Medicaid Legislation Ready for Governor's Signature

SB 300, sponsored by Sen. Linda Coleman, D-Birmingham, passed the House this week and now awaits the governor's signature.  Not only was this bill a top priority for BCA, but it was also an important priority of the governor, speaker and other key legislative officials. 

The bill provides a mechanism for the Medicaid agency to recoup payments made to a provider if the payment was made for a person already covered by a health plan.  The federal government is mandating that all states pass some form of this legislation.  Failure to pass the legislation could have  resulted in needed federal funds being withheld from the state's already struggling Medicaid program. Further, it requires health insurers and benefit plans to furnish information on the insured and their dependents to Medicaid.

BCA advocated for revisions to the bill that would not be administratively burdensome, as compliance could result in higher costs to employers for health care coverage.

Senate Passes Chiropractic Bill With BCA-Backed ERISA Exemption

The Senate has passed HB 472, sponsored by Rep. James Gordon, D-Saraland, that would require health plans to offer coverage for chiropractic services.. The bill includes a BCA-backed amendment that specifically exempts ERISA, a federal law,  from the legislation. If the federal law were ever repealed, this amendment would ensure that business does not have to offer the coverage.

For more information, contact Claire Haynes, 334-240-8726, or claireh@bcatoday.org.

Legal or Judicial

Last Chance to Raise Qualifications for Judges

The 2008 Legislative Session has seen its share of legislation aimed at the state's judicial system.   HB 464 by Rep. Paul Demarco, R-Homewood, passed the House, and moved easily through Senate committee.  The bill's companion, SB 606 by Sen. Roger Bedford, D- Russellville, and Sen. Roger Smitherman, D-Birmingham, passed the Senate. Both bills are now in position to pass on the final day. Both bills impose higher standards for the state's judges. For Supreme Court Justices, the bill requires at least ten years of bar licensure, while judges in the courts of civil and criminal appeals will need a minimum of five years. The bills also mandate that district judges have three years of licensure under the Alabama State Bar.

For more information, contact Brandon Colvin at 334.240.8768 or brandonc@bcatoday.com.

Worth Noting

State School Board OKs New Graduation Track

Future Alabama high school students will be placed on a tougher graduation track, according to a new plan approved Thursday by the State Board of Education. But students who cannot pass the state's exit exams will now have the chance to choose a less rigorous credit-based track, allowing them to pass only three of the five sections of the exam to earn a diploma.

For 12 years, the advanced diploma track has been a choice, but now incoming freshman will be put on the advanced track which includes two years of a foreign language and more rigorous math classes. With parents' permission, students can opt out of that track and be put on the regular credit-based track. Currently 39 percent of seniors choose the advanced track, which State School Superintendent Dr. Joe Morton says is not high enough for the state to meet its work force needs.

BCA supports the concept of  First  Choice, and in a letter to Dr. Morton from BCA President and CEO William Canary and Chairman David Muhlendorf said, "We are particularly encouraged by the fact that First Choice focuses on raising the bar and the educational expectations we place on our students, while simultaneously offering every child meaningful academic options that best meet their personal needs. As the competitive demands of a truly global marketplace continue to increase, and as more and more world class companies choose to make Alabama their home, it is increasingly clear that we must focus sharply on improving both the quality and quantity of our graduating seniors."

BCA Governmental Affairs Conference Goes 'Politickin' By the Dock of the Bay'

With the presidential race reaching a fever pitch, what better way to chill out than to relax this summer at the Business Council of Alabama's annual Governmental Affairs Conference at the Marriott Grand Hotel in Point Clear.  This popular event is earlier this year, so make your plans now to join us for a little "politickin' by the dock of the bay" June 27-29, when you can gather with fellow BCA members, state legislators and top elected officials to hear the latest political insights from two of the country's top pundits.

Online registration is now available at www.bcatoday.org.

Pollster Frank Luntz and analyst Larry Sabato will headline our Saturday session and give their viewpoints on the presidential campaigns. Gov. Bob Riley is scheduled to be with us, as are several other top state officials you won't want to miss.

Fran Luntz has been called the "hottest pollster" in America by the Boston Globe, and is a highly sought-after consultant by Fortune 500 companies. Time magazine named him one of  "50 of America's most promising leaders aged 40 and under." He is a familiar face on "Meet the Press," "Hannity and Colmes," "The Today Show" and many other network programs. The Instant Response focus group technique Luntz pioneered was profiled on "60 Minutes." He is the author of Words That Work: It's Not What You Say, It's What People Hear. He has written, supervised and conducted more than 1,500 surveys, focus groups and dial sessions in more than two dozen countries and four continents.  Comedian Al Franken said of Luntz: "Asking Frank Luntz if he understands public opinion is like asking Julia Child if she knows how to make a soufflé."

Larry Sabato was dubbed the most accurate political prognosticator of 2006 by Fox News Channel, CNN and MSNBC. He has appeared on "60 Minutes," "Hardball with Chris Matthews," and "The O'Reilly Factor." He is a regular contributor to NPR and will cover the 2008 elections for the BBC. Sabato is the founder and director of the University of Virginia's Center for Politics, bringing years of academic study together with an equally long career as political practitioner and commentator on local, state and national elections. His latest book is A More Perfect Constitution: 23 Proposals to Revitalize Our Constitution and Make America a Fairer Country. Both the Wall Street Journal and the Washington Post have noted that he is the most cited college professor in any field in the U.S. by national and regional news organizations. For more information, contact Susan Carothers at (334)240-8711.