Friday, January 17, 2014
2014 Session Off to a Fast,
Less Confrontational Start
Quick with the least conflict possible – that is the legislative leadership’s goal for the 2014 regular session of the Alabama Legislature. In the first week at least, lawmakers got as close as they could to that goal in an election-year session. The Legislature met for three rather than its customary two days this week as part of its accelerated schedule to try to finish the session by the first week of April. By law, the Legislature could meet through April 28. No matter how long they meet, lawmakers face conducting state business with the distraction of the looming Feb. 7 qualifying deadline for the June 3 primary. This week, the governor and legislative fiscal leaders differed on what level of revenue the state could expect in the next year’s budgets – a more than $100 million difference in one budget and more than $90 million in the other. The two political parties presented polar opposite agendas. The majority party got right down to business approving its bills, including several supported by the Alabama Retail Association. Filibustering happened, but it was minimal.
Facing a General Fund budget that continues to expand at a greater rate than revenue, House Speaker Mike Hubbard and Senate President Pro Tem Del Marsh (pictured above) expressed hope that Congress would pass legislation to authorize states to collect sales tax on Internet sales (See Federal section below). This is a sentiment shared by the Alabama Retail Association. In 2012, Alabama lawmakers agreed to put 75 percent of any future sales taxes collected through the anticipated federal legislation into the General Fund. Alabama’s leaders and your association will continue to advocate for e-fairness through a level playing field for all retailers in regard to sales tax collections.
Every Friday, Alabama Retail provides a summary of the legislative action for that week so retailers stay informed about state policies that could impact your bottom line. We invite you to provide feedback to your legislators and your association on the legislation included in this and future issues of Capitol Retail Report. Please continue to make the voice of retail heard when public policy is made.
RETAIL AGENDA IN ACTION
House OKs Central, Independent Tax Appeals Process
for Alabama; Public Hearing Set for Next Week in Senate
With little discussion and for the fourth year in a row, the Alabama House on Thursday approved the Alabama Taxpayers’ Bill of Rights II, HB105 by Rep. Paul DeMarco, R-Homewood (pictured), and Speaker of the House Mike Hubbard, R-Auburn. After making four technical amendments, the House voted 97-2 to approve the bill that would centralize Alabama’s tax appeal process and make that process independent of the taxing authorities. The bill, which had cleared the House Judiciary Committee the day before, is scheduled to be debated next week in the Senate Fiscal Responsibility and Accountability Committee, where a public hearing also is scheduled Wednesday on the Senate companion, SB74, by Sen. Bryan Taylor, R-Prattville. If the committee substitutes the House bill for the Senate version and approves it, the legislation could be headed for final OK as early as Thursday of next week.
The Taxpayer’s Bill of Rights is a major plank in the Alabama Retail Associations’ 2014 Legislative Agenda and is part of the House Republican Caucus Legislative Agenda. In 2013, the House approved the legislation, but the Alabama Senate never considered it. In 2012, both chambers gave their final OK to the bill, only to have the governor pocket veto it because of a technical error. “The governor gave his word that he will support the current bill, and he will honor that,” the governor’s chief of staff, David Perry, said Tuesday. The bill also has the support of the Business Associations’ Tax Coalition (BATC), a business trade association coalition chaired by Alabama Retail President Rick Brown. “An independent judge makes sense,” said Brown. “The judge who decides your fate shouldn’t be an employee of the taxing authority you disagree with.”
>> BATC Summary of the Taxpayers’ Bill of Rights II
The landmark legislation updates the 1992 Taxpayers’ Bill of Rights by creating an independent tax appeals process for businesses and individuals and allows businesses that cross multiple jurisdictions to use one process for appealing tax assessments.
House and Senate Vote to Raise Sales Tax Liability Threshold
At least 4,000 small retailers could see one-time tax relief of up to $2,500 under HB151 by Rep. Barry Moore, R-Enterprise, and SB46 by Sen. Bryan Taylor, R-Prattville. The Alabama House and Senate each approved their respective versions of the legislation Thursday.
The Small Business Tax Relief Act, which is part of the Alabama Retail Associations’ 2014 Legislative Agenda, would raise the average monthly tax liability threshold at which a business must estimate and make monthly sales tax payments to the state. Currently, any Alabama retailer who averaged $1,000 or more in monthly state sales tax collections in the previous year must pay an estimated sales tax each month in advance of collecting any sales tax revenue. This legislation would raise that threshold by $1,500 to $2,500. Moore’s bill has an effective date of Aug. 1 of this year, while Taylor’s would be effective Oct. 1, 2015.
The current $1,000 threshold in average monthly state sales taxes equates to roughly $25,000 in monthly sales. State sales tax in Alabama is 4 percent. Retailers collecting on average less than $2,500 in state sales taxes each month, or $62,500 in monthly sales, would no longer have to estimate their sales tax obligation in advance each month under this legislation. 
Those between the current $1,000 and the proposed $2,500 in average monthly state sales tax collection thresholds effectively would be allowed to skip a month of estimated sales tax payments if the legislation becomes law. The affected retailers would still have to collect and remit the sales taxes, they just would do it after the fact, rather than before the fact.
“This will give our smallest businesses help with cash flow,” said Moore (pictured).
HB151 has been assigned to the Senate Finance and Taxation Education Committee, while SB 46 has yet to be assigned to a House committee.
TAXES AND FEES
House Approves Short Form and Eventual Online Filing
for Business Personal Property Returns
On a vote of 99-0 Thursday, the Alabama House approved HB108 by Rep. Greg Wren, R-Montgomery, and House Speaker Mike Hubbard, R-Auburn, which would give businesses two additional options for filing their business personal property returns: A shortened tax form and ultimately, an online filing system. “What I’d really like to do is abolish this tax, but this legislation will streamline the process,” Wren told the House Commerce and Small Business Committee on Wednesday.
Small businesses that filed an itemized personal property tax return in the previous tax year that included $10,000 or less in total property acquisition costs will be able to use a new short tax form, which is to be developed by Oct. 1 of this year. If the short form is used, the $10,000 amount would be used by the local tax assessing official as the market value when calculating the taxes due, rather than an itemized return, which would still result in an average tax liability of less $100 for businesses in most localities. The online filing, which is to be available by Oct. 1, 2016, will be optional for businesses but mandatory for counties. The system would provide for uniform procedures and standardized formatting for online filing in all 67 Alabama counties. Currently, business owners have to file these taxes in each county where they do business. Under this bill, which is part of the House Republican Caucus Legislative Agenda, business owners would have a one-stop-shop for submitting to the state’s counties.
Once the bill reached the House floor, Wren amended it to exclude counties that already have an online filing system for business personal property taxes. Shelby County is the only county in the state that already has an electronic personal property tax filing system. The bill now goes to the Senate for consideration.
Revenue Could Suspend
Administratively Costly Taxes Under Bill
Another tax bill on the Republican Caucus Legislative Agenda that the Alabama House approved Thursday would require the Revenue Department, by administrative rule, to suspend the collection of a tax or fee when the administrative costs of collecting exceeds the collection amount for each of the previous three fiscal years. On a vote of 96-0 with one abstention, the House approved HB97 by Rep. Jim Patterson, R-Meridianville. The House agreed with a House State Government Committee amendment to require that before suspending a tax the department must notify any locality that would lose revenue as a result. The amendment also requires that no tax or fee be due if a rule suspending a tax is repealed. During debate, Patterson identified Alabama’s tax on playing cards as one that costs more to administer than the amount the state receives in tax revenue. He said the playing card tax generates $86,138 and costs more than $100,000 to collect, including the cost of placing tax stamps on the cards in the various warehouses throughout the state. The bill now goes to the Senate Finance and Taxation Committee for consideration.
House Carries Over Taxpayer Audit Protection Act
The House debated but did not vote on HB42 by Rep. Wayne Johnson, R- Ryland, which seeks to prevent the Alabama Revenue Department from ever targeting certain groups or organizations for audits based on their political views or messages. The House State Government Committee on Wednesday amended the bill so it would apply to county and municipal governments and third-party tax administrators as well. Under the amended Alabama Taxpayer Audit Protection Act, an employee of the Revenue Department, locality or third-party tax administrator could be charged with a Class A misdemeanor and subject to dismissal or other disciplinary action if he/she:
- makes false statements about or withholds information concerning a taxpayer;
- threatens to audit a taxpayer for personal gain;
- violates tax laws to retaliate against a taxpayer;
- or destroys records to conceal a mistake.
Panel Carries Over Business Privilege Tax
Forgiveness for Dormant Businesses
The Senate Finance and Taxation General Fund Committee on Wednesday carried over SB6 by Sen. Slade Blackwell, R-Birmingham, which would forgive business privilege tax obligations for any dormant business, even if the business fails to dissolve or to withdraw its qualification to do business with Alabama’s Secretary of State. Under the bill, if for two consecutive years prior to the taxable year, a business has not owned property, produced income or carried out any business activity or function of any type, the business would be considered dormant. Similar legislation died due to inaction by the Senate on the final legislative days in 2012 and 2013. Senate President Pro Tem Del Marsh, R-Anniston, asked that the bill be carried over to seek a long-term solution rather than merely giving the Alabama Revenue Department a means of cleaning up their books.
BUDGETS AND FINANCES
Math Different for State Budgets
As usual, state fiscal experts and the governor differ on what will be available for the state to spend in 2015. This year, it is the governor who has the sunniest view.
State budget and fiscal officials this week estimated there would $83 million less to spend in 2015 for the state’s General Fund budget, which funds state agencies that provide services other than education. Yet the proposed budget presented by Gov. Robert Bentley (pictured) would spend $1.82 billion, an increase from $1.78 billion this year. Bentley dipped into various funds with surpluses to come up with his number.
For the education budget, the governor proposes spending $5.89 billion, the cap everyone agrees has been set by the Rolling Reserve Act, a budgeting measure aimed at avoiding proration. However, the governor proposes diverting $92 million of gross sales taxes straight to schools before they reach the Education Trust Fund.
Medicaid Dominates Budget Discussions; Democrats Push for Expansion; Governor Firm ‘We Won’t Expand Broken System’
Medicaid, which accounts for 35 percent of Alabama’s General Fund budget, continued to draw the most attention in state budgetary discussions this week. Some $600 million of Medicaid expenditures go to Alabama’s pharmacies.
The governor’s proposed budget includes a $70 million increase for Medicaid — $15 million shy of the $85 million State Health Officer Don Williamson (pictured) says he needs to maintain services. “I can’t do the shell game anymore,” Williamson told lawmakers when presenting his budget proposal to lawmakers.
During those same hearings, Williamson and others pointed out that as the economy has improved, Alabama has not seen a corresponding decrease in Medicaid enrollees. As of November, 976,000 Alabamians were on Medicaid, while the state unemployment stood at 6 percent, one of the lowest rates in the nation, the state health officer said. Williamson said 23,000 individuals who are eligible for Medicaid have never enrolled in Alabama. That is changing as federal health care reform moves forward and those applying for health coverage under the Affordable Care Act are told they qualify for Medicaid.
Meanwhile, by Sen. Roger Bedford, D-Russellville, has introduced SB92, which would allow for expansion of Medicaid and provide coverage to all state residents for whom federal matching funds are available under the Affordable Care Act. The bill awaits action by Senate Finance and Taxation General Fund Committee, but legislative leaders and the governor aren’t biting.
“We will not expand on a flawed and broken system that encourages greater reliance, not on self, but on government,” Bentley said in his State of the State address Tuesday.
UNEMPLOYMENT
Panel OKs Bill Encouraging Unemployed to Work Part Time
The House Commerce and Small Business Committee on Wednesday approved HB88 by Rep. Jack Williams, R-Birmingham, which would alter the formula for calculating the individual weekly unemployment benefit payment if the beneficiary is earning some money, either through forced hours reduction or a part-time job. The Labor Department requested bill allows earnings up to one third of the weekly benefit. Any money earned beyond that level would result in that dollar amount reduction in the unemployment benefit. The maximum weekly unemployment benefit in Alabama is $265, so the bill would allow $88.33 in earnings before any penalty payment would be taken from that maximum benefit. Since 1963, the amount an unemployment beneficiary could earn weekly without penalty to their benefits has been $15, Williams said.
Panel to Consider Change in Definition of Employing Unit
Wednesday, the House Commerce and Small Business Committee will consider HB109 by Rep. Wes Long, R-Guntersville, which clarifies that an employing unit for unemployment compensation purposes can be an employer who acquires at least 65 percent of another employing unit in Alabama. Currently, an employer must acquire all of the assets of another employing unit to be considered an employing unit.
HEALTH
Healthcare Rights of Conscience Clears Committee
After a public hearing, the House Health Committee on Wednesday approved HB31 by Rep. Becky Nordgren, R-Gadsden, and Rep. April Weaver, R-Brierfield, which would give healthcare providers the right to refuse to perform or participate in some reproductive healthcare services that violate their conscience. Under this legislation, an employer would not be able to discriminate against or discipline an employee for refusing to perform an abortion, human cloning, stem cell research and sterilization based on conscience if the employee first notified the employer in writing of his/her objection. The bill frees the provider of civil and criminal liability unless the conscientious objection places the life of a patient in immediate danger. The bill, which has been adopted by the House Republican leadership as part of its 2014 agenda, mirrors a model bill proposed by Americans United for Life, a Washington, D.C., anti-abortion group. An opponent who testified Wednesday questioned if private pharmacies would use this legislation to refuse to stock Plan B emergency contraception, sometimes known as the morning-after pill. The definition of healthcare provider in the bill includes pharmacists. Similar legislation has failed to make it through the legislative process in prior sessions.
ALCOHOL
Legislation Aligns Alabama’s Cork-and-Go Law with Federal Law
The Senate Judiciary Committee on Wednesday approved legislation that spells out specifically how a recorked or resealed bottle of wine may legally be transported based on the type of storage space in a vehicle. The sponsor of SB56, Sen. Paul Sanford, R-Huntsville, told the committee that Alabama and 31 other states have to pass similar legislation to bring state law in line with federal language so the state can continue to receive federal transportation money. Sanford’s bill, along with HB81 by Rep. Terri Collins, R-Decatur, amends a 2012 law the two sponsored that allows Alabama restaurant patrons to put the cork back in an unfinished bottle of wine and take it home. The 2012 law permits only one opened bottle of wine to be carried out of a properly licensed establishment, if the bottle has been recorked and resealed in a bag. Judiciary approved amending the law to specify that the bottle must be placed in a locked trunk; in a storage or luggage compartment; in a locked glove compartment; in a storage or cargo compartment in the bed of a pickup truck or in a locked case not readily accessible behind the front seat of a pickup truck; or in the area behind the last upright seat of any vehicle that does not have a trunk. The law will continue to require the seller to provide the customer with a dated receipt for the resealed wine bottle. Collins’ bill awaits action by the House Economic Development and Tourism Committee.
Panel OKs Letting Community Development
Districts Turned Cities to Stay Wet
The House State Government Committee on Wednesday approved HB89 by Rep. Jamie Ison, R-Mobile, which would allow the state’s community development districts to remain wet if the district already has the authority to sell alcohol and becomes a municipality, even if the newly incorporated city does not have the 1,000 residents required by state law to be a wet municipality. Community development districts include qualifying golf and marina developments.
STATE PROCUREMENT
Bill Allows State Agencies to Buy
From Retailers Outside Bid List
On a vote of 7-3 with one abstention, the Senate Finance and Taxation General Fund Committee on Wednesday approved and amended SB59 by Sen. Arthur Orr, R-Decatur, which allows state agencies to purchase personal property from retailers or vendors not on the statewide contract or bid list, if the purchase price is at least 10 percent less than the statewide contract price. The committee amended the bill to require that the price be the market price readily available to the public at large. Currently, state agencies must purchase personal property such as office supplies and furniture from the statewide contract/bid list.
WORKERS’ COMPENSATION
Workers’ Comp Burial Expenses
on Panel Agenda for Next Week
Rep. Rod Scott, D-Fairfield, this week introduced legislation to more than double the possible burial expenses a workers’ compensation claim can pay, taking it from $3,000 to up to $6,500, an increase of $3,500. The House Commerce and Small Business Committee is expected to consider HB107 at its Wednesday meeting.
NEXT LEGISLATIVE DAY
The Alabama House of Representatives meets at 1 p.m. Tuesday, Jan. 21, for the 4th legislative day of the Alabama Legislature’s 2014 regular session. The Senate meets at 2 p.m.
FEDERAL
Retail Continues Push for E-Fairness
The Alabama Retail Association began 2014 by urging Congress once again to support e-fairness. In a Jan. 7 letter, your association, along with organizations representing more than three million U.S. businesses, asked House Judiciary Committee Chairman Bob Goodlatte, R-Va., to take immediate action on the Marketplace Fairness Act. While state sales taxes are required on all customer purchases, states currently only have the authority to collect sales tax on purchases made from brick and mortar retailers. This federally sanctioned loophole gives online and other out-of-state retailers an advantage over local stores. Although it is not currently drafting legislation, the House Judiciary Committee is expected to hold a hearing on the Marketplace Fairness Act sometime in the first half of the year. The committee established principals for that legislation last year. The U.S. Senate overwhelmingly passed its version, S. 743, in May of last year. Continue to communicate your support for this vital legislation with your federal representative. To find out who your U.S. House member is and how to contact them, go to alabamaretail.org/findyourlawmaker
Spending Plan Through September on President’s Desk
The U.S. Senate on Thursday sent the president a slightly more than $1 trillion spending plan to fund the federal government through September. The U.S. House approved the bill Wednesday. The president is expected to sign it before the current spending measure expires Saturday. The passage ensures the nation will not face another government shutdown until at least Oct. 1.
