Friday, March 21, 2014
Work Left on State Budgets
as Legislature Takes Spring Break
The Alabama Legislature left Montgomery for its spring break with three legislative days remaining in the 2014 regular session, one budget still in a conference committee and the other approved by the second chamber but with changes.
The Alabama Senate on Thursday approved a $1.8 billion General Fund budget that is $14.9 million more than what the House passed earlier. The House will have to consider the Senate changes to HB235 by Rep. Steve Clouse, R-Ozark, when it returns from spring break April 1.
Meanwhile, the state’s education budget (SB184 by Sen. Trip Pittman, R-Daphne) continues to be sorted out by a conference committee as lawmakers try to fully fund teacher insurance.
Legislators scrambled this week to address legislation that had not yet moved from its original chamber. Even though lawmakers worked long hours, hundreds of bills, both good and bad, died.
One of the bills legislators debated this week but did not vote out of its originating chamber was SB335 by Sen. Bobby Singleton, D-Greensboro, which would require restaurants, grocery delis and other food service establishments to notify customers of the country of origin for the entire catfish species order, Siluriformes. Current law at both the federal and state level define catfish as only those fish belonging to the Ictaluridae family, which is the North American family of catfish. Anything else advertised or labeled as catfish is considered fraud. Since Alabama’s law was enacted in 2009, the Alabama Department of Public Health said there have been no violations.
This legislation would have broadened the notification process to the entire order of catfishes, which adds 35 additional families of catfish to those about which food establishments would have to communicate country of origin with their customers. Among the types of fish that would fall under this bill would be the Pangasius family, which includes basa, tra and swai. Under current law, those types of fish cannot be advertised or listed on menus as catfish. The bill was being pushed by the state’s catfish producers.
“We need to leave it up to restaurants to decide what products they want to market,“ Pittman told senators when Singleton tried once more to get his bill considered right before the Senate adjourned Thursday.
>> Current Alabama catfish and seafood labeling notification rules
The companion legislation, HB432 by Rep. A.J. McCampbell, D-Livingston, died without action from the House Agriculture and Forestry Committee.
Posters and requirements related to catfish labeling and notification can be found under Regulations in the Advocacy section at alabamaretail.org.
TAXES AND FEES
Bill Clarifying Sales Tax Due
on Prepaid Wireless Service on Governor’s Desk
The Senate agreed unanimously Thursday to HB373 by Rep. Bill Poole, R-Tuscaloosa, which modernizes sales tax law related to prepaid wireless services. The bill now goes to the governor for his signature. Under existing law, prepaid calling cards and prepaid authorization numbers are deemed tangible property and thus subject to sales tax. A June 2013 decision by Alabama’s chief administrative law judge, Bill Thompson, however, pointed out there was no definition of prepaid telephone services in state law and ruled prepaid services loaded on countertop terminals were not subject to sales tax because that method of purchase was not anticipated by current law. The administrative law decision “put the sales tax in jeopardy,” Poole said.
This legislation makes it clear that even in the absence of a physical card, such as the countertop terminal example, sales tax is owed on prepaid wireless services. The bill also adds definitions that update the law to today’s technology to include other digital products and content that are paid for in advance and sold in predetermined amounts that the consumer can use until the amount is consumed. The House unanimously approved the legislation Feb. 20. If the governor signs it into law, it would be effective June 1.
Senate Votes to Raise Sales Tax Liability Threshold;
Sends Bill to Governor
On a vote of 23-2, the Alabama Senate on Thursday approved the Small Business Tax Relief Act, HB151 by Rep. Barry Moore, R-Enterprise. It now goes to the governor for his signature.
At least 4,000 small retailers could see one-time tax relief of up to $2,500 under the bill, which is part of the Alabama Retail Associations’ 2014 Legislative Agenda.
The bill 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. 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.
The effective date of the bill is Aug. 1. The Senate version, SB46 by Sen. Bryan Taylor, R-Prattville, had an effective date of Oct. 1, 2015. The Senate, like the House, approved its version of the bill Jan. 16.
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.
Governor Ceremonially Signs
Taxpayer Fairness Act of 2014
Alabama has become the 32nd state with an independent tax appeals process, Gov. Robert Bentley said in a ceremonial bill signing (pictured) Wednesday of HB105 by Rep. Paul DeMarco, R-Homewood, and Sen. Bryan Taylor, R-Prattville. The bill actually became law Monday, March 10.
The new law (Act No. 2014-46) creates the Alabama Tax Tribunal, consisting of at least one, but no more than three judges. The tribunal will be in place by Oct. 1 with the chief judge appointed by July 1.
The Business Associations’ Tax Coalition (BATC), a coalition of 27 business trade associations, chaired by Alabama Retail Association President Rick Brown, has advocated for an independent tax appeals process for at least 15 years and is elated to see the new process put into action.
>> Read more
Senate OKs Bill Capping Health Savings
Account Exemption at Federal Maximum
The Alabama Senate on Wednesday unanimously approved SB71 by Sen. Paul Sanford, R-Huntsville, which would allow health savings account contributions to be exempt from state income tax beginning Jan. 1, 2015. The bill allows exemptions up to the maximum annual amount permitted under federal law for health savings accounts. For calendar year 2014, that amount is $3,300 for individuals and $6,550 for families, according to the bill’s fiscal note. Alabama, California and New Jersey are the only three states that don’t already offer this exemption. This bill would become effective three months after it becomes law. The bill now goes to the House Ways and Means Education Committee.
House Amends Tax Credits
for Historic Properties Law to Allow for Transfers
On a vote of 100-0 Wednesday, the Alabama House adopted a substitute version of HB509 by Rep. Paul DeMarco, R-Homewood, which clarifies that tax credits for historic rehabilitation, preservation and development are awarded on a calendar year basis and allows tax credits to be transferred. The bill amends legislation approved in 2013 that allows up to $20 million in tax credits annually for such projects. The substitute charges the Alabama Department of Revenue rather than the Alabama Historical Commission with tracking the tax credits and allows Revenue to adopt rules for the transfers. DeMarco said the legislation will encourage more investors to redevelop historic properties for retail and other businesses. Ten projects qualified for and were granted the credits available for 2014 including retail, apartments, a hotel and an independent living facility. The bill now goes to the Senate Finance and Taxation Education Committee.
Sales Tax Exemption for Art Sold in Cultural Districts
Heads to Senate for Final OK
The Senate Governmental Affairs Committee on Tuesday approved HB52 by Rep. Terri Collins, R-Decatur, which would exempt original art works from sales tax if sold within a cultural district in Alabama’s larger cities that either have an incorporated arts council or a Main Street program. The bill authorizes the Alabama Council on the Arts to develop guidelines for the establishment of cultural districts. The tax-free status would apply to original works with a price tag of $10,000 or less. The bill requires each local government with a certified cultural district to submit an annual report on the cultural and economic development resulting from the district to the Revenue and Tourism departments. The Alabama House approved the bill on a vote of 98-0 Tuesday, March 11. It now goes to the Senate for its final consideration.
Taylor Proposes Replacing Food Sales Tax
with Cigarette Tax Increase
Sen. Brian Taylor, R-Prattville, introduced a constitutional amendment Tuesday to phase out state sales and use tax on food while increasing the state tax on cigarettes over a four-year period. SB471 uses the federal Supplemental Nutrition Assistance Program definition of food, excluding candy and soft drinks. The bill was referred to the Senate Finance and Taxation Education Committee but not enough time remains in the session to consider the legislation.
BAD CHECKS
Senate Judiciary Votes
to Extend Bad Check Law to Electronic Versions
The Senate Judiciary Committee on Wednesday approved HB450 by Rep. Mike Hill, R-Columbiana, which would make electronic drafts negotiable instruments. The bill now goes to the Alabama Senate for final consideration. On a vote of 28-1 March 6, the Senate approved the companion legislation, SB339 by Sen. Scott Beason, R-Gardendale.
Under this legislation, electronic drafts are considered negotiable solely as it relates to the state’s law governing negotiating a worthless instrument. Under existing law, a person commits the crime of negotiating a worthless negotiable instrument if he or she presents a check or promissory note as payment, knowing or intending that it will not be honored by the drawee. The legislation extends that crime to electronic drafts made in bad faith. It also extends the same punishment and other related legal matters to bad electronic drafts.
TOBACCO
Overhaul of Tobacco Tax Enforcement
on Way to the Governor
HB404 by Rep. Mike Jones, R-Andalusia, which requires retailers to maintain 90 days of computer and machine-generated invoices for tobacco products the stores buy with the tobacco tax stated separately is on its way to the governor for his signature. After 90 days, the records must be maintained for three years from the date of purchase but they don’t have to be kept at the store itself, under this legislation.
The Senate uananimously approved the bill Wednesday, while the House unanimously concurred with a Senate Health Committee amendment Thursday, sending the bill to the governor for his signature. The Alabama House originally approved the bill Feb. 20 on a vote of 98-0.
The legislation also:
- redefines wholesale dealers and jobbers and adds a definition for semi-jobbers.
- makes retailers of semi-jobbers who refuse to provide a duplicate invoice to the Revenue Department subject to a $1,000 to $5,000 department-imposed penalty that is multiplied by the sum of the violation added to any prior violations.
- removes archaic language regarding stamps on tobacco products.
- makes handwritten invoices from tobacco wholesalers invalid documents as proof of sale.
- sets out penalties, including confiscation of tobacco, for failure to maintain records.
- adds a definition for cigars, cheroots and stogies.
- creates a website listing of permitted and registered tobacco distributors.
Retailers would have until Oct. 1 of this year to gear up for this change should the governor sign it into law.
FOOD DONATIONS
Senate Votes to Extend Immunity
to Restaurant Donated Food
On a vote of 28-0 Tuesday, the Alabama Senate approved SB298 by Sen. Rusty Glover, R-Semmes, which clarifies that the limited criminal and civil immunity now afforded to donors of canned or perishable food to charitable organizations applies to food prepared at a restaurant or permitted food service establishment. A Senate Judiciary Committee amendment requires food donors to advise the charitable organization if the donated items contain major food allergens as defined in the Food Allergen Labeling and Consumer Protection Act of 2004. It also requires the charitable organization to segregate foods with known allergens and list the known allergens on a notice to those who will consume the products. The bill now goes to the House State Government Committee for consideration.
ALCOHOL
Wine Supplier/Wholesaler Relationship Bill
for Montgomery County on Governor’s Desk
The Alabama House on Tuesday approved SB351 by Sen. Dick Brewbaker, R-Montgomery, while the Alabama Senate on Thursday approved HB445 by Rep. John Knight, D-Montgomery, sending both bills known as the Montgomery County Wine Franchise Jobs Protection Act to the governor for his possible signature.
The legislation requires suppliers to designate in writing exclusive sales territories for wine wholesalers in the county. It also forbids wholesalers from delivering wine to a retail business outside the designated sales territory. Suppliers would be forbidden to offer the same brand or brands of wine in the same territory to more than one wholesaler or to sell directly to any retailer in the state. It also forbids suppliers from requiring a wholesaler to purchase one or more brands of wine or other products in order for the wholesaler to purchase another brand of wine.
Pike County Draft Beer Bill on Governor’s Desk
On a vote of 29-0 early Thursday, the Alabama House gave final approval to SB455 by Sen. Brian Taylor, R-Prattville, which would allow draft and keg beer sales in all of Pike County. Draft beer sales would be allowed in the unincorporated areas, while the city councils within Pike County would have to approve ordinances to allow draft and keg beer sales. The bill now goes to the governor for his signature. The House had approved the bill Tuesday on a vote of 18-1. The companion bill was HB592 by Rep. Alan Boothe, R-Troy.
Gadsden 7-Day Sales Bill Awaits Governor’s Signature
On a vote of 17-0 Tuesday, the Alabama Senate approved HB522 by Rep. Craig Ford, D-Gadsden, which would allow the city of Gadsden in Etowah County to vote whether to allow sales of alcoholic beverages on Sundays. A Jacksonville State University study released in February stated Sunday sales would result in 420 new jobs and a $12.6 million annual economic impact for the city. The probable date for the referendum would be Aug. 26. The bill awaits the governor’s signature to become law. The House approved the bill 39-0 March 5.
Different Millbrook/Wetumpka Draft Beer Bills Move;
Sunday Sales Included in One Bill
Dueling versions of bills related to draft beer sales in the cities of Millbrook and Wetumpka cleared their respective chambers this week.
On a vote of 26-8 early Thursday, the Alabama House adopted a substitute version of HB526 by Rep. Paul Beckman, R-Prattville, which would allow Millbrook and Wetumpka to authorize draft beer sales and permit Sunday sales of alcoholic beverages for on-site consumption based on a majority vote of the councils. It now goes to a local legislative committee in the Senate.
On a vote of 11-7 Wednesday, the Alabama Senate approved SB454 by Sen. Brian Taylor, R-Prattville, which would allow the city councils of Millbrook and Wetumpka to authorize draft beer sales. Keg beer for off-premises consumption is not allowed by the bill. It also excludes gambling and gaming facilities. The Poarch Creek Band of Indians operate a casino on land the tribe owns in Wetumpka. The bill moves to a local House committee.
Senate OKs Sunday
Off-Premise Sales Bill for Tallassee
On Thursday, the Senate unanimously approved SB465 by Sen. Jerry Fielding, D-Sylacauga, which authorizes the city of Tallassee to hold a referendum in the next general election on Sunday alcohol sales. Under this legislation, alcoholic beverages alcohol may be sold for off-premises consumption between 1 p.m. and midnight Sundays, if approved by voters. It now goes to a House local legislation committee for consideration. The city limits of Tallassee fall in both Elmore and Tallapoosa counties.
Draft Beer Definition Moves to Senate for Final OK
The Senate Business and Labor Committee on Thursday approved HB459 by Rep. Alan Boothe, R-Troy, which defines draft or keg beer as beer packaged and distributed in a keg by the manufacturer. Bottled beer labeled as draft beer would not fall under that definition. The House approved the bill on a vote of 91-0 March 13. It now goes to the full Senate for final consideration.
RED TAPE REDUCTION
Red Tape Reduction Act Amendment
Set for Final OK in Senate
An amendment to the 2013 Red Tape Reduction Act is ready for final consideration by the Senate.
On a vote of 97-0 Tuesday, the Alabama House approved HB465 by Rep. Jim McClendon, R-Springville, which extends the effective date of a rule related to certification or licensing by two calendar months if the Joint Committee on Administrative Regulation Review determines the change has such a negative impact on business that a business economic impact statement is warranted. On Thursday, the Senate Fiscal Responsibility and Accountability Committee unanimously approved the bill, putting it in line for final consideration in the Senate.
The bill also clarifies that state agencies must fulfill license or permit requests within 28 calendar days or notify the applicant as to why the license or permit has not been granted. The Senate companion, SB363, by Sen. Trip Pittman, R-Daphne, awaits action by the full Senate.
MEDICAID
Senate OKs Revisions to Medicaid Delivery System
On Thursday, the Alabama Senate unanimously adopted a substitute version of SB459 by Sen. Greg Reed, R-Jasper, which revises the membership of and eligibility requirements for the governing boards for regional care organizations, which the Legislature adopted last year to deliver Medicaid services. The House Health Committee will debate the bill at noon April 1.
Two physicians to the board would be appointed by the Medical Association of Alabama, rather than the county boards of health in the region, under the bill. The bill further provides the majority of the board may not represent a single provider, rather than a single type provider as originally enacted. However, if only one entity steps forward to be the risk-bearing participant the single provider prohibition will not apply, according to the bill.
The substitute also adds an executive committee to execute policies adopted by the board.
The legislation also allows Medicaid to set a minimum reimbursement rate for providers based on the prevailing Medicaid fee-for-service payment schedule. The methodology for setting the rates would be subject to approval by the Centers for Medicare and Medicaid Services.
>> More information on regional care organizations
WORKERS’ COMPENSATION
Senate OKs
Workers’ Comp Exemption for LLC Members
On a vote of 25-2 Thursday, the Alabama Senate approved SB304 by Sen. Cam Ward, R-Alabaster, which would allow members of a limited liability company to exempt themselves from Alabama Workers’ Compensation Act coverage on a year-by-year basis. Corporate officers already have that option. A committee amendment clarifies that the bill does not exempt an LLC member from being counted as an employee for determining the employer’s number of employees. The bill also removes the requirement that written notification be given to the Department of Labor of the exemption. The only notification required under the bill is to the employer’s insurance carrier.
NEXT LEGISLATIVE DAY
Tuesday, April 1, will be the 28th legislative day of the Alabama Legislature’s 2014 regular session. Only three legislative days remain in this session. The Alabama House of Representatives will meet at 1 p.m. The Senate convenes at 2 p.m.
