Capitol Retail Report

Friday, June 5, 2015

Regular Session Closes;
Special Session Looms

The Alabama Senate reluctantly passed a $1.6 billion General Fund budget (HB135) that slashed $200 million from the current spending plan and left town a day early. The House grumbled about it but concurred with the Senate changes. The governor, as promised, vetoed the state’s general operating budget. The House overrode the governor’s veto, but it didn’t matter because the Senate was no longer at the State House to join the House in the override. The Alabama Legislature will return in special session sometime before Oct. 1 to vote on a workable budget. The governor says he will seek common ground before setting the date for that special session.

That is how the final day of the Alabama Legislature’s 2015 regular session went in a nutshell, minus the drama.

What did the Alabama Legislature accomplish in its 2015 regular session? Lawmakers updated the state’s economic development incentives, passed sweeping prison reform and in the first two weeks fixed a 2009 law so businesses could continue to sell alcohol in more than 30 small Alabama cities (Act. No. 2015-2 / Act. No 2015-1).

Meanwhile, members of the Alabama Retail Association spoke loud and clear and kept the Legislature from adopting an almost $50 million tax increase on retailers (HB553). Legislation that would limit retailers’ ability to extend credit to the customers who need it the most (SB29) also never made it out of committee.

Other bills that died in the regular session include unitary combined reporting for income taxes (HB142), statewide (HB42) and local minimum wage bills (HB384) and legislation that would have created a new cause of action for workplace bullying (SB195).

Expect a full summary of the 2015 regular session in a special Tuesday, June 16, edition of the Capitol Retail Report.

As it has for 72 years, your Alabama Retail Association will be wherever public policy is being made to protect the interests of Alabama’s retail community.

FINAL WEEK ACTION

Voluntary Remote Seller
Sales Tax Collection on Governor’s Desk

The governor gets the final say on whether Alabama tries to entice online retailers to voluntarily collect and remit sales taxes from Alabama customers.

Thursday, on a vote of 69-23, the House passed SB437 by Sen. Trip Pittman, R-Daphne, (HB660 by Rod Scott, D-Fairfield). The Senate unanimously concurred with the House changes, sending the legislation to the governor.

The bill, pushed by the state’s cities and counties, allows remote sellers without a physical presence in our state to:

collect use taxes Alabama customers owe on items delivered to our state at a flat 8 percent rate, no matter where in the state the seller ships the purchased items. Because the average sales tax rate in Alabama is 8.91 percent, some customers would receive a tax break on goods bought online.
receive a discount of 2 percent on all use taxes remitted with no cap on the amount they retain.
stay in this voluntary sales tax collection program even if Congress enacts e-fairness legislation requiring all retailers to collect sales taxes.
receive amnesty for all uncollected sales tax during the year before they begin participating if the seller participates for at least three years.

Under the bill, 4 percent of such taxes collected would go to the state, 2 percent to the counties and 2 percent to the cities. The state would distribute the city and county portions based on population.

An objection expressed during floor debate Thursday related to taxpayers in unincorporated areas, where tax rates can be as low as 5 percent, having to go to the state to seek tax refunds. Under the legislation, taxpayers can apply once a year for refunds and the state can defer refunds of less than $25 for up to three years.

It is unknown if this voluntary program would result in any new tax revenue for the state. If the governor signs the bill into law, remote sellers could start collecting and remitting the taxes Oct. 1

FEDERAL E-FAIRNESS STATUS
U.S. Reps. Jason Chaffetz, R-Utah, and Steve Womack, R-Ark., are expected to introduce the Remote Transaction Parity Act of 2015 in Congress sometime next week. The Chaffetz-Womack bill replaces the Marketplace Fairness Act that the U.S. Senate passed in the last Congress.

us_capitol_building It is anticipated this new destination-based e-fairness legislation will contain such small business protections as audit exemptions, a liability shift to service providers and an increase in the small business exemption. The Alabama Retail Association along with the National Retail Federation and the Retail Industry Leaders Association, the nation’s two major retail trade associations, support this federal effort to level the playing field for all sellers with respect to the collection of state sales taxes.

If you agree, send a letter to the sponsors to encourage them to present this legislation and send a simlar letter your congressional representative asking him or her to co-sponsor the bill. A sample letter complete with addresses for the sponsors is provided.

Bill Tying Fees to Consumer Price Index
on Governor’s Desk

The Alabama Legislature on Thursday sent Gov. Robert Bentley legislation that allows state agencies that already have statutory authority to assess fees to increase those fees every five years based on the Consumer Price Index.

SB216 by Sen. Gerald Dial, R-Lineville, allows eligible agencies to boost fees by the previous 10 years average CPI percentage increase or the average since the last change in the fee, whichever is the shorter period. The agency would then have to wait five years before considering another fee increase. The maximum increase would be 10 percent, or 2 percent for each year in the five-year period. The legislation excludes state parks, the Public Service Commission and the Alabama Banking Department.

If the governor signs the bill into law, it takes effect immediately.

Factor Presence Nexus Standard Dies in the House

The House Ways and Means Education Committeee on Wednesday amended and approved a factor presence nexus standard for business activity for income tax purposes, but the full House never considered the bill. SB497 by Sen. Greg Albritton (pictured), R-Bay Minette, (HB466 by Rod Scott, D-Fairfield) would have made Alabama’s standard for establishing substantial nexus different than any other Southern state and the majority of the other U.S. states.

Factor presence is dictated by the amount of property, payroll or sales a business has within a state. What makes factor presence controversial is that a certain dollar amount of sales made in a state, even if there is no physical presence, creates nexus for taxing purposes. Albritton’s bill used thresholds from a Multistate Tax Commission model bill: $50,000 of property; $50,000 of payroll; or $500,000 of sales. It also would have allowed changes in those thresholds based on the Consumer Price Index.

Albritton told the committee his bill “captures taxes, broadens the base” of businesses that would owe income tax in Alabama. The fiscal note says the bill would have resulted in an increase of $2 million to $8.5 million annually in state revenue.

At the request of the Alabama Retail Association and other business groups, the committee deleted all references to combined reporting in the bill.

While this bill is dead for this session, the issue could resurface in a special session or the 2016 regular session.

Legislature Votes to Raise Exemptions for Debt

The Alabama Legislature voted Thursday to increase Alabama’s debt exemptions. SB327 by Sen. Cam Ward, R-Alabaster, (HB396 by Jim Hill, R-Moody) increases Alabama’s homestead exemption from $6,000 for a surviving spouse and $5,000 for a debtor to $15,000 for both; and the personal property exemption from $3,000 for a debtor and $3,500 for a surviving spouse to $7,500 for either. If the governor signs the legislation into law, it becomes effective immediately.

Electronic Business Entity Filings Ready for Governor

An electronic process for business entity and nonprofit filings with probate judges and the secretary of state is on the governor’s desk. Under SB229 by Sen. Steve Livingston, R-Scottsboro, by Sept. 1 the secretary of state would create a pilot online filing system, while counties’ participation would be voluntary. The online system will include form filing, online fee recording and payment through credit or debit cards.

Bill Limiting Reduction in UC Benefits
for Pensioners on Governor’s Desk

Someone who is drawing unemployment and still looking for work can draw down from an employee-contributed 401K retirement plan without reducing that individual’s unemployment compensation under HB506 by Rep. Napoleon Bracy, D-Prichard. The bill only reduces unemployment benefits for those receiving a pension or retirement benefits if those benefits are 100 percent employer financed. If signed by the governor, the law would take effect Sept. 1.

Resolution Calls for State Bar to Discipline Lawyers
For Bringing Questionable Disability Lawsuits

After the Senate adjourned, the House passed a resolution urging the Alabama State Bar to “aggressively investigate questionable practices of lawyers and discipline those lawyers who are found to be engaging in the practice of filing false or exaggerated claims of violations of the Americans With Disabilities Act.” HR369 by Rep. Chris Pringle, R-Mobile, states that the lawsuits “appear to have been filed for the purpose of forcing settlements based on the cost of litigation and not based on injury to any individual.”

Ban on Tax Zappers Dies in Senate

Wednesday, the Senate Judiciary Committee approved HB140 by Rep. Steve McMillan, R-Bay Minette, (SB505 by Tim Melson, R-Florence), but the full Senate did not consider the bill before adjourning. The legislation would have made the possession or use of an automated sales suppression device a Class C felony. The devices, also known as phantom ware or zappers, are used to delete records of sales transactions from cash register records so that sales taxes are under-reported to the taxing authorities.

Regulation of Pharmacy Benefit Management
Gets Public Hearing, Dies

The Senate Banking and Insurance Committee conducted a public hearing this week on SB483, which would bring pharmacy benefit managers under the Alabama Insurance Department, allow the department to develop rules for the regulation of PBMs and change pharmacy audit procedures. The bill by Sen. Del Marsh, R-Anniston, banned pharmacy benefit managers from mandating a specific pharmacy be used, specifically prohibiting mandated use of a particular community or mail-order pharmacy. The committee did not vote on the bill.

NOW LAW

Governor Signs Pistol in Car Legislation

Thursday, Gov. Robert Bentley signed into law a new gun measure that among other provisions allows licensed guns to be locked in vehicles parked in secure lots, even if the owner doesn’t allow guns inside the facility. The law is effective Sept. 1.

Act No. 2015-341 by Rep. Chris England, D-Tuscaloosa, specifies that someone in lawful possession of a firearm can have the weapon and ammunition locked in a compartment of their private vehicle parked at a secure facility, which includes parking lots protected by guards and inside a fence where weapons are prohibited inside the building.

The law also includes parameters for minors possessing pistols and the elimination of much of the record keeping for pistols. Gun dealers, law enforcement and the secretary of state would have to destroy all records of pistol, revolver or silencer sales 180 days (six months) after the bill becomes law. Supporters said the law removes the requirement for duplicate registration records.

Financing for Grocery Stores
in Food Deserts Available Soon

Under Act No. 2015-240 by Sen. Greg Reed, R-Jasper, (Rep. James Buskey, R-Mobile) federal, state or private funds available for the purpose of attracting grocery stores to underserved areas will go into a fund from which at least 25 percent will be used for grants or forgivable loans to retailers seeking to build, renovate or expand grocery stores in food deserts. The law goes into effect Aug. 1.

ALCOHOL

Legislature Votes to Ban Powdered Alcohol in Alabama

Powdered alcohol could become illegal in Alabama even before it hits the market. SB365 by Sen. Vivian Davis Figures, D-Mobile, (HB421 by Chris Pringle, R-Mobile) outlawing the product in Alabama, received final approval Wednesday, sending it to the governor for his signature. Powdered alcohol, which can be reconstituted with water and food, is expected to launch this summer. Alabama joins at least 13 states that have banned the product permanently. Three others have enacted temporary bans and dozens more are or have considered a ban. If the governor signs the bill into law, it will be effective Sept. 1.

Bill to Extend Timing
of Wet/Dry Elections on Governor’s Desk

If the governor agrees, wet/dry alcohol elections will be scheduled 82 to 97 days after a petition is filed for a referendum under SB210 by Sen. Dick Brewbaker, R-Montgomery. The current time frame is 30 to 45 days. Brewbaker said the Secretary of State was having trouble complying with another law that requires allowing Alabama voters living overseas to participate in state elections.

House Alcohol Task Force
to Study Privatization, Other Issues

On a voice vote as one of its last actions of the 2015 regular session, the Alabama House adopted HR368 by Rep. Alan Boothe, R-Troy, creating the Alcoholic Beverage Control Reform Task Force. The panel of House members and a representative of the Alcoholic Beverage Control Board will examine Alabama and other state alcoholic beverages laws and regulations “to determine if more cost-effective measures and reforms can be reasonably implemented by the Alabama Legislature to reduce the cost and burden of Alabama alcoholic beverage laws and regulations on the taxpayers of the state.”

Boothe said the group would “look at privatization and see what is best for the state.” The study group is to make recommendations for proposed legislation to the Alabama House of Representatives no later than the first day of the 2016 regular session.

This is the second alcohol study group created this session. The other, the Alabama Alcohol Beverage Study Commission, is specifically prohibited from looking at privatization of the state’s ABC board.

Flow of Alcohol Legislation Continues in Final Week

The governor this week signed six alcohol-related bills into law:

Four of the bills allow the governmental bodies in Heflin (Act No. 2015-296), Fayette (Act No. 2015-298) Rogersville (Act No. 2015 – 329) and Dallas County and its cities (Act No. 2015 – 335) to authorize the sale of draft beer. The Heflin law is for on- or off-premises consumption. The Rogersville law only applies six days a week. The Dallas County law is for on-premises consumption only.
Act No. 2015-297 allows the Jasper City Council to designate up to two entertainment districts.
Act No. 2015 – 328 gives the Oak Grove Town Council authority to ask voters if they would like to allow alcohol sales after 1 p.m. on Sundays.

Wednesday, the Senate passed several House bills regarding alcohol, sending them to the governor for his signature:

HB601 authorizes the Sunday sale of alcohol in the city of Demopolis.
HB647 authorizes Chilton County to hold a referendum on whether to allow alcohol sales every day of the week except Sunday. If the bill becomes law, the referendum would be on the ballot in the November 2016 General Election.
HB692 would allow each city council in Marshall County to authorize six-day-a-week draft beer sales and to set referendums to ask voters if they favor Sunday alcohol sales.

Thursday, the Senate carried over and thus killed HB667, which would have lengthened the time between wet/dry referendums from 720 days (about two years) to 1,440 days (almost four years). The Senate Constitution, Ethics and Elections Committee had approved the bill Wednesday.

NEXT LEGISLATIVE DAY

The governor is expected to call the Alabama Legislature into special session this summer but no date has been set. Both the Alabama Senate and House will convene at noon Tuesday, Feb. 2, 2016, for the Legislature’s 2016 regular session.

FEDERAL

Trade Promotion Authority Vote Soon in the U.S. House

The U.S. House is expected to vote this month on the Trade Priorities and Accountability Act, possibly as early as next week. The U.S. Senate already passed the bill, which would renew Trade Promotion Authority. TPA is the first step in securing new trade agreements that eliminate barriers to selling more American-made products overseas and empowering American businesses large and small to compete in the global economy, according to the U.S. Chamber of Commerce. Nearly 40 million American jobs depend on trade. The act includes provisions to raise labor and environmental standards, creates a level playing field for businesses and workers around the world, and ensures that new issues, such as state-owned enterprises and digital trades, are addressed in future trade agreements. It also ensures that stores have access to overseas products that meet the standards set by American consumers, according to the Retail Industry Leaders Association.

In Alabama alone, trade supports 101,000 retail jobs. Alabama Agriculture and Industries Commissioner John McMillan this week said TPA will help our state’s economy. He said TPA is nothing more than an agreement between Congress and a U.S. president as to how they will work together to negotiate, consider and vote on international trade agreements.