Capitol Retail Report

Friday, Feb. 12, 2016

House to Debate Preemption
of Local Wage and Benefit Mandates

The Alabama Legislature quickly took steps this week to preempt cities and counties from creating a local minimum wage and mandating other benefits for private employees. After a public hearing and committee approval Thursday, HB174 by Rep. David Faulkner, R-Birmingham, and Rep. Arnold Mooney, R-Birmingham, will be debated Tuesday on the House floor. Fifty-one other House members have signed on as cosponsors of the bill.

Alabama Retail’s Alison Hosp talks with Rep. David Faulkner.

The Alabama Uniform Minimum Wage and Right-to-Work Act “reaffirms that Alabama is a pro-business state,” Faulkner told the House State Government Committee. His bill prohibits local governments from requiring minimum wages, paid or unpaid leave, vacation time or work schedules. Nationwide, some 30 cities and counties have established their own minimum wages, mostly in California. The federal minimum wage would continue to apply to Alabama employees under the bill.

“The bill does not set, lower or establish a minimum wage,” Faulkner said. It does provide for a consistent minimum wage in the state, so “we don’t have a patchwork of over 400 city minimum wages,” he said.

Tuesday, the Birmingham City Council voted to shift the effective date for an $8.50 local minimum wage for that city from July 1 to March 1, giving Birmingham’s businesses just three weeks to prepare for the wage change. Under the original August ordinance and the one approved this week, the city’s minimum wage would increase to $10.10 on July 1, 2017, with increases afterward tied to inflation. The only difference in the two ordinances is the effective date of the $8.50 minimum.

During Thursday’s public hearing, Otis McGuire, a human resources executive for Piggly Wiggly in Birmingham, testified that increasing the minimum wage creates “a chain reaction through the pay scale.” With the thin profit margin at grocery stores, the Birmingham minimum wage would mean “reducing the number of employees and hours” and could end with the “closing of stores in the area,” he said. Chris B. Stewart, executive director of The Arc of Jefferson County, said the developmentally disabled citizens his organization serves could lose their jobs if the Birmingham minimum wage ordinance becomes law. He said the increased wage could also violate the state’s contract with the Centers for Medicare and Medicaid Services.

Three state minimum wage bills have been introduced so far in the regular session: HB70, HB71 and SB185. None are set for committee consideration at this time.

MEDICAID

Alabama Medicaid’s Community
Managed Care Structure Receives Federal OK

The Centers for Medicare and Medicaid Services this week approved the Alabama Medicaid Agency’s plan to implement a community-based managed care structure to serve the 650,000 Alabamians who receive full Medicaid benefits. More than 1 million Alabamians currently are enrolled in Medicaid. More than half of those are under the age of 17 with the remainder being the elderly and disabled.

With the CMS approval comes $328 million in federal money over three years to help 11 regional care organizations get started and begin to increase access to medical care, improve quality and reduce costs. Alabama could qualify for up to $420 million more in federal funds over five years if it reduces the state’s infant mortality rate, emergency room visits and chronic conditions such as heart disease as well as meeting other benchmarks.

Key to the dramatic change in the state’s Medicaid delivery system, which has been four years in the making, is at least $100 million more in state funding, which the governor has included in his proposed state operating budget.

“I will work closely with members of the Alabama Legislature … to ensure the Medicaid RCO model is adequately funded so we can continue our efforts in Medicaid transformation,” the governor said.

The RCOs spread over five regions of the state will receive a share of Medicaid money with a goal of shifting the delivery system from a fee-for-service model to one that awards money on a per-person basis tied to health outcomes. The new system is to be operational by Oct. 1. The agreement with CMS begins April 1.

A statewide series of 15 provider forums began this week and will continue through March for physicians, hospital officials and other healthcare professionals who want to learn more about how the RCO implementation will impact them. Alabama Retail Association provided its pharmacy and doctor members with the schedule on Wednesday. Read the full provider forum schedule here.

Sen. Billy Beasley, D-Clayton, this week introduced legislation to expand Medicaid in Alabama, SB182. The governor said expansion is a separate issue from the RCOs.

TAX ISSUES

Tax Credits for Small Business Jobs,
Apprentices and Unemployed Vets Move

Several bills providing additional tax credits for job creation moved this week:

Tax Credit for Small Business Job Creators Headed to Senate: The Alabama House overwhelmingly voted Tuesday to add another tax credit for small businesses that create jobs. HB36 by Rep. Kyle South, R-Fayette, provides a one-time, $1,500 income tax credit to Alabama businesses with 75 or fewer employees, for each qualified, new, full-time, Alabama resident employee hired. It allows for an additional $1,000 income tax credit (for a total of $2,500) if the new employee hired is a recently returned, unemployed veteran as part of the Heroes for Hire Act passed in 2012. To qualify for the credit, businesses must retain the new employee for a full year, and the employee must make $40,000 or more annually. In addition, businesses must show a net employee growth each year to qualify for the credit. The bill now goes to the Senate Fiscal Responsibility and Economic Development Committee.
Senate Panel OKs Apprentice Tax Credit: The Senate Finance and Taxation Education Committee on Wednesday approved SB90 by Sen. Arthur Orr, R-Decatur, which would provide a $1,000 income tax credit to an employer for each qualified apprentice employed. It now goes to the full Senate. Meanwhile this week, Rep. Ken Johnson, R-Moulton, introduced companion legislation, HB217. It has been assigned to the House Ways and Means Education Committee.
Bill Expands Hiring Tax Credit to More Out-of-Work Veterans: The Senate Finance and Taxation Education Committee also approved SB75 by Sen. Gerald Dial, R-Lineville, which removes the requirement from the 2012 Heroes for Hire Act that the unemployed veterans hired or starting their own business have to be recently returned. Dial told the committee 22 took advantage of the credit last year. Others wished to take advantage of it, but the veterans had been honorably discharged longer than the two years allowed in the act. The bill also renames the act, the Veterans Employment Act. It now goes to the full Senate. The House companion, HB179, awaits action by the House Ways and Means Education Committee.

Senator Again Introduces Combined Reporting

As she has in past sessions, Sen. Linda Coleman-Madison, D-Birmingham, this week introduced mandatory unitary combined reporting of corporate income taxes, a taxing scheme that would greatly hinder the state’s ability to attract new business. Under SB202, companies and their affiliated entities would have to file all income with the Alabama Department of Revenue, whether or not it was earned in Alabama, and the department would determine the amount of taxes due. The bill would apply to every business, both inside and outside the state, with multi-state tax obligations.

The Alabama Retail Association and the Business Associations’ Tax Coalition, a coalition of the major business groups in the state, as well the state’s major economic development groups oppose combined reporting.

Panels Vote to Require Counties to Hire
Outside Counsel for Property Tax Assessment Appeals

House and Senate committees this week approved companion bills that would require county commissions to hire outside legal counsel for both the state and counties when property tax assessments are appealed to a circuit court. Right now, the district attorney represents the state and counties in property tax assessment appeals. The House County and Municipal Government Committee approved HB50 by Rep. Paul Lee, R-Dothan, sending it to the full House; while the Senate Fiscal Responsibility and Economic Development Committee approved SB128 by Sen. Phil Williams, R-Rainbow City, sending it to the full Senate.

House Sends Taxpayer Advocate Bill to Senate

The Alabama House on Tuesday amended and approved HB38 by Rep. Mark Tuggle, R-Alexander City, which requires Alabama’s Taxpayer Advocate to be appointed by the governor rather than by the Alabama revenue commissioner. The bill also broadens the duties of the advocate. Tuggle said the goal is neutrality and better communication with taxpayers. While some criticized the bill for trading one political appointment for another, Tuggle pointed out it “interjects a five-person committee into the process.” The bill now goes to the Senate Finance and Taxation Education Committee.

Bill Would Establish Small Business Investment Funds

A bill introduced this week by Rep. Danny Garrett, R-Trussville, creates the framework for small business investment funds that will in turn invest in Alabama companies. HB224 has been assigned to the House Ways And Means Education Committee.

LABOR

House to Take Up Right-to-Work
Constitutional Amendment Again Next Week

House Speaker Mike Hubbard said the House will reconsider legislation next week that would make Alabama’s right-to-work law part of the Alabama Constitution. Because it is a constitutional amendment, HB37 by Rep. Arnold Mooney, R-Birmingham, needed 63 votes to pass, but only received 60 votes after an extended debate Thursday. The sponsor said the weight of the state constitution needs to be behind the 1953 law, which states Alabamians have the right to work without their membership or lack of membership in a labor union being a condition of employment. Currently, 10 of the 25 states with right-to-work laws have the provision as part of their constitution, according to the National Conference of State Legislatures. The Senate companion SB111 by Sen. Gerald Dial, R-Lineville, awaits action by the Senate Fiscal Responsibility and Economic Development Committee.

ELECTIONS

House Vacancy to Be Filled Tuesday

Rep. Dan Williams died in July after a battle with leukemia, creating a vacancy in House District 5. The Alabama Retail Association endorses Danny Crawford of Athens in the Tuesday, Feb. 16, special General Election to fill that seat. Polls open at 7 a.m. and close at 7 p.m.

ALCOHOL

Bill Allowing Limited Retail Sales at Breweries
in Committee Next Week; Panel OKs Distillery Sales Bill

Next week, the House Economic Development and Tourism Committee will consider legislation recommended by the Alabama Alcoholic Beverage Study Commission that would allow breweries and brewpubs to engage in some retail sales of their products. HB176 by Rep. Anthony Daniels, D-Huntsville, is on the committee’s Wednesday agenda.

Daniels’ bill would allow small brewers and brewpubs producing less than 60,000 barrels of beer annually to sell up to 288 ounces of beer per day to a customer for off-premise consumption. The bill also allows brewers to directly deliver up to two kegs per event to charity functions.

The House Economic Development and Tourism Committee this week amended and approved HB46 by Rep. Alan Boothe, R-Troy, to allow an Alabama distillery to sell a standard-size bottle (up to 750 milliliters) per customer, per day from its premises for off-premise consumption only. The bill now goes to the full House.

The third bill recommended by the Commission, HB83 by Rep. David Faulkner, R-Birmingham, and Rep. Alan Harper, R-Aliceville, was on the committee’s agenda for this week, but no vote was taken. It would allow a licensed winery to obtain a permit to operate one additional tasting room outside its on-site tasting room. Sen. Linda Coleman-Madison, D-Birmingham, this week introduced the Senate companion, SB166.

Other alcohol bills or scheduled for action next week include:

HB148 by Rep. Becky Nordgren, R-Gadsden, which allows licensed liquor manufacturers or representatives to conduct liquor and wine tastings, at no charge to consumers, in retail and state liquor stores. Under this legislation, one-quarter ounce of liquor with no more than two products or one ounce of wine with no more than four products could be served at any tasting. The bill is on the House Economic Development and Tourism Committee’s agenda for Wednesday. The Senate companion, SB219, by Sen. Billy Beasley, D-Clayton, is on the Senate Tourism and Marketing Committee’s Wednesday agenda.
SB102 by Sen. Tom Whatley, R-Auburn, is scheduled to be debated by the Senate Governmental Affairs Committee on Tuesday. It would allow alcohol beverage licenses to be transferred without an additional fee, reapplication or reinspection, if the local governing body agrees to the move.
HB69 by Rep. Mark Tuggle, R-Alexander City, would provide for an additional marina community development district that could be authorized for on-premise Sunday alcohol sales even though it is located in a wet county that doesn’t authorize Sunday sales. The House Economic Development and Tourism Committee will consider it Wednesday.

Other alcohol bills introduced this week include:

HB219 by Rep. Ken Johnson, R-Moulton, which would lengthen the time between wet/dry referendums from 720 days to 1,440 days;
HB140 by Rep. Lynn Greer, R-Rogersville, which would allow voters in the town of Lexington to decide if they want six-day draft beer sales.

OTHER INTRODUCTIONS

HB150 by Rep. Laura Hall, D-Huntsville, would create an Equal Pay Commission to study wage disparities and report its findings and recommendations to the Alabama Legislature.

HB151 by Rep. David Faulkner, R-Birmingham, would increase the district courts’ jurisdiction to all cases with amounts in controversy of $15,000 or less, and give circuit courts jurisdiction over matters exceeding $15,000.

Rep. Bill Poole, R-Tuscaloosa, introduced four bills regarding biennial, or every other year, budgeting: HBs 197, 198, 199 and 200.

NEXT LEGISLATIVE DAY

The Alabama House of Representatives will convene at 1 p.m. Tuesday, Feb. 16, for the fifth legislative day of the Alabama Legislature’s 2016 regular session. The Alabama Senate will convene at 2 p.m.

FEDERAL

Senate Majority Leader Pledges
Efairness Will Be Considered This Year

U.S. Senate Majority Leader Mitch McConnell, R-Ky., this week pledged that the Senate will consider legislation this year that would allow states to collect sales taxes from online retailers.

McConnell’s agreement to advance efairness legislation during the current session of Congress is good news for Main Street retailers, who continue to operate under a tax disadvantage compared with remote online-only retailers.

Senate Minority Whip Dick Durbin said if an efairness bill does not come over from the House, then the Senate will just take up the latest version of the bill, which is based on the Remote Transactions Parity Act (H.R. 2775) by U.S. Reps. Jason Chaffetz, R-Utah. Alabama Rep. Mike Rogers, R-Saks, is a cosponsor.

In the meantime, Congress this week gave final approval to customs and trade legislation that included a permanent extension of a moratorium on internet access taxes. It bars state and local governments from taxing the monthly bills customers pay for Internet service, like your cable service.

Byrne, Roby Among Bipartisan Group Calling
on Labor Dept. to Reconsider Overtime Rule

Alabama U.S. Reps. Bradley Byrne and Martha Roby were among 108 members of Congress who signed a letter delivered Tuesday to U.S. Department of Labor Secretary Tom Perez expressing serious concerns with the proposed Fair Labor Standards Act (FLSA) overtime rule.

The proposed rule change would more than double the minimum salary necessary for executive, administrative, professional, outside sales or computer programmer employees to qualify for an overtime exemption. The minimum would go from the current $455 per week, or $23,660 annually, to approximately $970 per week, or $50,440 per year – a 113 percent increase.

The U.S. Labor Department is expected to release its final rule in July, according to the agency’s fall 2015 regulatory agenda. In the letter sent this week, the congressional leaders urged the department to reconsider moving forward with the rule as drafted noting unintended consequences for employers and employees. In Alabama alone, the proposed rule could bring 48.6 percent of full-time salaried workers under overtime rules.

Nearly 300,000 comments were received on the proposed rule. Alabama Retail board member Terry Shea (pictured), one of the co-owners of Wrapsody, a gift shop with locations in Hoover and Auburn, testified in October before Hardy’s committee, representing all of the nation’s retailers. She said this week that she is encouraged by “the bipartisan support for revamping this rule or at least pausing” and thanked Byrne and Roby for signing the letter to Perez.

The rule tops the DOL’s list of regulatory priorities in the Obama administration’s final full year. Once the final rules are published, employers will have 60 days to comply.

Other information on this issue is available at: