Friday, March 11, 2016
How to Fund Medicaid is
the Question of the Week
As the Alabama Legislature approaches the midpoint of its 2016 session, funding for the Alabama Medicaid Agency, which pays for medical and long-term care services for more than 20 percent of Alabama’s population, has become the primary topic of conversation.
The House left town early Thursday, because some wanted to talk about rewriting the General Fund budget and its Medicaid appropriation before the legislation had even made it to the House floor. The House is expected to debate a $1.85 billion General Fund budget (SB125) Tuesday. The current version of the budget funds Medicaid at $85 million less than what the agency and the governor say is needed to serve the more than 1 million Medicaid recipients. Consequently, the governor said this week he would call lawmakers back into special session if Medicaid is not adequately funded in whatever budget the Legislature approves.
Medicaid Commissioner Stephanie Azar told lawmakers the $700 million allotted for Medicaid in the current budget proposal would not be enough to sustain the agency’s transition to managed care and jeopardizes the $747 million in federal funds pledged to help with that transformation.
On the other side of the budgetary coin, all 105 members of the Alabama House on Tuesday voted for a $6.3 billion education budget (HB117) for 2017. The House also approved pay raises for education employees.
Tuesday will be the 15th legislative day of the 30-day regular session.
MEDICAID
Remote Sellers’ Voluntary Collection of Sales Taxes
Said to Aid Medicaid; Revision Ready for Final Debate
The General Fund budget approved this week by the House Ways and Means General Fund Committee contained $15 million more for Medicaid than the Alabama Senate version of the budget. Budget officials told lawmakers most of that money is projected to come from voluntary sales taxes paid by remote online sellers, according to news reports. The Alabama Revenue Department has not released specifics of how much tax has been remitted since the law creating the voluntary program was enacted in 2015.
Meanwhile, companion bills that would revise and expand the 2015 Simplified Seller Use Tax Remittance Act easily passed out of committees this week and could get final consideration in either legislative chamber. On a vote of 9-3 Wednesday, the Senate Finance and Taxation General Fund Committee approved HB116 by Rep. Rod Scott, D-Fairfield; while the House Ways and Means General Fund Committee unanimously adopted SB233 by Sen. Trip Pittman, R-Daphne, on a voice vote. The 2015 law allows remote sellers without a physical presence in Alabama to collect a flat 8-percent sales tax from Alabama residents who buy their merchandise.
The revision, which is headed to its final vote, would allow eligible remote sellers to continue to participate in the state’s voluntary sales tax collection program, under certain circumstances, even if the seller later establishes a physical presence in Alabama. Pittman said the aim is to get more remote retailers “to voluntary remit revenue.” He added, those sellers can “locate a facility in our state as long as they don’t conduct retail sales” from that property.
Specifically, the proposed legislation says remote sellers can continue to participate in the voluntary program even after establishing a physical presence in the state, as long as they don’t sell to Alabama residents from their Alabama location or through an affiliate and have been in the voluntary program for six months or more. The revision also allows those in the voluntary program to continue to collect the flat tax rate, even if federal efairness legislation passes as long as the remote retailers have been in the voluntary program at least six months before the federal law becomes effective.
Also at play is an administrative rule, which was effective Jan. 1, that requires remote sellers with more than $250,000 in retail sales of tangible personal property into Alabama to collect sales tax on transactions with Alabama customers. Those sellers also can utilize the simplified program established by the 2015 law.
Half of the voluntary sales taxes and those collected through the administrative rule using the simplified program go to the state with the other half divided equally by the states’ cities and counties. Seventy-five percent of the state’s 50 percent share goes to the General Fund, which funds Medicaid and other state agencies.
Panel OKs Property Tax Increase
for Medicaid by One Vote
A constitutional amendment that would raise property taxes by 5 mills statewide, with the proceeds going to Medicaid, cleared a Senate budget committee Wednesday on a one-vote margin. Under SB136 by Sen. Vivian Figures, D-Mobile, the state portion of property taxes would go from 6.5 mills to 11.5 mills, if the state’s voters agreed. Figures said the increase would equate to $15 more for every $50,000 in a property’s value. According to the fiscal note, it would increase Medicaid funding by $280 million annually beginning with the 2019 fiscal year with lesser amounts in 2017 and 2018. The vote by the Senate Finance and Taxation General Fund Committee was 7-6. The bill now goes to the full Senate.
Groups Float Idea of Another
Cigarette Tax to Benefit Medicaid
Last year, the Alabama Legislature increased the state tax on cigarettes by 25 cents a pack to benefit Medicaid. Now, the Alabama Health Care Improvement Task Force, which the governor created through executive order, and Alabama Arise, a coalition that lobbies on behalf of the state’s poor, are calling for a 75-cents-per-pack additional increase in the cigarette tax to raise another $200 million. Both recommend $180 million go to Medicaid. No such bill has been introduced at this point in the session.
OTHER TAX ISSUES
House Bill Requiring Counties to Hire Outside Counsel
for Property Tax Assessment Appeals Goes to Senate
House legislation requiring county commissions to hire outside legal counsel for both the state and counties when property tax assessments are appealed to a circuit court is headed to the Senate. Currently, the district attorney represents the state and counties in property tax assessment appeals. The Senate County and Municipal Government Committee on Wednesday unanimously approved HB50 by Rep. Paul Lee, R-Dothan, sending it to the full Senate. The Senate companion, SB128 by Sen. Phil Williams, R-Rainbow City, awaits consideration by the House County and Municipal Government Committee.
Digital Goods Tax Dies in Committee
Legislation that would have made “digital goods” in Alabama subject to sales or use tax failed to garner enough support to make it out of committee this week. Confusion among the Senate Finance and Taxation Education Committee members about exactly what goods would be taxable seemed to be the primary reason for the failure of SB242 by Sen. Trip Pittman, R-Daphne. Despite the sponsor’s assurances that he could get the committee a definitive list of what would be taxed, the bill failed 4-8.
During the committee meeting, a Revenue Department representative cited two examples of an electronical transfer of goods that would be taxable under the legislation: photographs sent from a photographer to a buyer and movies being purchased, not rented. “The purchase of a movie is still taxed, although you don’t have to go to the store to buy it,” she said. She said those items are taxable now, and the bill was meant as a clarification.
At this point in the session, there is no House version of Pittman’s bill.
Senator Introduces Exemption for Video Programming
Services From Rental, Sales and Use Taxes
Sen. Bobby Singleton, D-Greensboro, this week introduced the Senate companion to legislation Rep. Ed Henry, R-Hartselle, introduced last week. SB345 and HB349 would exempt video programming services (such as streaming) — including subscription services, video-on-demand television services and broadcasting services — from rental, sales and use taxes. It does not exempt software that is purchased and downloaded onto a computer for permanent use. The Senate bill has been assigned to the Senate Fiscal Responsibility and Economic Development Committee, while the House bill is in the House State Government Committee.
Bill Would Ban Cities from Hiring
Private Tax Auditors or Collectors
Sen. Paul Sanford, R-Huntsville, introduced legislation that would prohibit a municipality from entering into a contract with a private auditing or collecting firm related to local sales and use taxes. SB335 has been assigned to the Senate County and Municipal Government Committee.
HEALTH
Committees Move Bills Granting Anti-Trust
Liability Immunity to Pharmacy Board
Committees this week moved companion bills that would give the Alabama Board of Pharmacy and its members immunity from liability under state and federal antitrust laws for adopting pharmacy rules that prioritize “patient safety and wellness but may be anti-competitive.”
The House Health Committee approved a substitute version of HB320 by Rep. Ron Johnson, R-Sylacauga, which makes it identical to SB310 by Sen. Billy Beasley, D-Clayton, which the Senate Health and Human Services Committee approved unanimously.
The sections added to the House bill that make it compatible with the Senate version say that the legislation doesn’t lessen or expand the rights and privileges of those governed by the pharmacy board nor does it lessen or expand the pharmacy board members duties “in any context outside of federal or state antitrust immunity” beyond what existed prior to the Feb. 25, 2015, U.S. Supreme Court ruling in the N.C. State Board of Dental Examiners v. Federal Trade Commission case. That ruling held that professional licensing boards don’t automatically get antitrust immunity. In the 6-3 ruling, the nation’s highest court found that the dental examiners board, which was made up primarily of dentists, could not exclude non-dentists from the market for teeth whitening services.
Full Senate, House Panel OK Outlawing
Sale of Adjustable Focus Eyewear
The Alabama Senate this week voted to halt the sale of adjustable focus eyewear in Alabama. SB245 by Sen. Jim McClendon, R-Springville, now goes to a House committee.
The legislation sets lens requirements for over-the-counter eyewear that would preclude the sale of glasses with an adjustable magnification, a technology being marketed worldwide by Adlens. McClendon, a retired optometrist and past president of the Alabama Optometric Association, told the Senate that this new technology was “made for third-world countries where there are no optics laboratories.” He said adjustable magnification eyewear is “better than no glasses at all” in those areas of the world, but does not meet the standards of acceptable vision correction needed in Alabama, especially for driving.
The Senate amended the bill to increase the magnification allowed in over-the-counter eyewear to 3.50 diopters, the unit of measurement for optical power. The original bill had called for a maximum of 3.00.
The House Health Committee on Wednesday approved the companion legislation, HB336 by Rep. April Weaver, R-Brierfield, with the same amendment as was added in the Senate. The House bill now goes to the full House.
The legislation gives the Alabama Board of Optometry, district attorneys and the attorney general enforcement authority.
Exempting Prescription Drug Costs
from Business License Taxes Among Introductions
Sen. Billy Beasley, D-Clayton, this week introduced companion legislation that would exempt prescription drug costs from business license taxes based on gross receipts. SB329 has been assigned to the Senate Fiscal Responsibility and Economic Development Committee. The House companion, HB58 by Rep. Ron Johnson, R-Sylacauga, awaits consideration by the full House.
Another introduced bill, SB331 by Sen. Cam Ward, R-Alabaster, would allow any entity that meets the definition of a federally qualified health center under the Social Security Act to compound and dispense prescriptions, excluding controlled substances, at one location and courier the medication to clinics for patient pick-up. It has been assigned to the Senate Health and Human Services Committee.
LEGAL
Judiciary Panel Sends Bill Increasing
District Court Jurisiction to House
The House Judiciary Committee on Wednesday approved HB151 by Rep. David Faulkner, R-Birmingham, which 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. The bill now goes to the full House for consideration.
WORKPLACE ISSUES
Ross Introduces Ban the Box Bill
Sen. Quinton Ross, D-Montgomery, this week introduced “ban the box” legislation to keep employers from asking about a job applicants’ criminal background until after the applicant has received a conditional job offer. Under Ross’ bill, the only reason a prior conviction would automatically disqualify someone for employment would be if the conviction is directly related to the job being sought.
SB327 also requires employers to engage in extensive communications and record-keeping. It sets up audits and fines enforced by the Alabama Department of Labor, and it creates a new private cause of action against employers. The bill has been assigned to the Senate Fiscal Responsibility and Economic Development Committee.
ALCOHOL
Bills Allowing Limited Retail Sales
for Alcohol Makers Progress in Legislature
Three bills recommended by the Alabama Alcoholic Beverage Study Commission to allow greater retail opportunities for breweries/brewpubs, wineries and distilleries all saw movement in the Legislature this week:
BEER – Legislation that would allow breweries and brewpubs to engage in limited retail sales of their products is in line for final approval in the Senate. On a 13-2 vote Wednesday, the Senate Fiscal Responsibility and Economic Development approved HB176 by Rep. Anthony Daniels, D-Huntsville. It 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. Currently, breweries can only sell beer for off-premises consumption through a licensed wholesaler. Thursday, the Alabama Senate approved a procedural motion that would allow the Senate companion, SB211 by Sen. Bill Holtzclaw, R-Madison, to be debated anytime at the call of the chair. Holtzclaw said he plans to substitute the House version of the bill with his bill next week, putting it in line to go to the governor to be signed into law as early as next week.
WINE – On a vote of 25-1 Thursday, the Alabama Senate approved SB166 by Sen. Linda Coleman-Madison, D-Birmingham, which would allow a licensed winery that produces less than 50,000 gallons of table wine annually to obtain a permit to operate one additional tasting room outside its on-site tasting room. The Senate amended the bill to limit the sales at the off-site tasting room to one case of wine, or the equivalent of a dozen 750-milliliter bottles, per customer per day. The bill also would allow an association representing the majority of wineries and grape growers in the state to operate one off-site tasting room that also could be used for retail sales of table wines produced by the state’s wine manufacturers. Another provision of the bill would permit a producer to deliver up to two cases of table wine directly to a charitable event as long any table wine remaining at the conclusion of the charitable event is returned to the manufacturer for disposal. What had been the House companion, HB83 by Rep. David Faulkner, R-Birmingham, and Rep. Alan Harper, R-Aliceville, awaits action by the full House. It does not contain the sales limitation that is part of the Senate bill.
SPIRITS – Also on a vote of 25-1, the Senate approved SB132 by Sen. Bobby Singleton, D-Greensboro, which would 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. Singleton said there are only a couple of distilleries in the state and his legislation will help them market their product. The House companion, HB46 by Rep. Alan Boothe, R-Troy, is ready for House consideration.
Senate Liquor and Wine Tasting Bill Headed to House
The House Economic Development and Tourism Committee on Wednesday approved SB219 by Sen. Billy Beasley, D-Clayton, which would allow licensed distilleries or wineries to conduct liquor and wine tastings, at no charge to consumers, in retail and state liquor stores. The bill now goes to the House for final consideration.
Under the bill, 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. All tastings must begin before 6 p.m. The bill also specifies that no more than 10 percent of state liquor stores can have tastings in 2016; no more than 20 percent in 2017 and no more than 28 percent in 2018 and beyond. According to testimony during Wednesday’s public hearing, 40 states already allow such tastings. The House companion, HB148 by Rep. Becky Nordgren, R-Gadsden, awaits consideration by the full House.
Secretary of State Clarifies that
Shelby County Sunday Sales Effective Immediately
In an email to the Alabama Retail Association on Monday, the Secretary of State’s general counsel said the constitutional amendment allowing alcoholic beverage sales after noon on Sundays in Shelby County went into effect upon the amendment’s ratification on Tuesday, March 1. “Therefore, despite the fact that the results will not be certified until March 20th, the amendment went into effect immediately upon ratification,” Joel Laird wrote. “Since the amendment passed 70 percent to 30 percent, certification of the results is simply a formality at this point.”
Butler Introduces Rainbow City Sunday Sales Bill
Rep. Mack Butler, R-Rainbow City, this week introduced legislation that authorizes the Rainbow City Council to ask voters in that city if they would like to allow alcohol sales between 1 and 9:30 p.m. on Sundays. HB381 has been assigned to the House Local Legislation Committee.
Bill Allows Relatives of Alcohol Distributors to Be
an Alcohol Maker or Hold a Separate Beer or Liquor License
Sen. Bill Holtzclaw, R-Madison, this week introduced legislation that would allow a family member of an alcohol distributor or wholesaler to be an alcohol manufacturer or own an establishment that sells beer or liquor as long as the manufacturer or owner is not an officer, employee or stockholder of the distributor or wholesaler. SB343 has been assigned to the Senate Fiscal Responsibility and Economic Development Committee.
NEXT LEGISLATIVE DAY
The Alabama House of Representatives will convene at 1 p.m. Tuesday, March 15, for the 15th legislative day of the Alabama Legislature’s 2016 regular session. The Alabama Senate convenes at 2 p.m.
