Friday, March 18, 2016
Voters to Decide if Right to Work
Should Become Part of State Constitution
If Alabama voters agree, the state could become the 11th in the nation to include its right-to-work law as a part of its constitution.
Gov. Robert Bentley signed Act. No. 2016-86 by Rep. Arnold Mooney, R-Birmingham, early Thursday afternoon shortly after the Alabama Senate passed the bill on a vote of 25-9. Sen. Gerald Dial, R-Lineville, was the Senate sponsor.
Alabama’s 1953 right-to-work law states Alabamians have the right to work without their membership or lack of membership in a labor union being a condition of employment. “Just a law does not protect that core value,” Mooney said. Alabama voters now will be asked if they want to make right to work part of the state’s constitution.
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.
BUDGET
State Operating Budget Still Up in the Air
Alabama’s general operating budget remains a work in progress. The Alabama House of Representatives on Tuesday approved a $1.85 billion budget (SB125) that level funds most agencies and is $85 million short of what the Alabama Medicaid Agency and the governor says the agency needs to operate. The Senate did not take up the House changes this week. The Legislature is expected to work Tuesday and Wednesday of next week, then break for its spring recess.
TAX ISSUES
Revision of Remote Sellers’ Voluntary
Collection of Sales Taxes on Governor’s Desk
On a 98-0 vote and without discussion, the Alabama House on Tuesday sent a revision and expansion of the 2015 Simplified Seller Use Tax Remittance Act to the governor for his signature.
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. If the governor signs SB233 by Sen. Trip Pittman, R-Daphne, into law, it would immediately allow eligible remote sellers under specific parameters to continue to participate in the state’s voluntary sales tax collection program, 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.” Those sellers can “locate a facility in our state as long as they don’t conduct retail sales” from that property, the sponsor said. The sellers also couldn’t sell to Alabamians through an Alabama affiliate, and they must have been in the voluntary program for six months or more before opening a facility in Alabama.
From the original law’s effective date, Oct. 1, 2015, through early March of this year, 30 companies have voluntarily remitted sales taxes, according to the Alabama Department of Revenue. In the first three months the 2015 law was in effect, only about $12,000 was collected as a result.
Then on Jan. 1, the Revenue Department, through a rule, began requiring 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. The rule allows those sellers to utilize the simplified program established by the 2015 law. Revenue Department officials said once the Jan. 1 rule went into effect, the number of companies voluntarily remitting increased. “It is anticipated that the first quarter of 2016 will show a significant percentage increase in receipts,” said Mike Gamble, director of the Revenue Department’s Tax Policy and Research Division. The state won’t know the exact amount of those quarterly receipts until after April 20, he said. It is also unknown if SB233 will generate more voluntary remitters.
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.
Gasoline Tax to Improve Alabama
Roads and Bridges Ready for House Consideration
A bill that would raise taxes on gasoline and diesel fuel in Alabama by six cents per gallon and benchmark those taxes every four years to the average tax in the four states bordering Alabama is on its way to the House for consideration. The tax would take effect Oct. 1, 2016, and the automatic adjustments would end in 2027. Rep. Mac McCutcheon, R-Huntsville, introduced HB394 on Tuesday, and the House Transportation, Utilities and Infrastructure Committee approved the bill on a voice vote Thursday morning.
“We are facing issues with our infrastructure that will become a crisis if we don’t do something,” McCutcheon told the committee, referencing the American Society of Civil Engineers rating of nearly half the highways in our state as fair, poor or very poor. The states’ roads received a D+ grade, while the state’s bridges got a C- in the ASCE 2015 Report Card for Alabama’s Infrastructure.
The committee also approved SB180 by Sen. Gerald Dial, R-Lineville, which ensures revenue generated by McCutcheon’s bill will be spent on roads and bridges. The Alabama Department of Transportation, counties and municipalities would be required to use funds on road and bridge projects and not on salaries or administrative expenses. The Transportation Department also would be required to announce annual projects and post quarterly progress reports on its website.
Both bills are ready for House consideration. The sponsors expect the House will consider the bills the first full week of April.
>> Learn more about HB394 and SB180 here
Senate OKs Bill Linking State Income
Tax Returns to Federal Due Dates
The Alabama Senate on Tuesday unanimously approved SB263 by Sen. Quinton T. Ross Jr., D-Montgomery, which requires the due dates for state income tax returns to correspond to the due dates for federal returns. It also mandates payment to be made on the return’s due date. Beginning with the 2016 returns filed in the 2017 filing season, the federal government moved the due date for partnership returns from April 15 to March 15 and certain C corporation returns from March 15 to April 15.
>> Summary of federal income tax due date changes
Ross’ bill now goes to the House State Government Committee. The House companion, HB251 by Rep. Anthony Daniels, D-Huntsville, awaits consideration by the full House.
Final Debate Possible in Either Chamber on Counties
Hiring Outside Counsel for Assessment Appeals
The House County and Municipal Government Committee on Wednesday approved SB128 by Sen. Phil Williams, R-Rainbow City, which requires county commissions to hire outside legal counsel for both the state and counties when property tax assessments are appealed to a circuit court. Currently, the district attorney represents the state and counties in property tax assessment appeals. The sponsor said outside counsel is necessary to combat the “dark store” method of valuing property for taxing purposes. Under dark store, property tax valuation is not based on the cost to construct a store, but on the cost to sell an empty store built for a specific retailer. The Alabama Department of Revenue has hired an attorney to handle more than 20 lawsuits one retailer has filed in Alabama challenging property values based on the dark store method. The bill is next to last on the House’s proposed 39-bill calendar for Tuesday. The House companion, HB50 by Rep. Paul Lee, R-Dothan, is ready for consideration by the full Senate.
Panel OKs Bill Exempting Video Programming
Services From Rental, Sales and Use Taxes
Video services, such as streaming and pay television for live sporting events, would remain untaxed for now under legislation approved Wednesday by the House State Government Committee.
HB349 by Rep. Ed Henry, R-Hartselle, 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. The bill does not exempt software that is purchased and downloaded onto a computer for permanent use.
Henry said the main purpose of the bill is to emphasize that it is “a legislative decision, not a Revenue Department decision,” whether to tax such services. The Alabama Revenue Department last year tried to make rental of on-demand movies, television programs, streaming and other similar programming subject to the state’s rental tax through an administrative rule. The department ultimately withdrew that rule. Henry’s bill now goes to the full House for consideration.
The Senate companion, SB345 awaits action by the Senate Fiscal Responsibility and Economic Development Committee.
ALCOHOL
Limited Retail Sales for Breweries on Governor’s Desk
Legislation that would allow breweries and brewpubs to engage in limited retail sales of their products is on the governor’s desk. On a vote of 24-3 Tuesday, the Alabama Senate approved HB176, by Rep. Anthony Daniels, D-Huntsville. If the governor signs it into law, starting June 1, Alabama brewers and brewpubs producing less than 60,000 barrels of beer annually will be able to sell up to 288 ounces of beer per day to a customer for off-premise consumption. Alabama currently doesn’t have a brewery producing 60,000 barrels annually, so the new law will apply to all of the state’s breweries, at least initially. 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. The bill was recommended by the Alabama Alcoholic Beverage Study Commission.
Next week, the House Economic Development and Tourism Committee will take up the other two bills recommended by the commission. On Wednesday’s agenda is:
- 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 bill limits 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 allows 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.
- 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. The House companion, HB46 by Rep. Alan Boothe, R-Troy, is ready for House consideration.
Panel OKs State Store Privatization Bill
On a vote of 10-4, the Senate Fiscal Responsibility and Economic Development Committee this week approved SB292 by Sen. Arthur Orr, R-Decatur, which would phase out retail alcohol sales at the Alabama Alcoholic Beverage Control Board’s 176 state stores by Oct. 1, 2021. The Alcohol Beverage Reform Task Force, which this summer and fall studied the possibility of privatizing state liquor sales, made no recommendations to the Legislature. Orr’s bill now goes to the full Senate for consideration.
House Passes Kellyton Sunday Sales;
Hollywood Sunday Sales Bills Introduced
The Alabama House voted Tuesday to give the Kellyton Town Council authority to ask voters if they would like to allow alcohol sales after 1 p.m. on Sundays in that Coosa County town. HB274 by Rep. Ron Johnson, R-Sylacauga, now goes to the Senate Local Legislation Committee.
This week, lawmakers introduced companion bills that would authorize the Hollywood Town Council through a vote of the council to allow Sunday alcohol sales in the Jackson County town. HB401 by Rep. Tommy Hanes, R-Bryant, received approval Thursday from the House Local Legislation Committee. The Senate companion, SB352 by Sen. Steve Livingston, R-Scottsboro, awaits action by the Senate Local Legislation Committee.
WORKPLACE ISSUES
Bracy Introduces Minimum Wage
Constitutional Amendment for Mobile
Rep. Napoleon Bracy, D-Prichard, this week proposed a local constitutional amendment that would ask Mobile County voters if they want to set a $10.10-an-hour minimum wage in that county starting in 2017 and create a civil action for employees if an employer fails to pay that minimum. HB402 has been assigned to the Mobile County Legislation Committee.
HEALTH
Panel OKs Healthcare Rights of Conscience Bill
The House Health Committee on Wednesday approved HB159 by Rep. Arnold Mooney, R-Birmingham, which would give healthcare providers, including pharmacists, the right to refuse certain reproductive healthcare services that violate their conscience. The bill now goes to the full House for consideration.
LEGAL
House OKs Revision to Limited Partnership Law
The Alabama House on Thursday unanimously approved HB202 by Rep. Bill Poole, R-Tuscaloosa, which modifies the state’s Alabama limited partnership law to reflect current case law. Poole said his bill also brings the state’s LP law in conformity with its LLC law. The 173-page bill was written by the Alabama Law Institute. The Senate companion, SB151 by Sen. Cam Ward, R-Alabaster, awaits action by the full Senate.
NEXT LEGISLATIVE DAY
The Alabama House of Representatives will convene at 1 p.m. Tuesday, March 22, for the 17th legislative day of the Alabama Legislature’s 2016 regular session. The Alabama Senate convenes at 2 p.m.
FEDERAL
Overtime Final Rule May Come
in Spring, Rather than Summer
Early this week, the U.S. Labor Department sent final changes for its proposed overtime rule to the White House Office of Management and Budget for review. As originally proposed, the rule would add some 5 million people nationally to those eligible for time-and-a-half pay for working more than 40 hours a week. The estimate of the number of workers affected is 2.2 million in the retail and restaurant industries alone.
The details of the changes sent to OMB this week have not yet been made public. After a review period — as short as a few weeks or as long as several months — the final rule will be published in the Federal Register and take effect within 60 days of publication. Because the president wants this change made before he leaves office, employers should expect and prepare for the rule sooner rather than later.
Under the Congressional Review Act, a joint resolution from both houses of Congress and the president can undo laws and rules passed during the final 60 legislative days of the previous Congress. According to recent calculations by the Congressional Research Service, if the DOL’s overtime rule isn’t released by the OMB by May 16, the rule will be at the mercy of the next Congress and president, a fate the Obama administration wants to avoid.
The DOL, in its fall 2015 regulatory agenda, had estimated a July 2016 release date for the final rule. This week’s action speeds up that process and could mean the rule will be in effect as early as July, rather than released in July.
Under the proposed rule, the minimum salary necessary to qualify for an executive, administrative, professional or computer programmer exemption more than doubles from the current $455 per week, or $23,660 annually, to approximately $970 per week , or $50,440 per year in 2016.
In Alabama, the proposed rule could bring 48.6 percent of full-time salaried workers under overtime rules (See report for state-by-state numbers.) Again, it is not known yet if the final rule will match the levels set in the proposed rule.
The Alabama Retail Association will continue to keep its members informed as this rule develops. Alabama Retail board member Terry Shea testified in October on behalf of all retailers about the real-world effects of this rule change. She also spoke about the issue to the Opelika-Auburn News in a story that appeared just last week.
“I think everyone agrees that there should be an increase; it’s time for an increase, but number one, the amount of increase that the Department of Labor is proposing is too extreme,” Shea told the OA News. “The way they came about getting this dollar amount was not a true representation, cross section of America.”
