Thursday, March 24, 2016
Governor Will Veto General Fund
Gov. Robert Bentley said today that he will veto the $1.85 billion General Fund budget (SB125), which the Alabama Senate sent to him Wednesday. The budget funds the Alabama Medicaid Agency at $85 million less than the agency and the governor says it needs. Bentley said the spending plan doesn’t adequately fund the agency that provides health coverage for more than 1 million Alabama children, disabled and elderly.
The Senate voted 20-13 to concur with the budget passed last week by the House of Representatives, then left for the Legislature’s spring recess. When lawmakers return, Tuesday, April 5, they say they expect to override the gubernatorial veto.
Medicaid officials say its $15 million funding increase isn’t enough to fund the regional care organizations meant to transform the agency from a fee-for-service model to one that pays on a per-person basis tied to health outcomes.
Legislative leaders say most of their fellow lawmakers are reluctant to raise revenue and fund Medicaid, which consumes about 38 percent of the General Fund budget, at the expense of other agencies.
In debate Wednesday, at least one lawmaker, Sen. Dick Brewbaker, R-Montgomery, expressed concern about the state losing medical providers and a willingness to vote for a revenue-raising measure.
“The idea of doctors leaving the state isn’t just rhetoric,” he said. “I think we’re already there.”
TAX ISSUES
Bill Requiring Counties to Hire Outside Counsel
for Assessment Appeals Gets Final OK
As one of its last actions before leaving on spring break, the Alabama House on a vote of 100-1 gave final approval to legislation that requires county commissions to hire outside legal counsel when property tax assessments are appealed to a circuit court. If the governor signs SB128 by Sen. Phil Williams, R-Rainbow City, into law, it will be effective Oct. 1. The bill did not get transmitted to the governor Wednesday, so the earliest it could reach the governor for his signature is Tuesday, April 5.
Currently, the district attorney represents the state and counties in property tax assessment appeals. The sponsor said outside counsel is necessary for both the state and counties 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 House companion, HB50 by Rep. Paul Lee, R-Dothan, was ready for consideration by the full Senate.
Panel OKs Bill Requiring Wholesalers to Report
Tobacco, Beer and Wine Sales to the State
Legislation that would require tobacco, beer and wine wholesalers/distributors, as well as wholesale or warehouse clubs that sell those products, to inform the Alabama Department of Revenue of how much they sold and to what retailers or other resellers they sold it received committee approval this week.
The House Ways and Means General Fund Committee on Wednesday approved an amended and substituted version of HB115 by Rep. Ron Johnson, R-Sylacauga. It would require tobacco manufacturers, wholesalers or distributors that sell more than $300,000 annually to Alabama retailers as well as every beer and wine distributor to provide information regarding sales made within Alabama for resale purposes to the Revenue Department. The original bill also included grocery wholesalers in the reporting requirement. After the Alabama Retail Association expressed concern about that provision, the sponsor removed it.
“We have problems with stores not remitting sales taxes,” Johnson told the committee. “There are a pile of taxes that are not being collected.”
Mike Gamble, director of the Revenue Department’s Tax Policy and Research Division, said the legislation will help the department “target those who are out of compliance” by comparing taxes remitted to the “wholesale record.” The substitute removed a provision Alabama Retail objected to that would have required automated assessments or audits.
Gamble said there are retailers “we don’t know are in business, or the amounts they are selling.” Johnson added, “If the state doesn’t know they exist, it can’t audit them.” Starting Oct. 1, the bill requires cities and counties to notify the Revenue Department within three business days of each new or renewed business license issued. It also creates a mechanism for local governments to license beer, wine or tobacco retailers who currently are not required by a city or county to have a business license. The $60 annual county business privilege license fee would go to the county government.
The bill now goes to the full House for consideration.
Panel OKs Exempting Prescription Drugs
from Gross Sales for Business Licenses
Pharmacies would be able to remove prescription drug sales from their gross receipts when calculating the cost of their business license, under a bill approved on a 9-3 vote Wednesday by the Senate Fiscal Responsibility and Economic Development Committee. SB329 by Sen. Billy Beasley, D-Clayton, now goes to the full Senate for consideration. The House companion, HB58 by Rep. Ron Johnson, R-Sylacauga, is on the House’s agenda for Tuesday, April 5.
Prescription drugs have been exempt from sales tax since the 1970s and the profit margins on those drugs have decreased substantially, especially since pharmacy benefit managers determine most of those profits, Beasley told the committee. While the bill will not reduce state funds, it will result in a “loss of local funding,” he added.
Senate Bill Linking State Income
Tax Returns to Federal Due Dates Ready for House
The House State Government Committee on Wednesday 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. The bill now goes to the full House, where the companion bill, HB251 by Rep. Anthony Daniels, D-Huntsville, also awaits consideration.
Representative Introduces Business Privilege Tax Increase
Rep. Jimmy Martin, R-Clanton, this week introduced a revision to the state’s business privilege tax that would eliminate the business privilege tax liability for the smallest businesses and increase the maximum tax and rates for larger businesses. Similar legislation failed to get approval during the 2015 regular and two special sessions.
HB462 would eliminate the business privilege tax liability for more than 100,000 of the state’s smallest businesses, those with less than $10,000 in Alabama taxable net worth. It leaves the minimum tax at $100 and would increase the maximum amount of business privilege taxes due from $15,000 to $24,500. A bill in the 2015 regular session would have raised that maximum to $20,000, while special session legislation would have raised the maximum to $30,000.
Martin’s bill has been assigned to the House Ways and Means General Fund Committee.
LEGAL
Senate OKs Clarification That Only DA or AG Can File
Class Action under the State’s Deceptive Trade Practices Act
On a vote of 31-1 Tuesday, the Alabama Senate approved SB270 by Sen. Phil Williams, R-Rainbow City, which clarifies that the Alabama Deceptive Trade Practices Act only allows the attorney general or a district attorney to file a class action under the act. “That was the Legislature’s intent all along,” Williams said. The bill now goes to the House Judiciary Committee for consideration.
A 2015 ruling by the 11th U.S. Circuit Court of Appeals considered the class-action provision of the Alabama law as “procedural and not substantive,” Williams said, adding that his bill makes it clear that “this law is substantive.” Private causes of the action would still exist, Williams said. He said the bill simply makes the state’s law what it was before the court ruling.
Learn more about the court ruling here: Federal ruling opens door for Alabama class actions
WORKERS’ COMP
Panel OKs Bill Excluding Owners from Counting
as an Employee for Workers’ Comp Requirement
The House Commerce and Small Business Committee on Wednesday approved HB359 by Rep. Barry Moore, R-Enterprise, which excludes anyone owning 50 percent or more of a business in determining the number of employees a business has in regard to workers’ compensation requirements. Currently, employers are not required to provide workers’ compensation insurance if they employ fewer than five employees. Moore’s bill would exclude owners from counting as an employee. It now goes to the full House for consideration.
ALCOHOL
Bill Allowing Liquor and Wine Tasting on Governor’s Desk
Legislation that would allow licensed distilleries or wineries to conduct liquor and wine tastings, at no charge to consumers, in retail and state liquor stores, awaits the governor’s signature to become law. If it becomes law, it will take effect Sept. 1.
On a vote of 78-18, the Alabama House on Tuesday approved SB219 by Sen. Billy Beasley, D-Clayton. 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. Rep. Becky Nordgren, R-Gadsden, the sponsor of the House companion, HB148, presented the Senate bill to the House.
House to Consider Bills That Allow Limited Retail Sales
for Spirit and Wine Makers; Governor Signs Beer Bill
The House Economic Development and Tourism Committee this week sent two Senate bills recommended by the Alabama Alcoholic Beverage Study Commission to the full House for consideration. The House is expected to have the House versions of both bills on its agenda for Tuesday, April 5:
- SPIRITS: SB132 by Sen. Bobby Singleton, D-Greensboro, 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 on the proposed House agenda for April 5.
- WINE: SB166 by Sen. Linda Coleman-Madison, D-Birmingham, 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. What had been the House companion, HB83 by Rep. David Faulkner, R-Birmingham, and Rep. Alan Harper, R-Aliceville, is on the House’s April 5 proposed agenda. It does not contain the sales limitation that is part of the Senate bill.
BEER: The governor signed into law today a third bill recommended by the commission. Act No. 2016-97 by Rep. Anthony Daniels, D-Huntsville, would allow breweries and brewpubs to engage in limited retail sales of their products. 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.
Bill Would Allow Piedmont Council to Permit Sunday Sales
Rep. Richard J. Lindsey, D-Centre, this week introduced legislation that would allow the Piedmont City Council to allow Sunday alcohol sales in that Calhoun County town. HB469 has been assigned to the House Local Legislation Committee.
WORKPLACE ISSUES
Mobile Minimum Wage Constitutional
Amendment Fails to Get Committee OK
A tie vote in the Mobile County Legislation Committee prevented HB402 by Rep. Napoleon Bracy, D-Prichard, from making it out of committee this week. Bracy’s proposed local constitutional amendment would have asked Mobile County voters if they wanted 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 failed to pay that minimum.
NEXT LEGISLATIVE DAY
The Alabama House of Representatives will convene at 1 p.m. Tuesday, April 5, for the 19th legislative day of the Alabama Legislature’s 2016 regular session. The Alabama Senate convenes at 2 p.m.
FEDERAL
Labor Department Issues Rule Requiring
Employers to Disclose Anti-Union Consultants
The U.S. Department of Labor this week issued a new rule that will require reporting of employer-consultant or “persuader” agreements regarding anti-union communications.
>> Final rule on persuader reporting
The rule requires employers to disclose any consultant they hire to develop plans or policies for supervisors involved in attempting to persuade workers not to join a labor union, who create materials to be distributed in the workplace for this reason and who lead seminars on how to discourage workers from forming unions or bargaining collectively. It doesn’t require disclosure of the content, just the person hired and payment made.
The rule takes effect April 25 and applies to arrangements, agreements and payments made on or after July 1.
The rule, first proposed by the Obama administration in June 2011, is based on a 1959 law that already required employers to disclose the hiring of such consultants for direct communications. Currently, as long an employer’s lawyer or consultant does not communicate directly with employees and as long as the employer remains free to accept or reject any draft materials prepared by them (speeches, letters, written communications, etc.), they are covered by what is known as the advice exemption and not subject to disclosure or reporting by the employer or the counselor.
“For more than 50 years, the Department of Labor has maintained a clear definition of the advice exemption so that employers could seek and receive legal counsel and protect employer free speech,” said David French, senior vice president for government relations for the National Retail Federation “Now, DOL is rewriting the law without any involvement from Congress and without any proof a change is needed.”
Kelly Kolb, vice president for government affairs for the Retail Industry Leaders Association said, “Labor law is complex and many businesses rely on the support of outside counsel to ensure that their actions during an organizing campaign comply with the morass of rules and regulations. By undermining the advice exception, DOL is putting employers in a no-win situation where seeking the guidance they need will almost certainly be used against them by organizers.”
The rule could seriously interfere with and compromise the attorney-client relationship.
