Friday, April 29, 2016
Medicaid Patch, For-Profit Audit Reform
Among Debate Left for Final Week
As the Alabama Legislature heads into the final week of its 2016 regular session, both the states’ education and general operating budgets are law, while Hail Mary efforts to patch Medicaid funding and keep the federal government from taking over Alabama prisons hinge on action in the final two days of the session.
The Legislature is expected to meet Tuesday and Wednesday of next week and then go home, hopefully not to return until 2017.
This week, Rep. Steve Clouse, R-Ozark, devised a plan that frees up $70 million for the state’s Medicaid Agency while paying down some of the state’s debt and funding road projects in Baldwin and Mobile counties. The plan depends on a roughly $639 million bond issue against the state’s $1 billion settlement from the 2010 Deepwater Horizon BP oil spill. Under HB569, $161 million would replenish the state’s Rainy Day Account and $287 million would go toward paying back money owed to the Alabama Trust Fund. Those payments and other maneuvers would free up $70 million in the General Fund to help bring Medicaid up to about 80 percent of the funding that agency officials say they need in 2017. For the one-time Medicaid patch to become law, the Senate will have to go along with the plan or devise an alternative that the House can quickly agree to in the final two legislative days. The bill also sets aside about $191 million for road projects in Mobile and Baldwin counties.
For-profit auditing firm business practice reform is on the agenda for consideration next week, while hundreds of bills including unitary combined reporting as well as state and local minimum wages died this week from inaction.
THIS WEEK’S ACTION
Senate Bill Reforming For-Profit Audit Process
Ready for House Consideration in Final Week
The Alabama Senate as well as the House State Government Committee this week approved SB335 by Sen. Paul Sanford, R-Huntsville, a first step toward reining in abuses against businesses by for-profit tax auditing and collecting firms. The bill is third on the House calendar for Tuesday. The House companion was HB375 by Rep. Paul Lee, R-Dothan.
Alabama Retail has helped draw attention to the issue of for-profit audit abuse by sharing the experiences of two business owners. The latest is Woody Baird of The Sure Shot in Alexander City who faced a $12,487 assessment only to see it reduced to zero after four months of providing documentation to the for-profit, contract auditor his city hired.
Watch Woody’s story
Charlie Ferguson’s assessment was $95,000. The audit process occupied him and his 40-year-old business for four years. In the end, he owed slightly less than $136, but he had to spend $45,000 in attorney costs to prove it.
Listen to Charlie’s story
Alabama Retail is interested in hearing from members who feel they have not been treated fairly or professionally by for-profit auditors hired by local governments to audit and collect local sales and use taxes. Tell us your story. Even if this legislation is adopted, more reforms may be necessary.
Legislature Approves Tax Credit for Hiring Apprentices
Late Thursday, the Alabama House on a vote of 85-3 approved SB90 by Sen. Arthur Orr, R-Decatur, which provides employers with a $1,000 income tax credit for each of up to five qualified apprentices employed. Employers must train the apprentices (16 years old or older) for at least seven months in a tax year. Each year, the tax credits allowed would be capped at $3 million, or 3,000 apprentices. The program, which begins with the 2017 tax year, would sunset after five years if not renewed by the Legislature. It will be Tuesday before the bill can go to the governor for his signature. The House companion was HB217 by Rep. Ken Johnson, R-Moulton.
Senate Approves Data Breach Notification Bill;
House Panel Not Expected to Take It Up in Final Days
On Wednesday, the Alabama Senate approved a substitute version of SB238 by Sen. Arthur Orr, R-Decatur, which if enacted, would make Alabama the 48th state to provide consumers with timely notification of data breaches. The bill has been assigned to the House Military and Veterans Affairs Committee, which never acted on the House companion, HB291 by Rep. Connie C. Rowe, R-Jasper. The committee is also not expected to act on the Senate bill.
Among other changes, the substitute bill struck definitions of terms not contained elsewhere in the bill. It also clarified that the entity making the notification would be the owner or licensee of the information acquired in a breach. Another change was to remove a 10-day window for a third-party vendor to notify the information’s owner of a security breach. The revised bill requires the third party to notify the breached entity “as expeditiously as reasonably practicable” following a breach.
Under the legislation, failure to comply with the act would be considered a deceptive trade practice and not a criminal offense. Violators would face penalties of up to $50,000 for each breach, not each individual affected. The Alabama Information Protection Act of 2016 would have required owners of breached information to notify Alabama’s attorney general, Alabama residents whose information had been compromised and credit-reporting agencies of breaches involving more than 1,000 that could result in financial harm to the individuals. The notifications were to occur within 60 days of the determination of a breach with a possible 15-day extension if requested before the 60 days end. Law enforcement agencies could also delay a notification.
Medicaid RCO Certification Deadline Extension
Ready for Senate Consideration
The Senate Health and Human Services Committee on Thursday approved HB530 by Rep. April Weaver, R-Brierfield, which extends the Oct. 1 deadline set in a 2013 state law establishing a community-based managed care structure for Medicaid, known as regional care organizations (RCO). The House bill now goes to the full Senate for consideration, possibly in the final two days of the session. The Senate companion, SB397 by Sen. Greg Reed, R-Jasper, has been indefinitely postponed.
Probationary or full certification for the 11 RCOs established so far was to occur by Oct. 1, shifting the risks associated with Medicaid services from the state agency to the RCOs on that date. The legislation leaves it up to the Alabama Medicaid Agency to decide when RCO certification will occur.
This week, the Medicaid Agency made a presentation about the role of hospitals in the Medicaid program to a joint legislative committee studying Medicaid expenditures.
Bill Allowing State Civil Action to Collect
Child Labor Penalties Ready for Final Consideration
The House Judiciary Committee on Thursday approved SB264 by Sen. Steve Livingston, R-Scottsboro, which would allow the Alabama Department of Labor to file an action to collect civil penalties against an employer for child labor law violations in the circuit court of the county where the violation occurred. The Alabama Senate had unanimously approved the bill Tuesday. It now is ready for the House to give it final consideration in the final two days of the session, although it is not on the House agenda for Tuesday.
Senate OKs Bill Allowing Family Members to Operate
Separate Businesses within the Alcohol Supply Chain
The Alabama Senate on Wednesday approved SB343 by Sen. Bill Holtzclaw, R-Madison, which would allow family members of alcohol retailers, wholesalers, distributors or manufacturers to be licensed in another aspect of the alcohol supply chain as long as they are not an officer, employee or stockholder of the original business. The bill now goes to the House Economic Development and Tourism Committeefor possible consideration in the final days of the session.
Holtzclaw presented and received approval of a floor amendment that would restrict family members who live in the same household as the original business licensee from being licensed for another business in the alcohol supply chain. That is the Alabama Beverage Control Board’s current policy.
House OKs Glencoe Sunday Alcohol Sales Bill
The Alabama House on Thursday approved HB544 by Rep. Mack Butler, R-Rainbow City, which would allow the Glencoe City Council, by resolution, to call a Sunday alcohol sales referendum. It now goes to the Senate Local Legislation Committee for consideration.
NOW LAW
Legislature Expands Tax Breaks
to Small Businesses That Create Jobs
Effective July 25, Alabama businesses with 75 or fewer employees can claim a one-time, $1,500 income tax credit for each new, full-time, Alabama resident employee hired for a job that pays $40,000 or more annually. Act No. 2016-188 by Rep. Kyle South, R-Fayette, which the governor signed into law Tuesday, 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 2012 Heroes for Hire Act. To qualify for the credit, businesses must retain the new employee for a full year. In addition, businesses must show a net employee growth each year to qualify for the credit. The tax credit expires Jan. 1, 2019, unless extended by the Legislature.
Road and Bridge Funds to Go to Infrastructure;
Meanwhile, Gas Tax to Create Fund Runs Out of Time
Two bills (HB394 and HB560) by Rep. Mac McCutcheon, R-Huntsville, would have raised gasoline and diesel fuel taxes in Alabama to fund road and bridge improvements, but the bills ran out of time to pass this week. Even so, the governor Tuesday signed Act No. 2016-150 by Sen. Gerald Dial, R-Lineville, which ensures any new revenue coming in for roads and bridges is spent on the state’s transportation infrastructure. The Alabama Department of Transportation, counties and municipalities will 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. If the Legislature does not appropriate any new revenue for roads and bridges in the next two years, the accountability law becomes null and void.
McCutcheon’s bills would have increased fuel taxes by six cents per gallon and benchmarked those taxes every four years to the average tax in the four states bordering Alabama. The legislation is expected to resurface in future sessions.
Hollywood Town Council Can Allow Sunday Alcohol Sales;
Kellyton, Rainbow City Can Call Sunday Sales Referendums
The governor this week signed into law three bills allowing Sunday alcohol sales:
- Act No. 2016-154 by Sen. Steve Livingston, R-Scottsboro, authorizes the Hollywood Town Council through a vote of the council to allow Sunday alcohol sales in that Jackson County town. The House companion was HB401 by Rep. Tommy Hanes, R-Bryant.
- Act No. 2016-224 by Rep. Ron Johnson, R-Sylacauga, gives 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.
- Act No. 2016-228 by Rep. Mack Butler, R-Rainbow City, 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 in that Etowah County municipality.
NEXT WEEK
House to Consider Clarification That Only DA or AG
Can File Deceptive Trade Practices Class Action
The first bill on the House calendar for Tuesday is SB270 by Sen. Phil Williams, R-Rainbow City, which specifies only the attorney general or a district attorney can file a class action under the Alabama Deceptive Trade Practices Act. The House briefly debated the bill Thursday, but carried it over. Williams has said it was the Legislature’s intent all along for only the AG and DAs to bring such class actions. 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
Bills That Modify Business Licensing
for Certain Industries Still Alive
Two bills related to business licenses could be considered in the final two days of the 2016 regular session.
Prescription Drug Exemption from Gross Sales
The Senate on Thursday briefly considered HB58 by Rep. Ron Johnson, R-Sylacauga, which allows pharmacies to remove prescription drug sales from their gross receipts when calculating the cost of their business license. The bill could resurface at any time during the final legislative days. President Pro Tem Del Marsh, R-Anniston, said his municipality objects to the bill because the city would lose revenue it has already budgeted. Sen. Billy Beasley, D-Clayton, the legislation’s Senate sponsor (SB329), a pharmacist and an Alabama Retail member, argued prescription drugs have been sales tax free since 1975, and the amount pharmacists can charge for medications is set by a third party 90 percent of the time.
Home Health/Hospice/Durable Medical Equipment
The House Health Committee on Tuesday approved SB306 by Sen. Cam Ward, R-Alabaster, which requires qualified home health care or hospice agencies or providers of durable medical equipment, prosthetics, orthotics or health care supplies to get a city business license in a municipality, only if its headquarters or a branch office are in that municipality or it has $75,000 or more in annual gross receipts within that city. The bill is now ready for final consideration in the House, although the bill is not on that body’s agenda for Tuesday.
House to Consider Senate Bill
Outlawing Sale of Adjustable Focus Eyewear
Legislation that seeks to halt the sale of adjustable focus eyewear in Alabama is seventh on the Alabama House’s Tuesday agenda. SB245 by Sen. Jim McClendon, R-Springville, 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, says this new technology does not meet the standards of acceptable vision correction needed in Alabama, especially for driving. The bill also increases the magnification allowed in over-the-counter eyewear to 3.50 diopters, the unit of measurement for optical power. The full House never considered the companion legislation, HB336 by Rep. April Weaver, R-Brierfield.
House to Consider Granting Anti-Trust
Liability Immunity to Pharmacy Board
Fifteenth on the House’s 17-bill agenda for Tuesday is SB310 by Sen. Billy Beasley, D-Clayton, which gives the Alabama Board of Pharmacy and its members liability immunity for adopting pharmacy rules that prioritize “patient safety and wellness but may be anti-competitive.”
The bill 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. SB310 requires the board to document the public safety and wellness of any anti-competitive rule. The House companion was HB320 by Rep. Ron Johnson, R-Sylacauga.
Bill to Increase District Court Jurisdiction
by $5,000 Ready for Final Consideration
HB151 by Rep. David Faulkner, R-Birmingham, increases district courts’ jurisdiction from all cases involving $10,000 or less in controversy to all cases of $15,000 or less. Circuit courts would then have jurisdiction in matters exceeding $15,000. The House bill is ready for the full Senate to consider.
Senate Could Consider
Revision to Limited Partnership Law
The Alabama Senate had on its Thursday agenda legislation that modifies the state’s Alabama Limited Partnership law to reflect current case law but adjourned before getting to the bill. HB202 by Rep. Bill Poole, R-Tuscaloosa, 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 was SB151 by Sen. Cam Ward, R-Alabaster. Poole’s bill could resurface in the Senate next week.
TIME’S UP
Only two days remain in the Alabama Legislature’s 2016 regular session, which means many bills died this week because they had not progressed far enough in the process. Some of the legislation with significance for retailers that died follows.
Unitary Combined Reporting
Never Even Considered
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 continued their opposition to combined reporting in this legislation session. The Senate Finance and Taxation Education Committee never even considered SB202 by Sen. Linda Coleman-Madison, D-Birmingham, which would have required mandatory unitary combined reporting of corporate income taxes, a taxing scheme that would greatly hinder the state’s ability to attract new business. SB202 would have applied to every business, both inside and outside the state, with multi-state tax obligations.
Statewide and Local Minimum Wage Bills Die;
Lawsuit Filed Against Preemption Law
After passing a law early this session that preempts local minimum wages and other mandated benefits, the Alabama Legislature let several measures related to establishing statewide and local minimum wages die due to inaction, including:
- HB70 by Rep. Darrio Melton, D-Selma, which would have created a state minimum wage of $10.10 per hour in three steps ending Jan. 1, 2018. Starting Jan. 1, 2020, the state minimum wage would have increased every three years based on the Consumer Price Index (CPI) for the preceding July 1.
- SB185 by Sen. Linda Coleman-Madison, D-Birmingham, a constitutional amendment, would have asked voters to establish a state minimum wage of $10 an hour in three incremental steps by Jan. 1, 2018.
- HB71 by Rep. Darrio Melton, D-Selma, which would have created a state minimum wage at the federal minimum, but would increase Alabama’s minimum wage each year based on the percentage increase in the CPI in the previous calendar year.
- HB402 by Rep. Napoleon Bracy, D-Prichard, which would have asked Mobile County voters if they wanted to set a $10.10-an-hour minimum wage in that county starting in 2017. A tie vote prevented it from coming out of the Mobile County Local Legislation Committee. A second bill by Bracy that was not a constitutional amendment, HB248, was never even considered.
None of these bills received committee approval.
This week, the Alabama National Association for the Advancement of Colored People, the Greater Birmingham Ministries and two fast-food workers filed a lawsuit in U.S. District Court in Birmingham challenging the wage and benefit preemption law as racially motivated and in violation of the Equal Protection clause of the U.S. Constitution. The attorney general, who along with the governor is named in the suit, said Thursday that the AG’s office “will vigorously defend Alabama law.”
‘Ban the Box’ and Equal Pay Commission
Among Workplace Issues that Fall to the Wayside
SB327, “ban-the-box” legislation by Sen. Quinton Ross, D-Montgomery, originally would have kept private employers from asking about a job applicants’ criminal background until after the applicant had received a conditional job offer. The Senate Judiciary Committee revised the bill so that it only applied to state employment and licensing agencies. The House State Government Committee never even took up the companion, HB412, Rep. Juandalynn Givan, D-Birmingham.
HB150 by Rep. Laura Hall, D-Huntsville, would have created an Equal Pay Commission to study wage disparities and report its findings and recommendations to the Alabama Legislature.
NEXT LEGISLATIVE DAY
The Alabama Senate and House of Representatives will convene at 1 p.m. Tuesday, May 3, for the 29th legislative day of the Alabama Legislature’s 30-day 2016 regular session.
FEDERAL
Wrapsody’s Terry Shea Takes
National Stage Again on Overtime Proposal
Alabama Retail board member Terry Shea is the small business representative in a new video featuring the voices of employers and employees who would be adversely affected by the Department of Labor’s proposed rule change for overtime. The video was produced by the Partnership to Protect Workplace Opportunity.
View Video
“This regulation is meant to protect the worker. Ultimately, it is to the detriment of the worker,” Shea said.
