End of Session Report – April 8, 2022

Volume 23 Number 12 – April 8, 2022

Final legislative day brings controversial bills

Representatives and Senators met for 15 hours on Thursday in an effort to wrap up the 2022 legislative session 2.5 weeks earlier than required. Despite finishing early, they were able to complete 29 out of 30 legislative days.

The final day started in both chambers with bills targeting transgender issues. The House started the day with a bill that would make it a felony for doctors to prescribe puberty blockers or offer gender transition treatment for minors. The Republican majority allowed little debate on the bill, passing a petition to end discussion and force a vote. It passed by a vote of 66 – 28 with only two Republicans voting against it.

The Senate started by taking up legislation that would require that public schools restrict access to multi-occupancy restrooms and locker rooms to students based on their biological sex. The bill was amended on the floor to include language mirroring a recent Florida law prohibiting K-5 teachers from any instruction that includes sexual and gender identity. Critics have dubbed the proposal as “don’t say gay,” though those words do not appear in the text. The bill would also require school counselors, nurses, and others to tell parents if a child discloses they believe they are transgender.

Both bills have gone to the Governor.

Education budget goes to Governor

Alabama lawmakers gave final approval to a record $8.3 billion education budget Wednesday, an increase of 7% or $589 million over the current year’s budget. Much of the new spending for K-12 schools will be put into historic pay raises for teachers and improving instruction in the early grades.

Under the new budget which starts Oct. 1, teachers with less than nine years of experience will see a 4% increase in pay, and teachers with nine years or more will see pay raises of 5% to 21%, with higher percentages for those with more years of experience.

The budget includes big investments in reading and math and funds the start of the Numeracy Act, a math initiative focused on kindergarten through fifth grade.

These investments include:

  • $94 million for the Alabama Reading Initiative, up $14 million over the current year
  • $15 million for the Alabama Numeracy Act
  • $48.3 million for the Alabama Math, Science, and Technology Initiative, up $18 million over the current year

Other investments include:

  • $49.6 million for school nurses, up $8.9 million over the current year
  • $10.5 million for cybersecurity, up $6.9 million over the current year
  • $80 million for the math and science teacher salary program, up $30 million over the current year
  • $27.1 million to provide funding for schools with higher numbers of students over the previous year

The supplemental budget bill includes an additional $1.3 billion in spending from the Education Trust Fund (ETF) budget. Of that, $750 million went to a fund for technology and capital projects for K-12 and higher education. It also included

  • A one-time bonus for retired public education employees: $58.4 million
  • The final payment for the PACT program, ending the state’s obligation under the prepaid college tuition program: $177 million
  • Higher education projects: $83 million
  • The Alabama Innovation Fund: $60 million
  • $118 million was moved into the Budget Stabilization Fund, which serves as a rainy day account in tough financial times

Another budget bill allocates $282 million from the Advancement and Technology Fund (ATF). Higher education received $76 million. The $206 million for K-12 schools is divided among school districts and public charter schools based on enrollment. Money from the ATF can be spent on technology, capital improvements, repairs and maintenance, transportation, and school security.

Christie Strategy Group client, Athens State University, received $19,444,951 for operations and management (O&M) in the upcoming fiscal year 2023 budget, $3,299,457 more than fiscal year 2022. They also received $525,000 in the supplemental appropriation bill.

Telehealth legislation goes to Governor

The House gave final passage to SB 272 by Sen. Dan Roberts (R – Mountain Brook) on Tuesday. The bill is designed to ensure that telehealth can continue to grow in Alabama while also protecting patients. Alabama is one of a few states that does not already have telehealth regulations in place.

The bill authorizes the Alabama Board of Medical Examiners and the Medical Licensure Commission to adopt rules for using technology to deliver remote care.

The original bill said that if a doctor sees a patient four or more times within a year, there must be an in-person visit. Stakeholders worked over several weeks to reach an agreement on this requirement. Ultimately, the Senate substitute dictates that if a person uses telehealth five times in a single year for the same condition with no resolution, the telehealth provider has to refer the patient to someone in Alabama who can see the patient in-person. The patient does not have to stop using telehealth. The goal with this requirement is to prevent chronic conditions from going untreated.

The bill also says that remote appointments must be initiated by patients or through referrals from existing physicians; cold calls and solicitations are prohibited.

In addition, the bill places reasonable restrictions on the prescribing of controlled substances using telemedicine. A doctor can prescribe a controlled substance using telehealth as long as they have seen the patient in person just one time in the prior 12 months. The bill also includes an emergency provision allowing a prescription for a controlled substance in a medical emergency. Other prescriptions for things such as antibiotics would be governed by the rules that control in-person prescriptions.

Mental health treatment is exempt from the legislation.

The bill passed the House 100 – 0, and the Governor is expected to sign it soon.

Gaming bills/lottery fail to advance

Notwithstanding the efforts of sponsors Sen. Greg Albritton (R – Atmore) and Rep. Chip Brown (R – Dauphin Island), legislation to create a state lottery and legalize/regulate casino gaming in Alabama failed to come to the floor of the Alabama legislature during the 2022 regular legislative session.

Brown’s bills included a constitutional amendment giving the people of Alabama the right to vote to approve a lottery in a statewide referendum at the next general election and a separate bill to create an Alabama Lottery Commission to regulate the operation of the lottery.

The paper lottery authorized by the bill would include traditional games of chance including the multi-state games such as Powerball. Proceeds would fund an Alabama education scholarship program for Alabama students who attend in-state schools.

Earlier in the session, Sen. Albritton introduced a comprehensive gaming package similar to the constitutional amendment and enabling legislation introduced by Sen. Del Marsh (R – Anniston) in the 2021 regular legislative session.

SB 293 by Sen. Albritton would authorize a state-run education lottery and full casino-style gaming at Greenetrack, Victoryland, the Birmingham Race Course, the Mobile Dog Track, and a new casino operated by the Poarch Band of Creek Indians (PCI) in either DeKalb or Jackson County.

In addition, the Albritton bill would grandfather Green County electronic bingo operators for two years while immediately outlawing electronic bingo in all other locations except PCI trust lands. The bill also authorized two satellite casinos in Lowndes and Houston Counties, which would only be allowed to operate 300 electronic gaming machines and no casino-style games.

Sports betting licenses would be issued for Greenetrack, Victoryland, the Birmingham and Mobile racing facilities, and the new facility in DeKalb/Jackson county. Of note, sports betting would also be allowed on electronic devices such as cell phones.

The Albritton bill also required the Governor to negotiate, execute, conclude, and take any other steps necessary to effectuate a compact with the Poarch Creek Indian tribe.

Gaming revenues would be taxed at 20% of net gambling revenues. While licenses would be awarded to the operators of each of the casino and satellite casino sites based on a “competitive process,” the operators of the Birmingham Race Course, Victoryland, Greenetrack, the Mobile Greyhound Racing facility, and Houston and Lowndes County satellite casinos would retain the right to make a final bid exceeding the highest bidder, thereby ensuring that they would retain ownership of their facility.

Albritton also introduced a separate bill (SB 294) to create a Gaming Commission to regulate the gaming industry in Alabama.

Despite both bill packages being favorably reported by the respective committees of jurisdiction, neither sponsor could convince the leadership to move forward with the bills during the final days of the session.

Most political observers believe that the issue of gaming and approval of a state lottery will be front and center in the new quadrennium next year, if not prior thereto in a special legislative session this summer or in the fall. Many also argue that this issue cannot be resolved or successfully moved forward without significant support from the next Governor.

It remains to be seen whether Governor Ivey will be re-elected and whether she will use the full weight and power of her office to move the gaming issue finally off of dead center in the Alabama legislature.

Legislature passes permitless carry

The issue of whether to allow Alabama citizens to carry firearms openly without a pistol permit proved to be extremely controversial again this year, but legislation was ultimately passed allowing concealed carry of a pistol while retaining language protecting the rights of property owners, including businesses, to restrict firearms on their property.

HB 272 by Rep. Shane Stringer (R – Mobile) was passed overwhelmingly in both chambers early in the session. The legislation was part of the formal agenda adopted by both the House and Senate Republican majorities. Primarily, this was a debate and fight between law enforcement organizations led by the Alabama Sheriff’s Association and virulent advocates of the 2nd amendment in our state.

While the fight between law enforcement and “constitutional carry” advocates raged, the business community worked hard to ensure that the rights of business property owners continue to be protected and the ability to regulate whether firearms are brought into the workplace are preserved.

Complicating this process was the fact that Alabama already has on the books a carefully negotiated law that establishes the parameters in which an employee may possess, transport, or store a pistol or ammunition for a pistol in their privately owned motor vehicle while parked or operated in a public or private parking area at work.

Importantly, the legislature retained this important feature of current law and delineated several additional circumstances where concealed carry is not allowed. These include sporting events at schools and universities, courtrooms, jails or other detention facilities, law enforcement offices, primary offices of elected officials, and businesses that have permanent security features (guards, turnstiles, etc.) and place signage informing the public and employees that firearms are prohibited.

Neither law enforcement or constitutional carry advocates were fully satisfied with the final document, and it remains to be seen whether the legislature will have to revisit this issue in coming sessions or if this bill finally settles this difficult and divisive issue for good.

Bill to make secret compartments illegal goes to Governor

SB 207 by Sen. Bobby Singleton (D – Greensboro) would make it illegal to create secret compartments in vehicles to hide drugs, weapons, and even people, from law enforcement officers. Current law prevents law enforcement from searching locked compartments without a separate search warrant.

The bill would make it unlawful to operate any vehicle with the knowledge it contains a secret compartment, to create a secret compartment, or to sell, trade, or dispose of a vehicle with a secret compartment. Vehicles in violation would be seized as contraband and persons found guilty could be convicted of a Class A misdemeanor.

Christie Strategy Group worked on behalf of JM Family Enterprises with other automotive interests to ensure that there was language included in the bill that clarified that the compartments in question are added after the factory and do not include compartments created by vehicle manufacturers or offered as accessories by the manufacturers or dealers.

The bill was delivered to the Governor for her signature on Thursday.

Economic development incentives

Legislation that would impact and, potentially, eliminate critical economic development incentives was considered by the Alabama legislature this year.

SB 57 by Sen. Arthur Orr (R – Decatur) would change the reporting date requirements of state agencies that administer economic tax incentives, align committee schedules to review state agency reports, establish sunset dates for tax incentive programs, establish future sunset dates for extended tax incentive programs, and provide required guidelines for all new incentive legislation.

This problematic legislation was actively opposed by the Business Council of Alabama, Manufacture Alabama, and the Economic Development Association of Alabama. Christie Strategy Group joined with these organizations to engage with Sen. Orr to ensure that legislation negatively impacting Alabama’s economic development incentives did not pass.

After several meetings with representatives of the business community, Sen. Orr introduced a second version, SB 303, which addressed many of the same issues as the original legislation, but in a more limited scope. This legislation also proved problematic, as it included some automatic sunset provisions on critical tax incentives to specific industries such as coal. Both bills were referred to the Finance and Taxation Education Committee, which Sen. Orr chairs, and SB 303 received a favorable report.  Faced with continued concerns from the business community, the Senate leadership including Rules Chairman Jabo Waggoner (R – Vestavia Hills) and President Pro Tem Greg Reed (R – Jasper) declined to move the bill to the floor of the Senate.

On the last day of the session, Ways and Means Education Committee Chairman Rep. Danny Garrett (R – Trussville) and Sen. Orr introduced separate but identical joint resolutions creating the Joint Legislative Study Commission on Renewing Economic Development Incentives. Sen. Orr’s resolution ultimately passed both chambers.

The Economic Development Incentives (EDI) Commission resolution is supported by the business community and creates a process whereby the legislature and the Ivey Administration can review, retain, eliminate, or improve upon Alabama’s very successful economic development tools. It is worth noting that the two most important economic development incentive statutes, the Alabama Jobs Act and the Growing Alabama Act, are already set to expire in 2023. The EDI Commission will provide an excellent forum whereby these two important statutes can be reviewed and, hopefully, improved upon and expanded. Lt. Governor Will Ainsworth will chair the EDI Commission, which shall hold its first meeting no later than May 6, 2022 and submit their written recommendations to the Governor and the Legislature prior to January 31, 2023.

Governor signs business privilege tax exemption bill

On Wednesday, Governor Ivey signed HB 391 by Rep. Steve Clouse (R – Ozark), which eliminates the state’s minimum business privilege tax levied on small employers.

The privilege tax is based on a company’s net worth and taxable income. Businesses have been required to pay at least $100 as a minimum. The new law reduces the minimum to $50 next year and eliminates the minimum in 2024 and beyond.

An estimated 230,000 small businesses pay the minimum, so the total tax savings are expected to be $23 million annually.

Upcoming schedule

The legislature has adjourned sine die for the 2022 legislative session. They will return in March 2023 for the next regular session. The next regular session will include all the new legislators elected in November 2022.

Legislators are expected to return for a special legislative session in late summer/early fall to address the second tranche of American Rescue Plan (ARP) funds. Most are speculating they will be called back in August or September. Only the Governor can call them back for a special session.