Legislative Report – April 26, 2019

Volume 20 Number 5 – April 26, 2019

12th & 13th legislative days

Lottery Bill Approved by Senate

Late Thursday afternoon, the Senate approved a constitutional amendment calling for a statewide vote on the lottery.

SB 220 by Sen. Greg Albritton (R – Atmore) calls for a paper lottery and allows Alabamians to participate in Mega Millions jackpots. If approved by the House, the proposal will appear on the March 2020 primary election ballot.

One significant amendment offered by Sen. Rodger Smitherman (D – Birmingham) protects the Birmingham Race Course and its gambling machines. Amendments offered to protect the other race tracks and machines were voted down.

The bill was approved 21 – 12, which was the minimum number of votes needed for passage.

It now goes to House committee, but it has not been assigned at this time.

SSUT Legislation Moving but Still Controversial

The simplified sales and use tax (SSUT) legislation is becoming a controversial issue once again during this regular legislative session.

During the recent negotiations and discussions leading to the introduction of the Rebuild Alabama Act (gas tax), representatives of the Alabama League of Municipalities were able to reach an informal agreement with the Ivey Administration and the House Speaker to increase the amount of money that municipal governments receive under the SSUT.

Under current law, sales and use taxes are voluntarily remitted by internet sellers under the SSUT. The current rate is four cents to the state and four cents to local governments. The split between local governments (counties and cities) is 2 cents to the counties and 2 cents to the cities. Cities, particularly large municipalities which make up most of the commerce in the state, have objected to this formula and would like to see it changed.

HB 418 by Rep. Rod Scott (D – Fairfield) would amend the state affiliate nexus laws and establish a procedure for ADOR to adjust the SSUT sales tax rate to reflect the weighted average of sale taxes in Alabama. This would create a more level playing field for in-state, main street brick and mortar retailers. HB418 was given a favorable report with one amendment by the House Ways and Means – General Fund committee. The amendment would earmark 25 percent of the county revenues generated by SSUT for public education.

To further complicate matters, mayors and finance officials from the Big 5 cities in Alabama (Birmingham, Montgomery, Huntsville, Mobile, and Tuscaloosa) are objecting to the affiliate nexus changes and are insisting that the additional penny provided in HB 418 be shared only with the larger cities.

There may be more changes to this bill as it moves through the process.

Bill to Reduce Lodging Taxes Re-introduced

The issue of how and whether state and local lodging taxes should be applied to recreational vehicles (RVs), marina slips, and tent campsites continues to be hotly debated in Montgomery.

After SB 19 failed in the Senate Finance and Taxation – General Fund Committee two weeks ago on a tie vote of six ayes to six nays, Sen. Allen (R – Tuscaloosa) introduced another version.

SB 308 by Sen. Allen would codify that recreational vehicles, marina slips, and tent campsites would be subject to the state and local lodging tax, but that the tax would not apply to stays of more than thirty consecutive days.

Clearly, Sen. Allen is very interested in passing a bill dealing with this issue, as he not only reintroduced the bill, but worked with the Senate leadership to assign it to what he believes would be a more favorable venue, the Senate Tourism and Marketing Committee.

While it might appear that the Tourism and Marketing Committee would be more receptive to the arguments of the tourism industry that is opposed to this bill, Senate President Pro Tem Del Marsh (R – Anniston) chairs this committee and he is often deferential to fellow members of the Senate and will allow them to move their bills out of his committee in order to be debated on the Senate floor.

A public hearing was held in the Senate Tourism and Marketing Committee on Wednesday. As in the Senate Finance and Taxation – General Fund Committee that heard SB 19 two weeks ago, members of the tourism industry and representatives of municipal governments testified in opposition to the legislation, and RV park owners testified in favor of it.

Sen. Marsh made it clear to the tourism industry and municipal governments that he wants a compromise worked out on this bill. At this point, it is difficult to accurately measure the impact of this legislation on local and state governments, but it is clear that it will be substantial.

It is anticipated that the Senate Committee on Tourism and Marketing will vote on the bill in the near future, perhaps as early as next week.

Upcoming Legislative Schedule

The House and Senate will reconvene on Tuesday, April 30, 2019 at 1:00 and 3:30 p.m., respectively.