12 Mar Legislative Report – March 12, 2020

Volume 22 Number 5 – March 12, 2021

13th & 14th legislative days

Gaming legislation fails

The Gordian Knot of Alabama politics (gaming) remains intact, despite the extraordinary efforts of former Senate President Pro Tem Del Marsh (R – Anniston) to untie it.

Sen. Marsh used his immense political skills and called in every chit built up over 23 years in the Alabama Senate to no avail; the constitutional amendment, which required 21 affirmative votes, failed by a vote of 19 ayes and 13 nays.

Thirteen republican senators including Albritton (Atmore), Chesteen (Dothan), Holley (Elba), Jones (Centre), Livingston (Scottsboro), Marsh (Anniston), McClendon (Springville), Melson (Florence), Price (Opelika), Reed (Jasper), Waggoner (Vestavia), Whatley (Auburn), and Williams (Wilmer) voted for the bill. They were joined by 6 democrats including Senators Beasley (Eufala), Coleman-Madison (Birmingham), Figures (Mobile), Hatcher (Montgomery), Singleton (Greensboro), and Smitherman (Birmingham).

The thirteen no votes were all republican senators including Allen (Tuscaloosa), Barfoot (Pike Road), Butler (Madison), Chambliss (Prattville), Elliott (Fairhope), Givhan (Huntsville), Gudger (Cullman), Orr (Decatur), Roberts (Mountain Brook), Scofield (Guntersville), Sessions (Red Bay), Shelnutt (Trussville), and Stutts (Sheffield).

Two democrat Senators, Sanders-Fortier (Selma) and Dunn (Birmingham), were absent due to serious illness and did not vote.  Sen. Marsh said after the vote that the loss of those two, presumed favorable democrat votes, probably doomed the measure to failure.

SB 214 would have provided the people of Alabama an opportunity to vote on a constitutional amendment on a traditional statewide lottery. Recent polling data indicate upwards of 70% of Alabama voters support such a measure.

As introduced, the bill also provided a mechanism to legalize casino gaming at four current gaming sites including Victoryland, Mobile Greyhound Track, Birmingham Race Course, and a new, greenfield casino site in Jackson or Dekalb Counties to be owned and operated by the Poarch Creek Indian Tribe.

The legislation also included language that directed the Governor to engage in good faith negotiations to create a statewide gaming compact with the Tribe, ultimately leading to casino gaming at tribal owned facilities in Atmore, Wetumpka and Montgomery.

During the debate on the bill, Marsh also agreed to allow casino gaming at Whitehall in Lowndes County and another facility in Houston County.

The bill also created a statewide Gaming Commission and allowed comprehensive sports book wagering on three platforms controlled by nationally recognized sports betting companies. Unlike some states including Mississippi which require sports betting to be done at physical gaming facilities, SB 214 would allow these activities to be conducted at will using a cell phone or personal computer.

Ultimately, this comprehensive gaming proposal was simply too heavy a lift even for Sen. Marsh, who has indicated that this is his highest legislative priority for the current legislative session. It is worth noting that Marsh also tied funding for his statewide broadband development bill to SB 214 likely as a way to garner support for both bills.

Sen. Jim McClendon (R – Springville), Sen. Garlan Gudger (R – Cullman) and Sen. Marsh introduced a “clean” statewide lottery bill late Tuesday evening after the failure of SB 214. It remains to be seen whether this bill will gain political momentum during the final half of this legislative session.

In addition, Governor Kay Ivey could call the legislature into session later this year to deal with this issue, should she decide to do so.

Senate committee hears testimony on impact of PBM legislation 

On Wednesday, the Senate Banking and Insurance Committee held a public hearing on SB 227 by Sen. Tom Butler (R – Madison), which attempts to regulate Pharmacy Benefit Managers (PBMs). As detailed during the hearing, there are several provisions in the legislation that would clearly raise the cost of prescription drug coverage and hurt employers and employees without improving access to care or quality of care.

This legislation removes the ability for employers to offer their employees lower cost options when it comes to prescription drug benefits. Not only will this legislation increase costs for private sector companies who utilize PBMs, it will also do the same for the State and place a significant burden on PEEHIP, which it can ill afford.

Justin Wright, executive vice president and chief financial officer of Abbeville’s Great Southern Wood Preserving, explained to the committee that the company utilizes a self-insured health care plan as a benefit for its employees; as such, the plan is covered by the company and the employees participating in the plan, which means that any increased costs fall on the company and the participating employees.

Wright said that if the bill passes, it could cost the company up to $1.1 million annually, which equals out to $1,079 per employee. That per employee cost hike would represent an increase of between 50-130% on employees’ current payments, depending on the exact employee.

Danny Rickert, chief policy officer for the University of South Alabama (USA) and USA Health, also testified in opposition of the bill. Rickert stated that if the bill were to pass in its current form, the measure would cost USA employees between $4.6 million and $5.5 million annually. Per USA health plan contract holder, this would break down to between $940 and $1,100 per year.

Diane Scott, the CFO for the Retirement Systems of Alabama, which oversees the Public Education Employees’ Health Insurance Plan (PEEHIP), testified that the bill would cost PEEHIP $159.7 million, which would have to be passed onto public educators, the ETF budget, or a combination of the two.

Sen. Butler, a pharmacist by trade, asserts that independent pharmacies are being hurt by PBMs.

The committee did not vote on the bill, and they are not scheduled to meet next week as of publication.

House passes General Fund budget

The House of Representatives passed the General Fund budget Tuesday, sending a bill to the Senate that increases funding across the board for state agencies and programs for the next fiscal year.

As passed, the $2.47 billion budget is an increase of $78.9 million over the current fiscal year’s General Fund and $15 million more than Gov. Kay Ivey’s original budget proposal from February. It includes a 2% pay raise for state employees.

One of the most significant increases in the budget is a $26.3 million-plus up for the Alabama Department of Corrections. Ivey and ADOC Commissioner Jeff Dunn have said most of the new funds would be directed toward improving health care, including mental health care, in state prisons. Last year, a federal judge ruled that the medical health care in Alabama prisons was “horribly inadequate” and ordered the state to make improvements.

The Department of Mental Health would see a $10 million increase in the House-passed budget, much of which would go toward establishing another crisis diversion center in the Birmingham-Tuscaloosa region, according to Finance Director Kelly Butler. The state is in the process of opening three crisis diversion centers in Mobile, Montgomery and Huntsville.

Christie Strategy Group, working on behalf of the Alabama Service Providers Association and with advocates from other community mental health providers, worked with Chairman Steve Clouse (R – Ozark) to get an across the board increase in community provider rates that was included in a floor amendment.

The bill passed the House 101 – 1 and now goes to the Senate where more changes are expected.

Upcoming legislative schedule

The House of Representatives and Senate will reconvene on Tuesday, March 16, 2021, at 1:00 and 3:00 p.m., respectively.