VOLUME 24 NUMBER 10 – MAY 26, 2023

The Alabama Legislature reconvened its regular session on Tuesday, May 23rd, 2023, working through the 24th, 25th, 26th, and 27th legislative days.

House passes increase to entertainment industry incentives

On Tuesday, the Alabama House passed a bill that would increase incentives through tax rebates for the entertainment industry. After lengthy discussion on the House floor, an amendment was added to HB 429, sponsored by Rep. Jamie Kiel (R-Russellville), to increase the original $20 million annual cap to $50 million annually. 

As originally written, the bill increased the current $20 million cap to $150 million. After lengthy discussion, an amendment was offered to remove the cap completely. A majority of House members opposed that idea, saying it had not been properly vetted. The bill ultimately passed with the $50 million cap by a vote of 100-1, with Rep. Ontario Tillman (D-Bessemer) as the only no vote. 

This legislation now goes to the Senate, where it faces an uncertain future.

Greene County gambling constitutional amendment passes the Senate

A local bill was introduced earlier this session that would legalize historical horse racing gambling machines in Greene County. SB 324 by Sen. Bobby Singleton (D-Greensboro) would “propose an amendment to the Constitution of Alabama of 2022, relating to Greene County, to provide legislative findings, provide for the pari-mutuel wagering on historical horse racing on computerized machines, levy a tax on pari-mutuel wagering on historical horse races on computerized machines, provide for the application for licensure and the operation of a racetrack, and provide for the distribution of taxes, fees, and other funds collected by the (racing) commission.” The bill states that only individuals who have lived in Alabama or entities that have been incorporated in the State for a minimum of five years immediately preceding the date with which the license is issued can operate a racetrack. 

A public hearing was held in the Senate Tourism committee on Wednesday where a few opponents to the bill spoke on their concerns, including the very close similarities that historic horse racing shares with slot machines. The bill ultimately received a 24-1 vote on Thursday from the full Senate and now requires a vote in the House to pass. It has been referred to the House Economic Development and Tourism committee. 

Alabama Legislature passes State budgets and supplemental appropriations

General Fund Budget

On Thursday, Alabama lawmakers met past midnight to reach an agreement on both state budgets and their corresponding supplemental appropriations. After multiple conference committees, legislators resolved disagreements between the House and Senate versions and they all received final passage. 

Conference committee members for HB 124 and HB 125, the General Fund and its supplemental appropriations, included Chairman Rex Reynolds (R-Huntsville), Rep. Laura Hall (D-Huntsville), Rep. Paul Lee (R-Dothan), Sen. Greg Albritton (R-Atmore), Sen. Clyde Chambliss (R-Prattville), and Sen. Rodger Smitherman (D-Birmingham). 

The $3 billion General Fund budget calls for a 6% increase in spending from the previous fiscal year. Some key items that were in the agreed upon General Fund budget include a 2% cost of living adjustment for state employees, increased spending for prisons, Medicaid, public and mental health, and law enforcement. Christie Strategy Group client, the Alabama Service Providers Association, advocated for an increase in workforce funding in the Department of Mental Health’s budget. Ultimately, the line item was increased by $7.5 million over last fiscal year. The full General Fund spreadsheet is available here

In addition to the General Fund budget, lawmakers approved approximately $200 million of supplemental appropriations for state and local projects. Funding for the newly built whitewater park near Maxwell Air Force Base in Montgomery proved to be especially controversial. The Governor originally recommended $25 million for the project in the Education Trust Fund supplemental budget, but it was  stripped by the ETF chairmen. Ultimately, the General Fund conference committee provided $5M for the project. Other local projects that received funding in the supplemental bill included the relocation of the Mobile airport, the State Port Authority, and the Alabama Department of Forensics Lab in Huntsville. The supplemental legislation can be viewed here

Education Trust Fund

Lawmakers also approved a record $8.8 billion Education Trust Fund budget and a $2.7 billion supplemental funding bill. The ETF budget did not undergo nearly as many changes as the General Fund budget and supplemental. Conference members for SB 87 and SB 88 included Sen. Arthur Orr (R-Decatur), Sen. Clay Scofield (R-Guntersville), Sen. Bobby Singleton (D-Greensboro), Rep. Danny Garrett (R-Trussville), Rep. Joe Lovvorn (R-Auburn), and Rep. Anthony Daniels (D-Huntsville).

Higher education institutions were allocated approximately $1.55 billion, including Christie Strategy Group client, Athens State University, who received approximately $20.5 million in the ETF and $7.35 million in the supplemental. 

One of the largest expenditures in the supplemental budget were the proposed one-time rebates to Alabama tax filers. Originally proposed as $400 rebates for individuals and $800 for couples, the Senate had reduced them to $105 per person, only for a House committee to raise them to $210.

On Thursday, the joint conference committee changed them a fourth time, reducing them to $150 per person, or $300 for couples. The change amounts to a $393 million hit to the ETF, down from the $550 million hit incurred from the House committee-passed $210 rebates.

The reduction in rebates allowed the legislature to appropriate more money to the K-12 Capital Grant Fund, which will provide grants to schools for capital projects, and the Educational Opportunities Reserve Fund, a new education savings account.

In addition to the General Fund appropriation, Christie Strategy Group worked diligently to secure additional funding in the ETF to address the workforce crisis for Intellectual Disability and Developmental Disability  (ID/DD) community service providers. The ETF includes a new line item for $3 million that will be allocated to ADMH to address rate increases for service providers. Combined with the General Fund increase, ADMH will receive an increase of $10.5 million over last fiscal year for ID/DD community provider rate increases. 

The full Education Trust Fund spreadsheet is available here, and the supplemental is available here

Sweet Home Alabama Tourism Investment Act “clarification”

HB 445, sponsored by Rep. Danny Garrett (R-Trussville), would “clarify the tax rebates for certain businesses for certified tourism destination projects are only available for projects placed into service after the effective date of the act.” 

During debate on the Senate floor on the Sweet Home Alabama Tourism Investment Act, which was approved earlier in the session, Sen. Orr and Sen. Sam Givhan (R-Huntsville) raised concerns that the language may allow for the incentive to be applied retroactively. Attorneys involved in the drafting of the bill and other proponents disagree with that characterization, but the tourism industry is not opposing Rep. Garrett’s bill. The bill passed the House on Thursday and was later referred to the Senate Finance & Taxation committee, chaired by Sen. Orr. 

Grocery tax

On Thursday, the House advanced a bill that would eliminate half of the state’s 4% grocery sales tax. The proposal would gradually reduce the tax by one percentage point per year until the tax decreases to 2%, but for the tax cut to take place, there would have to be adequate increases in the ETF to offset the loss. HB 479 by Rep. Garrett was approved by the House with a vote of 103-0. The bill now heads to the Senate, where every senator signed on as a co-sponsor to the senate version of the bill. Some education advocates have expressed concern about a reduction in funding for the state’s education budget, but the bill has received overwhelming bipartisan support. 

The Legislature will reconvene next Wednesday May 31st, 2023, for the 28th legislative day. Three legislative days remain for this year’s regular session.