- Published on 28 May 2015
By Brandon Moseley
Alabama Political Reporter
Tuesday, May 26, the Senate Finance and Taxation Committee introduced and passed a number of bills that they hope will generate more revenue for the State’s struggling General Fund.
The first of these is not a new tax; but rather moves existing tax dollars from the Education Trust Fund to the General Fund. Senate Bill 496 as introduced by Chairman Arthur Orr (R-Decatur) will increase receipts to the State General Fund (SGF) and decrease receipts to the Education Trust Fund (ETF) starting June 1, 2015, by changing the distribution of the use tax and the remote use tax. Currently the SGF gets 75 percent of the Remote Use Tax and 25 percent of the Use Tax. The ETF only gets 25 percent of the Remote Use Tax, but 75 percent of the Use Tax. Orr’s plan would change that to an even split of each tax 50: 50. According to the Fiscal note the proposed distribution will increase receipts to the SGF by $26,000,000 in Fiscal Year 15 and $80,000,000 annually thereafter and correspondingly decrease receipts to the ETF by the same amounts.
Chairman Orr told reporters that the ETF budget passed by the legislature is the biggest in recurring dollars in state history will have a $100 million surplus in the stabilization fund at the end of this fiscal year and that that grows to $260 million by the end of the next fiscal year.
Legislators often point to the fact that most of the growth taxes are in the ETF; but those growth taxes are also highly volatile in nature in regards to the state economy. If the economic projections are right then a growing economy produces more employment and higher wages…if the economy however declines (and recessions have occurred ever seven years on average since 1929), then those revenue projections for 2016 will be far from accurate. A $260 million stabilization fund sounds like a lot of money but that is only 4.4 percent of the ETF which is actually very small for an emergency fund. 25 to 50 percent of annual income is the standard recommended emergency fund for both personal and business finances.
According to the bill, it is hoped that a national agreement resulting in more remote use tax (i.e. sales taxes on over the internet purchases) collected will ultimately blunt much of the loss of revenues for the ETF by the loss of in-State use taxes (what people not writing bills in the legislature call: sales taxes). Of course if that were certain to actually happen there would be no reason to introduce this bill as the General Fund currently would receive 75 percent of any increased internet sales taxes (the Remote Use tax).
Orr hopes that his bill will be passed by the State Senate on Thursday and is passed by the House early next week so that he can introduce a much beefier General Fund Budget on the floor of the Senate next Thursday, June 4.
Chairman Orr said that this bill alone would give the State enough money to level fund Medicaid and the Department of Corrections at 2015 levels, which are his first two budget priorities followed by Forensics. The State only has four legislative days left to finish its work on the 2016 General Fund budget.
- Published on 28 May 2015
By Bill Britt
Alabama Political Reporter
MONTGOMERY—Speaker Mike Hubbard's attorney, J. Mark White, issued a subpoena back in March for Attorney General Luther Strange to testify in an evidentiary hearing that never took place.
Hubbard, who is charged by the State with 23 felonies, asked that Strange testify on a number of issues, including why he had appointed W. Van Davis to act on his behalf in the Lee County Grand Jury investigation.
Hubbard also subpoenaed Gov. Robert Bentley and the Custodian of Records for the Alabama Ethic Commission. Judge Walker ruled in favor of the State’s motion to quash the subpoena for Bentley and the Custodian, but did allow for the defense to question Strange in writing, and limited the questions as to Davis’ appointment.
The 53-question interrogatory with Strange’s answers was filed with the court on Wednesday, and focuses on why Strange appointed Davis to oversee the criminal investigation into Hubbard.
White has filed motions to have the case against Hubbard dismissed, claiming that Strange lacked the authority to have Davis act in his stead. This is a tactic that attorney Bill Baxley tried without success in the Rep. Barry Moore case.
When asked why he recused himself from the investigation Strange wrote, “The investigation concerned Mr. Hubbard’s potential misappropriation of funds when he was the Chairman of the Republican Party through his business, Craftmaster. My campaign used Craftmaster’s printing services.” He also states that the reason for his then Chief Deputy’s recusal was because, “Kevin Turner worked on my campaign.”
White tries to make an issue out of Special Prosecution Division Chief Matt Hart speaking with radio host Dale Jackson. During Hart’s conversation (which Jackson recorded without Hart’s knowledge) Jackson asked, "Why did Luther recuse himself?" White wanted to know if Strange agreed with Hart's characterization of his recusal, to which he answered, “The statement is materially correct.”
While arguing that Davis lacked the authority to prosecute Hubbard, White also tried to use the Jackson recording as proof of prosecutorial misconduct.
Hubbard’s attorneys also took issue with the term "Acting Attorney General,” asking what the procedures were for appointing someone to that position. Strange answered, “I asked Davis to assume the investigation pursuant to his powers and authority as a supernumerary district attorney as provided by Alabama Code §§ 12-17-184, 12-17-216, and 36-15-15.”
This section of code has been used by many AGs over the years, without controversy, to appoint District Attorneys to act on their behalf.
Strange later said, “I often ask district attorneys and supernumerary district attorneys to handle investigations or prosecutions when, for whatever reason, I believe their expertise or resources are needed.”
White also questioned Strange about his signature on the document giving Davis authority over the Hubbard investigation. Strange responded, “I personally signed the original letter represented by Exhibit A in my office on January 31, 2013, which is the date of the letter. I do not recall whether anyone saw me sign the document. Exhibit 1 to this response reflects that a signed copy of the letter was converted to pdf at 4pm on January 31, 2013 and saved to a computer in the Attorney General’s Office.”
In the interrogatory, White asks, “Are You aware of any discussions between any member of the Attorney General's Office regarding backdating the document reflected in Exhibit A or backdating any document of any type, including but not limited to any commission, letter, or oath for Davis, Hart, and/or Duffey?”
Strange answered, “No.”
White has tried to accuse the State of backdating Davis' appointment, but the meta data on Strange’s State computer proves White’s accusation to be false.
On several occasions, Strange reminded Hubbard’s defense that their questions, “Call[ed] for legal conclusion outside the scope of deposition.” He also objected to “[v]ague and confusing” questions as well as being “argumentative.”
Trial Judge Walker as well as Circuit Court Judge Christopher Walker have found that Davis was rightfully appointed. The State Supreme Court rejected a request for an opinion in the Moore case.
- Published on 28 May 2015
By Brandon Moseley
Alabama Political Reporter
On Wednesday, May 27, State of Alabama agency head after agency head paraded in front of the Senate Finance and Taxation Committee warning about how their agency will be impacted if they are forced to endure cuts to their budgets.
The Senate Committee introduced a substitute version of HB135; but their 2016 budget is still $1.62 billion. About $200 million less than what the budget was for the 2015 fiscal year which ends on September 30.
Chairman Arthur Orr (R-Decatur) told reporters that there are a number of bills which are moving through the legislature in the next four legislative days that could make up most of that $198 million gap. Orr said that he hoped that if the Senate and the House both passed the new revenue bills that he could substitute a General fund budget from the Senate floor.
The Governor’s $541 million package of tax increases on car sales, cigarettes, tobacco, car leases, publicly owned utilities, banks, insurance, etc. is languishing in committee and is unlikely to be acted on by either House.
Similarly Chairman Orr made no mention of gaming revenues. Senate President Pro Tem Del Marsh’s (R-Anniston) plan to create a state lottery, negotiate a gaming compact with the Poarch band of Creek Indians, and allow casinos at four dog tracks appears to be dead. On Friday Marsh had promised to bring his controversial gambling package to the floor if after polling the Senators over the weekend on their opinions he felt that he had the votes. Gambling did not come up in the Senate session on Tuesday…meaning it is likely that there are enough Senators to filibuster that plan so nothing gets done in the remaining days of the session. Thursday could prove different; but for the fifth consecutive year it appears that gaming will not be debated on the floor of either House.
The last time gambling was voted on by the Senate, people pled guilty to bribery and four Senators were indicted by federal authorities. Juries later found all the alleged conspirators not guilty.
Chairman Orr instead is laying his hope on a package of individual bills released by his committee in the past two days. The biggest of these is SB496, sponsored by Sen. Orr which reallocates existing use tax dollars. The bill would transfer $80 million a year of existing sales taxes from the ETF to the SGF.
SB497 is sponsored by Sen. Greg Albritton (R-Bay Minette). It broadens the definition of who is an instate business. Senate Bill 497 “establishes a factor presence nexus standard for business activity for purposes of business privilege tax, income taxes, and/or financial institution excise taxes which could increase receipts to the Education Trust Fund and State General Fund by an estimated $2 million to $8.5 million annually combined,” according to the fiscal note which is based on information obtained from the Department of Revenue.
Senate Bill 501 sponsored by Sen. Clyde Chambliss (R-Prattville) will increase auto sales receipts by an estimated minimum of $2,000,000 of which $840,000 would be credited to the State General Fund and $1,160,000 would be deposited to the Education Trust Fund by applying Alabama automobile sales tax to out-of-state residents who purchase a vehicle in Alabama and whose resident state does not allow Alabama residents to purchase a vehicle in their state for first titling and registration in Alabama without the payment of tax to that state.
SB507, sponsored by Roger Smitherman (D-Birmingham) would increase the current pharmaceutical privilege tax from 10 cents to 25 cents for each prescription filled or refilled for a citizen of Alabama. The pharmacists would be recompensated however by the Alabama Medicaid Agency raising the amount it pays the pharmacies to fill prescriptions. Since most of the Medicaid dollars come from the federal government the net effect of all of these moves is estimated to be over $8 million a year. Part of that is however negated because to get the independent pharmacists of Alabama to go along with this scheme the state has to agree not to hire a pharmacy benefits manager (PBM) for the costly Alabama Medicaid program.
SB504 sponsored by Sen. Shay Shelnutt (R-Trussville) would end the practice of individuals being able to file a certificate of exemption from income tax withholding. The increase to the ETF would be an estimated $12 million.
Orr said that House Bill 140 which passed the House on Tuesday also could generate some revenue for the general fund. It makes it unlawful to possess or use an automated sales suppression device or phantom-ware in Alabama. Orr said that some restaurants and other retailers use the devices to keep two sets of books. The Committee gave favorable report to SB505, sponsored by Sen. Tim Melson (R-Florence) which is the Senate version of the same bill.
Senate Bill 216, sponsored by Senator Gerald Dial (R-Lineville) would, “Allow state agencies authorized to statutorily levy or assess fees retained by the agency used to fund its operations or programs to review their fee schedule and request an increase of any such fees based upon a percentage increase in the Consumer Price Index since the last fee adjustment or over the preceding ten-year period of which the fee is to be increased, whichever period is shorter. Each five years thereafter, the agency may repeat this process.”
The bill could increase revenues to various agency funds and the SGF depending upon the number of agencies with approved requests to increase eligible fees and the amount of the fee increase. The committee agreed to leave the Alabama Public Service Commission or the State Banking Department out of the purview of this bill on the agencies request.
Chairman Orr said that because they could not project how much revenues this might generate it could not be used to prepare the 2016 SGF; but $60 million a year was the number discussed in committee.
The Senate Finance and Taxation Committee also gave favorable report on a 9 to 4 vote to SB502, sponsored by Sen. Dial, merging the SGF and ETF into one budget and doing away with all earmarking. This is a Constitutional Amendment and would have to be ratified by a vote of the people.
The target number we have been hearing is about $180 million. That will take significantly more than the fiscal notes in the bills that are listed here.
The Alabama Political Reporter has spoken with members of the House who are still adamant that they will not raise taxes on the people of Alabama and are skeptical of the idea that the leadership can cobble together enough votes to pass the BIR or cloture debate on all of the revenue bills. They remain skeptical of the idea that the House will ever pass the Senate’s beefed up General Fund budget. Some favor some version of the $1.63 billion austerity budget or shutting everything down and coming back in special session awaiting a better solution.
- Published on 28 May 2015
By Bill Britt
Alabama Poliical Reporter
MONTGOMERY—Just when it looked like time was running out on a Billion Dollar Bob Barack-Style Bailout, it is back and on today's House Special Order Calendar.
SB71, sponsored by Senate President Pro Tem Del Marsh (R-Anniston), is said to change some fundamental aspects of the State’s Accountability Act, which was sold as a way to help children escape failing public schools. The primary beneficiary of the revised law would appear to be the Florida-owned SGO led by former Governor Bob Riley (Riley’s SGO is a whole subsidiary of Florida-based Step Up for Students, according to its 990s).
SB71 would not only expand the cap of donations under the AAA from $25 million to $30 million, but would also allow for retroactive tax credits and give SGO’s the ability to bring forward unused money from previous years.
Most importantly, it would save Riley’s Alabama Opportunity Scholarship Fund (AOSF) from embarrassment.
There are currently nine SGOs, but there is only one that appears to be getting special consideration, or, is in need of the amended legislation: Riley’s Alabama Opportunity Scholarship Fund.
According to an internal memo from Riley’s SGO, AOSF needed approximately $15 million by May 1, 2015, just to renew its current scholarship obligation. That deadline has passed, but Riley still needs the legislation to avoid a massive default on promised scholarships. Under the provisions of the current law, Riley’s SGO could default on renewals and would not be able to enroll new students.
AOSF’s own accounting shows that the group needs $15,110,300 just to renew students from the 2014-2015 school year.
Under the current Education Trust Fund Budget, passed by the House and Senate, many school children will be without textbooks, teachers will have to make-do without classroom materials, even toilet paper will be in short supply. But, the parent company of former Gov. Bob Riley’s SGO is sitting on piles of taxpayer dollars.
Still, Riley does not have what he wants. But, it seems at long last, Speaker Mike Hubbard plans on delivering it to him.
An internet memo from Riley’s SGO indicates that it is on the verge of collapse, and could be the first SGO to fail under the Republican-created Alabama Accountability Act.
While other SGOs have faired well, Riley's has sunk under the weight of too many scholarships and not enough donors.
According to Riley’s parent company, Step Up For Students, Riley raised 85 percent of all his SGO’s donations from only three contributors.
Under the Accountability Act, SGOs are not accountable to disclose donors.
- Published on 28 May 2015
by Minority Leader, Rep. Craig Ford
We are often reminded that this nation was founded on Christian principles, and certainly a majority of the representatives in the Alabama legislature are Christians. So when the General Fund budget, which finances all government services and agencies outside of education, came up for a vote last week, I couldn’t help but think about that popular phrase from the ‘90s, “What would Jesus do?” The “WWJD” phrase has been used to guide Christians through a lot of tough decisions. So it only makes sense that most members of the state House should have asked themselves that question before they voted on that budget.
But last week, it looks like most House members didn’t ask themselves, “What would Jesus do?” Instead, the votes they cast may as well be their signatures on more than a thousand pink slips and death certificates for people throughout Alabama.
If Jesus had been voting on this budget, how would he have voted?
Would Jesus, who said, “Whoever welcomes one of these little children in my name welcomes me,” support a budget that eliminates the Child Abuse and Neglect Prevention program, and reduces the enforcement of child support payments?
Would Jesus, who healed the sick and is called the “Great Physician,” support a budget that eliminates outpatient dialysis and hospice care?
Would Jesus, who taught us to honor our mothers and fathers and our neighbors as ourselves, support a budget that takes the state’s Meals-On-Wheels program, which is the only way many elderly Alabamians are able to eat, and cut that program’s funding in half?
Would Jesus, who said, “Inasmuch as you have done it unto one of the least of these my brethren, you have done it unto me,” support a budget that cuts Medicaid and the Department of Mental Health by 5 percent?
Philippians 2 reminds us that daily we should “have the attitude within ourselves which was also in Christ Jesus.” This chapter tells us to treat the needs of others like they are more important than their own. But by approving this budget, the Alabama House of Representatives has done just the opposite, and chose to disregard the devastating impact these drastic cuts will have on many Alabamians.
Now, the Senate is considering the budget. The law requires that all revenue raising legislation must begin in the House of Representatives, so the Senate cannot do anything to put more money in the budget. But the senators can vote down this budget and force the legislature into a special session this summer. By then, the legislature could negotiate a fair revenue-raising package that raises money through voluntary methods, like a lottery and tobacco tax, instead of higher taxes on businesses, agriculture and families.
Cleary, the consequences of this budget are dire and not in the best interest of the people of Alabama. Legislators have a duty: to be a voice for the people they represent and stand up for those who cannot stand up for themselves, just as Jesus would do. It’s hard to imagine that the Christ who healed the sick, fed the hungry and taught us to take care of “the least of these,” would have voted for a budget that abandons the sick, takes food out of the mouths of our grandparents and forces a thousand Alabamians out of a job.
It’s now up to the Senate to either force this budget through or do the right thing and kill it so we can start over. A lot will depend on if the Senators will do what the House members did not do last week: ask themselves, “What would Jesus do? Would Jesus vote for this budget?”
Rep. Craig Ford is a Democrat from Gadsden and the Minority Leader in the Alabama House of Representatives.