Alabama Legislature Convenes for 2018 Session

The Alabama Legislature came back to town this week and completed their first and second workdays highlighted by Governor Kay Ivey’s State of the State presentation on Tuesday evening.  The Legislature has 105 calendar days in which to conduct 30 legislative workdays.  Generally, the legislative schedule involves workdays on Tuesdays and Thursdays with the principal committee day being held on Wednesday.  Following this schedule, the legislature would be set to adjourn the session on April 23rd.

This year is anticipated to be different, because it is an election year.  The election primaries are scheduled for Tuesday, June 5th.  The legislators running for re-election want to get out of Montgomery as quickly as possible so that they can spend their time campaigning and rumors have it that they will try to be gone by the end of March.

In this first week of action, the House of Representatives introduced 202 bills and the Senate introduced 171 bills.

Of note to forestry is SB131, sponsored by Senator Trip Pittman (R-Montrose) which redistributes 20% of the forest severance tax from the Alabama Forestry Commission to the State’s General Fund.  Pittman’s bill will be taken up in the Senate’s Finance & Taxation General Fund Appropriations committee (which Pittman chairs) on next Wednesday.  AFA is opposed to this bill.

As evidence of the legislature’s desire to move quickly through the session, both the General Fund and Education Trust Fund appropriations bills have already been introduced.  The Alabama Constitution vests one principal responsibility upon the Legislature and that is to pass appropriations bills that result in a balance budget for the state.  This year, the FY19 (begins October 1, 2018) ETF bill (sponsored by Representative Bill Poole) will originate in the House of Representatives and the FY19 GF bill will originate in the Senate (sponsored by Senator Trip Pittman).

The legislature is not anticipated to propose an increase in fuel taxes this session, but advocates are gearing for a substantial increase next year (after the elections).  In anticipation of that future revenue, Senator Gerald Dial (R-Lineville) has introduced SB86 setting up a $2.45 BILLION bond issue for road and bridge construction.  ATRIP II (as its being referred to) would utilize the future fuel tax increase to underwrite the bond issue that is intended to be split evenly between state DOT projects and local (county and municipal) projects.  AFA has developed an Issue Brief regarding fuel taxes that is available by clicking here.

The election season is well underway, but candidates for the legislature and state offices are precluded from raising campaign dollars while the legislature is in session, up until 120 days prior to the primary elections.  This has created a fund raising “dead period” from January 9th through February 5th.

AFA Members Know Luther is the Right Choice

The election for the United States Senate is tomorrow.  AFA has endorsed Senator Strange because of his unwavering support of private landowner rights.  You might be interested in what some of your fellow members are saying:

“The 10th Amendment to the United States Constitution recognizes the sovereignty of the states.  Senator Luther Strange, as Alabama’s Attorney General fought tirelessly to oppose the Obama Administration’s attempts to erode the rights of the states.  He has continued this battle by supporting President Trump’s efforts to reign in the federal government’s overreach.  I am going to vote for Luther and suggest your consideration to do likewise.”  Gray Skipper, Vice President, Scotch Plywood Company, Inc., Fulton

“Tuesday, September 26th is election day in Alabama.  I hope you plan to vote and to vote for Luther Strange.  Luther is highly qualified and his leadership is well known.  For example, it was Luther who led the Attorneys General from states affected by the BP oil spill to convince Congress that those states should receive the BP money.  He has successfully prosecuted politicians for corruption.  He served our state with honor and dignity and will continue to serve the nation the same way.”  Ann Bedsole, Mobile

“Luther Strange has consistently and strongly supported forest landowners and the forest industry while serving as Attorney General.  He knows and understands our issues and will be a respected leader for us in the U.S. Senate.  He deserves our support.”  Fred Stimpson, President, Canfor Southern Pine, Mobile

“The leadership of Jasper Lumber is grateful that Senator Strange took the time to come visit our facility and to meet the hard working, dedicated people of Walker County.  Senator Strange is fully committed to small business and creating an environment in which small businesses can thrive and allow working people to prosper through tax reform and reducing bureaucratic policies that weigh down the opportunities for growth.”  Al Bracewell, President, Jasper Lumber, Jasper

“It’s been said that if you want to know how well someone will act in the future, look at their past.  The past track record for Luther affecting forestry is unwavering.  We’ll continue to have an advocate if Luther remains in the U.S. Senate.”  Montgomery Simpson, Governmental Affairs Manager, Weyerhaeuser

“Luther stands for the values that are the foundation of the Alabama Forestry Association, smaller government with accountability to the tax payer“  Hank Bauer, Jr., AFA President

The election tomorrow is tightly contested and it’s important that those supporting Luther turn out to vote.  Please let your friends, family and co-workers know the importance of their vote.  Luther Strange should clearly be the choice of landowners and the forestry industry.


Luther Strange Works to Protect Alabama Landowners


Quietly, behind the scenes and with no political objective, Luther Strange has worked to assist private landowners from government intrusion.  In many cases, the office of Attorney General (in conservative states) was the only check available to the inexhaustible thirst of the Obama Administration and the increasingly liberal court system that he appointed to infringe on the private property rights of landowners.

Here is one prime example:

In 2001, the United States Fish & Wildlife Service listed the Dusky Gopher Frog as an endangered species pursuant to the Endangered Species Act.  Several years passed and in 2009 (only after the Obama administration took control and a lawsuit was settled with the Center for Biological Diversity, an environmental advocacy group), the Service, in a proposed rule making, designated an area of Mississippi to be critical habitat for the frog.  This area was where the frog was currently located and the Service felt the need to protect the area to ensure the “conservation” of the species.

The environmental group objected to the proposed area complaining that it wasn’t suitable for the “recovery” of the species; a novel interpretation of the ESA’s statutory requirements.  The Service however agreed to this new characterization and issued a final rule that not only included the acreage in Mississippi, but also acreage in Louisiana that admittedly did not have suitable habitat for the frog and had not seen this species in over 50 years.

The Louisiana land was owned and leased by Weyerhaeuser which brought suit in federal court challenging the critical habitat designation.  The federal district judge ruled in favor of the Service and the case was appealed to the Fifth Circuit Court of Appeals in New Orleans.  A three judge panel (two Obama and one Bush appointees) reviewed the case and upheld the lower court ruling on a 2-1 vote.

In the dissenting opinion offered by Judge Priscilla Owen (the Bush appointee) she stated “the majority opinion interprets the ESA to allow the Government to impose restrictions on private land use even though the land: is not occupied by the endangered species and has not been for more than fifty years; is not near areas inhabited by the species; cannot sustain the species without substantial alterations and future annual maintenance, neither of which the Government has the authority to effectuate, as it concedes; and does not play any supporting role in the existence of current habitat for the species.”  She goes on to note that “if the Endangered Species Act permitted the actions taken by the Government in this case, then vast portions of the United States could be designated as ‘critical habitat” because it is theoretically possible, even if not probable, that land could be modified to sustain the introduction or reintroduction of an endangered species…..the majority opinion’s holding is unprecedented and sweeping.” (Emphasis added)

After the panel’s decision, Weyerhaeuser then asked for the entire appellate court to review the case.  Alabama Attorney General Luther Strange agreed with Weyerhaeuser’s position and Judge Owen’s analysis.  He led an effort to bring 15 state Attorney Generals to jointly petition the court to support the request for the full court to review the case.  His staff prepared the amicus brief that the state’s filed in the matter.

Unfortunately the request for rehearing was denied and now the case has been appealed to the United States Supreme Court.  Alabama and the other states have continued to fight this case and have now petitioned the Supreme Court to take up the case.

If this ruling is not taken up and overturned by the Supreme Court it will stand as the law for the 5th Circuit jurisdiction and can be relied upon as precedent by other jurisdictions.

As Alabama’s Attorney General, Luther Strange has distinguished himself in working diligently to protect the rights of private landowners.  The Dusky Gopher Frog is just one example of his efforts to curb the Government’s enthusiasm in utilizing federal laws, agencies and courts to direct land use and land management practices.

We have an opportunity to show our appreciation to Luther Strange.  The election for United States Senate is next Tuesday, September 26th.  AFA has endorsed Luther and he needs your vote.

Luther Strange Has Earned AFA Support

The headline in the Montgomery Advertiser on October 6, 2014 read “U.S. Supreme Court rejects Alabama school-funding case.”

We can (and should) thank Luther Strange for this victory.

There have been several important landmark dates in the history of the Alabama Forestry Association; the election that defeated Bob Riley’s $1 billion tax hike (Amendment One) and the transfer of power in the Statehouse in 2010 come quickly to mind.  However, the final disposition of the Lynch v. State of Alabama lawsuit has to be the most important for Alabama’s landowners.

The lawsuit, first filed in 2008, was brought by plaintiff’s challenging the constitutionality of Alabama’s ad valorem tax system.  Specifically, they sought to do away with the differential assessment for different types of land uses and to terminate the current use valuation for timberland owners.  Had they been successful, Alabama’s timberland owners would have been required to pay property taxes at a rate at least ten times greater than the current rate of taxation.

Upon his election in 2010, AFA staff met with Attorney General Strange and his legal team to discuss the Lynch suit.  He quickly grasped the importance of the lawsuit and pledged to devote the resources needed to effectively manage the litigation.  In addition, he agreed to allow AFA to assist the state with further legal expertise, conducting studies and preparation of expert witnesses.

Brought in federal court, the District Court for the Northern District of Alabama (Birmingham) ruled in favor of the State and then later the Federal District Court of Appeals in Atlanta did the same.

Finally, after six long years and hundreds of thousands of dollars of legal expense, the United States Supreme Court gave notice that it would not take up the case and the case was over.

The State’s defense was well managed and the lawyers that General Strange had on his staff were well prepared and very talented.

This outcome could easily have gone the other direction if the State of Alabama’s Attorney General’s office had been occupied by someone driven by political ambition.  Thankfully, that was not the case in this instance.  Luther Strange knew the law, knew what to do and did so without any consideration of the political consequences.

Luther Strange’s management of the Lynch lawsuit is just one of the reasons that the Alabama Forestry Association has endorsed him to be elected to the United States Senate.  He has helped Alabama’s landowners and deserves our support.  The election is next Tuesday, September 26th.  AFA highly recommends that you turn out and vote for Luther Strange.

Severance Tax Bill Moves Forward

AFA’s bill to modernize the state’s antiquated and confusing severance tax statute took a major step forward yesterday.  Managed by Elaine Beech (D- Chatom), HB313 passed the Alabama House of Representatives on a unanimous, 103-0 vote.  The bill now moves to the Senate where it is anticipated to get its first reading on the next legislative day, April 11, 2017.  The bill is expected to be referred to the Senate Agriculture and Forestry Committee chaired by Senator Tom Whatley (R- Auburn).  A similar bill, the Senate companion sponsored by Senator Greg Albritton (R- Range), was given a favorable report by this committee earlier in the session.

Please take a moment to express your appreciation to all the members of the House of Representatives that supported the legislation yesterday.  The overwhelming support that was demonstrated on passage is testimony to Representative Beech and the respect that she has within both parties in the House.

The purpose of the legislation is to; (1) change everyone to a weight calculation for severance taxes and to do away with the lumber tally and log scale providing clarity to reflect current industry practices, (2) make sure that there is no double taxation, (3) be revenue neutral, (4) clarify that out-of-state manufacturers are not responsible for paying the Forest Products Manufacturers tax, (5) set forth that the collection of severance taxes is at the point of first delivery, and, (6) codify the legislative intent that forest based wood waste used for energy is to not be subject to severance taxation.

Alabama Legislature Heads into Spring Break

The Alabama legislature will adjourn this week having completed 13 of its allotted 30 days for the 2017 General Session.  They plan to take a couple of weeks off for spring break and will return on Tuesday, April 4.

The number one priority for every legislative session is to pass the appropriation bills necessary to fund state government.  As such, this legislature is moving promptly as the General Fund Appropriations bill (HB155- Clouse) originated in the House and has moved through that body and now awaits consideration in the Senate Finance & Taxation General Fund committee.  The Education Fund Appropriations bill (SB129- Orr) originated in the Senate and has moved from committee and is expected to be considered before the full Senate today.

The General Fund appropriation includes an increase of $800,000 for the Alabama Forestry Commission for FY18 which begins October 1, 2017.  There is also a supplemental funding bill for the AFC (HB157- South) which will allow $550,000 to be drawn from the Emergency Forest Fire Fund to assist in funding for the current year’s (FY17) needs.  We anticipate that an additional bill seeking further supplemental funding for the current fiscal year to be introduced soon.

In the area of fiscal responsibility and limited government, a bill to phase out the state’s involvement of the retail sale of alcoholic beverages (SB160- Orr) passed out of committee and awaits consideration before the full Senate.

A bill to increase the state’s fuel taxes is rumored to be introduced soon.  The current discussion revolves around a 5 cent/gallon increase immediately and 2 cent/gallon increases in 2019 and 2021 for a total of 9 cents/gallon.  Additionally, Washington County has introduced a local bill (HB362- Beech) that will set up a county wide referendum to increase fuel taxes by 2 cents/gallon and the creation of a 1% sales and lease tax.  The proceeds will be earmarked for road and bridge construction.  This bill has passed the House and awaits consideration on the Senate floor.

AFA is proposing legislation to clarify and modernize the forest products severance tax and the forest products manufacturer tax (HB313- Beech, SB244- Albritton).  Both bills have passed out of their respective committees.  We anticipate that HB313 will be addressed by the House during the week of the legislature’s return from spring break.


AFA To Propose Changes to Forest Products Severance Tax Statute

Alabama first adopted a forest products “severance” tax in 1945.  The purpose of this tax was to “provide for the conservation of the natural resources of the state by protection of the forest products and development of the forestry program.”  As such, the proceeds of the tax were earmarked for the Alabama Forestry Commission.  The severance tax was based on the volumetric amount of wood products produced from trees severed in Alabama and was intended to be paid by the landowner.

In 1973, the statute was amended to include a second tax, referred to as the “processors” tax and was levied against the “processor of the forest products or the manufacturer using the forest products in an amount equal to 50% of the tax on the severer.”  The tax was intended to be paid by the manufacturer and not the land owner.

Therefore, when most people refer to “severance” taxes, they are really intending to include both the severance tax and the processors tax.

Over the course of time, the forest industry has changed dramatically.  In 1993, the legislature, recognizing these changes, once again changed the statute to allow taxpayers an election to either pay the tax based on the weight of wood received or to continue to pay based upon the volume of wood products produced.  The clear intent of the legislature was to allow this election for all forms of produced wood products, but unfortunately the actual statutory language (by the placement of a “period” instead of a “comma”) technically excluded sawmills from the election to use weight.

Recent interpretations of the statute have highlighted the need to remove the ambiguities and vagueness created by the archaic language of the law.  As such, the Association has drafted changes to the statute that will hopefully clear up the current confusion.

The proposed changes are intended to be revenue neutral; tax rates are not changed.  The language is updated to reflect current products and practices, retains the option for taxpayers to elect to remit taxes based upon volume or by weight, and simplifies compliance.

AFA plans to continue meeting with constituent groups, legislators and the state with the hope to introduce legislation in the next couple of weeks.  If you have any questions with regard to the proposed changes or desire to become involved in the process, please contact an AFA staff member.

2016 Legislative Wrap Up- Part V of V- Other Legislation of Interest

RSAWednesday, May 4th, marked the close of the 2016 Alabama Legislature’s Regular Session.  Legislators passed the constitutionally required appropriations bills fairly early in the session which left time for debate on several high profile issues.  Many of these issues were not resolved which causes speculation that a special session may be called later in the year.



A detailed analysis of several legislative initiatives have been discussed recently; I- Fuel Tax (See Article Here), II- BP Settlement (See Article Here), III- Prison Construction (See Article Here), IV- Appropriations (See Article Here), and today’s article, V- Other Legislation of Interest, concludes the series.

Today….Other Legislation of Interest

Public Pensions

The Alabama public pension system administered by the Retirement Systems of Alabama will require a taxpayer (employer) contribution for FY17 of approximately $945 million, of which, nearly $750 million will be for the teacher’s pension (TRS) and another $195 million for state agencies pension (ERS).  Of the $945 million, $131 million is attributable to current retiree (“normal”) obligations and a whopping $814 million is needed to offset the accrued liabilities of the system.  The system is currently funded at 67.5% (TRS) and 63.2% (ERS) of its liabilities.

Of the nearly $750 million needed for the TRS, $413 million comes from the state education appropriations, with an estimated $351 million of that amount, attributed to offset accrued liabilities.  In other words, $351 million could have been spent on educational uses (teacher’s salaries, books, transportation, etc.) but was used instead to offset management decisions made by RSA that have resulted in excess liabilities.

RSA has been criticized for adopting an investment strategy referred to as “economically targeted investments (ETI)” that involves investing in Alabama companies, real estate and golf courses that exhibit lower returns for beneficiaries but positively affect local economies.  RSA claims that the “net” benefit to the state outweighs the lower returns to the beneficiaries.

HB468, introduced by Representative Phil Williams (R- Huntsville) and SB387, introduced by Senator Larry Stutts (R- Tuscumbia) and co-sponsored by Senators Paul Bussman (R- Cullman) and Trip Pittman (R- Montrose), attempted to bring the RSA investment strategy in-line with the private sector by requiring RSA to follow Section 19-3B-802 of the Alabama Uniform Trust Code.  This section is entitled “Duty of Loyalty” and subsection (a) simply sets forth that a trustee (RSA) shall administer the trust solely in the interests of the beneficiaries (public employees).  Essentially, this bill would preclude RSA’s ETI investment strategy, unless the investments were in the best interest of the pension system’s beneficiaries.

RSA opposed the bills and they did not get favorable consideration from their respective commitees.

In the interest of transparency, Representative Phil Williams (R- Huntsville) and Senator Paul Bussman (R- Cullman) introduced HB467 and SB376 respectfully that would, among other things, require the RSA to provide in its annual reports the performance of investments for all asset classes, including separate reporting for public equity, fixed income, private placements, private equity and real estate over time periods of one, three, five, ten and twenty years.

Many members of the legislature are frustrated that current reporting practices make it quite difficult to determine the performance of RSA by these separate classes.  RSA opposed these bills and they never made it out of committee.

Senator Tom Whatley (R- Auburn) introduced SB283 which would effectively preclude new employees from non-governmental agencies from participating in the state’s public pension system and the state health insurance plan.  Currently employees of the Alabama Education Association, the Alabama High School Athletic Association, the Alabama Association of School Boards, School Superintendents of Alabama, the Alabama State Employees Association and many other private organizations are able to participate in the pension system and the Public Employees’ Health Insurance Plan.  This bill did not make it out of committee.

Finally, with respect to the RSA, Representative Lynn Greer (R- Rogersville) introduced HB346 which would have required all new state public employees to contribute monthly to individual retirement accounts (like a 401K) administered by the RSA in lieu of the defined benefit pension system primarily offered by the RSA.  The legislation would allow an opt-out provision for employees after being in the plan after 90 days.  RSA opposed this legislation and it never was addressed in committee.

Tax Earmarks

Senator Cam Ward (R- Alabaster) introduced SB15 which would have removed the “earmarks” for certain taxes and direct their payment into the General Fund for distribution pursuant to the General Fund Appropriation’s bill by the legislature on an annual basis.  Approximately $500 million in tax revenues would be freed up including the tax revenues generated by the forest products severance tax that are currently directed to the Alabama Forestry Commission.  Ward’s bill passed committee but was not passed by the full Senate.

Worker’s Compensation

Senator Arthur Orr (R- Decatur) introduced SB122 on behalf of the AFA’s affiliate organization, ForestFund.  This legislation would have simply limited an employer’s liability for permanent total disability benefits after the age 65 and would limit the obligation of an employer to pay medical benefits if an employee does not seek medical attention for a claimed work injury within two years of the injury.  The bill passed out of committee but was never addressed on the floor of the Senate.


Senator Vivian Figures (D- Mobile) introduced SB136 that would increase statewide ad valorem taxes by 5 mills in order to raise revenue for Medicaid.  The bill passed committee but was never addressed by the full Senate.

Representative Ralph Howard (D-Greensboro) passed a local bill, HB418, which will allow a referendum in Sumter County to raise ad valorem taxes by 6 mills be distributed 35% to the York Health Care Authority, 25% to the Sumter County Commission for ambulance service, roads and bridges, 20% to the Sumter County Volunteer Firefighters Association, 15% to the Sumter County Sheriff’s Department and 5% to Sumter County Board of Education.

Representative Donnie Chesteen (R- Geneva) nearly passed a local bill, HB539, which would have allowed Geneva County to conduct a referendum to allow the Geneva County Commission to levy a five cents/gallon fuel tax for road and bridge construction.  The bill passed both houses of the legislature but died in the basket on the last day.

Representative Paul Lee (R- Dothan) introduced a local bill, HB540, which would have allowed Houston County to conduct a referendum to allow the Houston County Commission to levy a five cents/gallon fuel tax for road and bridge construction.  The bill did not get considered in its committee.


HB68, sponsored by Representative Danny Garrett (R- Trussville), would prohibit an agency of the Executive Department of the state that receives appropriations from the General Fund or the Educational Trust Fund from entering into or renewing a contract with a lobbyists or lobbying firm.  The bill passed the House and a Senate committee but died before being addressed by the full Senate.

2016 Legislative Wrap Up- Part IV of V- Appropriations

dollars2Wednesday, May 4th, marked the close of the 2016 Alabama Legislature’s Regular Session.  Legislators passed the constitutionally required appropriations bills fairly early in the session which left time for debate on several high profile issues.  Many of these issues were not resolved which causes speculation that a special session may be called later in the year.

A detailed analysis of several legislative initiatives will be discussed over the next couple of days; I- Fuel Tax (see Here), II- BP Settlement (see Here), III- Prison Construction (see Here), IV- Appropriations (today), and V- Other Legislation of Interest.


The Alabama legislature’s primary constitutional responsibility is to pass the appropriation bills necessary to fund the operations of state government for the next fiscal year.  Usually, they wait until the very last days of a session in order to accomplish this requirement, however, this year they passed the two main appropriation bills fairly quickly with the General Fund Appropriations bill passing on the 19th legislative day (out of 30 possible days) and the Education Fund Appropriations on the 25th legislative day.

Of note, once these two bills are passed by both houses and transmitted to the Governor, the Budget Isolation Resolution (“BIR”) is no longer required before addressing other legislation.  This is meaningful because to adopt the BIR, a bill must receive a vote in excess of 2/3 of the members present and voting at the time in order to receive consideration on the floor.  The Republicans hold 26 seats in the Senate and 72 seats in the House, both of which exceed the 2/3 threshold when all members are present.  This is why they are oftentimes referred to as holding a “supermajority.”  If the Republicans are working together as a caucus, the BIR is not a problem.  Absent the “supermajority”, the minority party (in this case the Democrats) could stop legislation from coming to the floor by voting against the BIR.

Enough with the parliamentary procedure lesson….

The Education Appropriations bill, HB117, sponsored by Representative Bill Poole (R- Tuscaloosa) provides $6.327 billion for FY17 education related expenditures.  This is an increase of $337 million in spending over the FY16 appropriations.  The cap imposed by the Rolling Reserve Act for FY17 was $6.432 billion (for more on the cap see this article).  The actual projected funding for FY17 is less than the cap, so therefore, all of the $337 million increase will be spent and nothing will be put into savings.

Included in the $6.327 billion in education spending is the Foundation Program for K-12 students which is funded at $4.033 billion for FY17, an increase of $192 million over the prior year.  By way of comparison, the highest funding for K-12 in the state’s history occurred in the FY08 budget at $4.15 billion and the next highest was $4.036 billion in FY09.  The Education Appropriations were subsidized in FY08 by draining a proration prevention account of $439 million and in FY09 by $437.4 million borrowed from the Alabama Trust Fund.

Though this year’s appropriation for the Foundation program would be the third highest in the state’s history, it is the largest non-subsidized amount.

The Republicans took control of the legislature in the 2010 elections.  Their first regular session in the role of leadership was in 2011 where they addressed FY12 appropriations.  Prior to this change in leadership, proration was declared in education spending in each of the 2008 through 2011 fiscal years.  Since the change of leadership, proration has not been needed.

Why?  One of the first legislative initiatives enacted by the new leadership was passage of the Rolling Reserve Act.  This act places a “cap” on education spending based on the prior 15 years of actual revenues.  Any actual revenue in excess of the “cap” is placed in a reserve account to be utilized during economic downturns and lagging revenues.

The cap has forced the legislature to budget in a fiscally responsible manner and as a result there has not been the need for proration.

The General Fund Appropriations bill, SB125 sponsored by Senator Trip Pittman (R- Montrose) provides for $1.847 billion in funding, an increase of $90.9 million over the FY16 appropriation.

By far, the largest appropriation in the General Fund Appropriations bill goes to Medicaid.  This year Medicaid funding was increased by $15.3 million to $700.4 million over the previous year’s spending authorization.

Ummm….an increase of $15.3 million, yet the media reports that Medicaid is suffering from cuts or is “experiencing a shortfall.”  The “shortfall” is derived from the department’s request of an additional $100 million this year over last year’s funding.

To put this into perspective the FY02 Medicaid appropriation was $231 million, which, when compared to this year’s $700 million, is an increase of over 200% in the last 15 years.

The next largest appropriation in the bill is that for Corrections which was funded at $412 million for FY17 compared to $197 million in FY02.  Again, a nearly 100% increase over the last 15 years.

Meanwhile, the Department of Agriculture & Industries was funded at $8.3 million in FY17 compared to $13.7 million in FY02, a 40% decrease.  Likewise, the Alabama Forestry Commission was funded at $6.7 million in FY17 (a $300,000 cut from last year) as compared to $14.2 million in FY02, a 53% decrease.

The General Fund appropriation for FY02 was $1.2 billion, when compared to this year’s $1.8 billion representing a 50% increase over 15 years.  Clearly, the growth in Medicaid and Corrections has swallowed all the growth in funding, and more, to the detriment of all other non-education functions of state governance.

What message does this send regarding our priorities?  Timber and Agriculture are two of the most important segments to the state’s economy.  At the rate that Medicaid and Corrections are expanding, the other General Fund agencies will soon be completely swallowed up.  To make matters worse, the other agencies are forced to adopt higher fees and earmarked taxes in order to make up their reduced budget appropriations.

2016 Legislative Wrap Up- Part III of V- Prison Construction

prisonWednesday, May 4th, marked the close of the 2016 Alabama Legislature’s Regular Session.  Legislators passed the constitutionally required appropriations bills fairly early in the session which left time for debate on several high profile issues.  Many of these issues were not resolved which causes speculation that a special session may be called later in the year.

A detailed analysis of several legislative initiatives will be discussed over the next couple of days; I- Fuel Tax (see HERE), II- BP Settlement (see HERE), III- Prison Construction (today), IV- Appropriations, and V- Other Legislation of Interest.

Today…. Prison Construction

Alabama prisons are currently occupied by 188% more prisoners than there are beds.  This is defined as “overcrowding.”  The prisons have 13,318 beds to house 25,102 prisoners.

On May 21, 2015, Alabama Governor Robert Bentley signed legislation, SB67 sponsored by Senator Cam Ward, which was intended to provide sweeping changes to sentencing and probation standards with the intent to reduce crowding to a level of 137%.

The changes seek to steer low-level offenders away from prison by creating a new Class D felony category and to reduce recidivism with making changes to probation and supervision.  The legislation was the product of a Prison Reform Task Force.

The Alabama prison system was placed in federal receivership in the 1970’s, which led to a court-ordered release of inmates.  The U.S. Department of Justice is investigating conditions at the state’s only prison for women after accusing the state of failing to protect inmates from sexual abuse and harassment.  The Equal Justice Initiative and the Southern Poverty Law Center have filed separate suits on behalf of state inmates to address safety, health and disability issues.

The changes made by SB67 have only recently begun to be implemented.  In February, 2016, the Alabama Board of Pardons and Paroles announced that it was hiring 100 new officers and another 23 probation and parole specialists.  Additionally, a new Day Reporting Center opened in Birmingham in January and others are expected to be opened throughout the state.  These changes will theoretically allow supervision of all prisoners that are released for parole.

The legislation also provides $4 million in funding to expand substance abuse treatment for probationers and parolees.

Interestingly, the Prison Reform Task Force recommendations make no mention about the need to construct new prisons.  In fact the task force was told that “Alabama cannot build its way out of the chronic overcrowding of state prisons.”

The Governor, however, has apparently come to a different conclusion.  While the changes created by SB67 were still in their formative stages, he proposed to the legislature a massive $800 million prison building plan that would result in the construction of 4 new prisons and the closure of 14 older facilities.

The legislation, SB287 sponsored by Senator Trip Pittman (R- Montrose) passed the Senate on a 23-11 vote.  Only five Republican senators voted against the plan; Bill Holtzclaw (R- Madison), Paul Sanford (R- Huntsville), Shay Shelnutt (R- Trussville), Paul Bussman (R- Cullman) and Clay Scofield (R- Guntersville).

The $800 million in funding is proposed to come from a bond issue that will be result in a $50 million payment requirement over the next 30 years ($1.5 billion repayment).  Proponents of the bill maintain that the $50 million will come from “savings” produced by consolidating the prisons (requiring fewer personnel) and reduced maintenance expense.

No economic study was publicly produced to evaluate whether the savings projection was realistic.  Additionally, no economic study was provided to determine the impact that prison facility closure would have on the local communities where they are currently located.  There was also no study discussing the impact on prison personnel that would be relocated.  In fact, there was no disclosure at all regarding where the new facilities would be constructed.

SB287 also set forth a no bid process for the construction project.

The bill reached the House, passed out of the Ways & Means General Fund Committee and was considered before the full House on April 28th, the 28th legislative day.  During House consideration, the bill became quite controversial.  Several representatives attempted to amend the bill.

Representative Mike Holmes (R- Wetumpka) offered an amendment that would preclude the state from closing an existing prison until the Department of Corrections had conducted an economic impact study to determine the impact of the closure on the region’s employment, economic growth and debt service (many communities have outstanding debt requirements for infrastructure they constructed on behalf of the prisons).

Representative Holmes’ amendment passed on a 49-44 vote and the proponents of the legislation were clearly not pleased.  Voting on the prevailing side were 23 republicans and 26 democrats.  After considerable arm-twisting, the vote was reconsidered and this time the amendment failed on a 54-33 vote.  7 republicans and 9 democrats changed their vote.  The republicans were; Dickie Drake (Birmingham), Mickey Hammon (Decatur), Corey Harbison (Cullman), Steve McMillan (Bay Minette), Barry Moore (Enterprise), Jim Patterson (Meridianville) and Ritchie Whorton (Owens Cross Roads).

Later in the debate, Representative A.J. McCampbell (D- Livingston) offered an amendment that would require the DOC to produce a report by the 25th legislative day of the next regular legislative session and would then allow the legislature to approve or reject the report.  If the report was rejected, no bonds would be let and no project would be built.  Surprisingly, McCampbell’s amendment passed on a 49-35 vote with 23 republicans and 26 democrats supporting it, very similar to the first Holmes’ amendment vote.

With this amendment, the bill then passed the full House and was sent to the Senate to either concur with the changes or to go to conference committee.  Obviously, the bill’s proponents were not happy with the amended bill.

Upon arrival in the Senate, the bill now had 2 legislative days remaining for passage.  Intense negotiations began and it appeared that the senate was posturing for a filibuster of the bill.  The Senate voted to send the bill to conference committee where negotiation proceeded throughout the 29th day and into the 30th day.  Ultimately, late on the 30th day, a compromise substitute was developed.

The substitute would essentially reduce the amount of the bond issue from $800 million to $550 million reducing the number of prisons to be built and added some additional transparency language.  The McCampbell amendment was stripped from the substitute.

The Senate then began a filibuster on the bill on the last legislative day.  The filibuster led by Senators Paul Sanford (R- Huntsville) and Vivian Figures (D- Mobile) lasted until about 10:30 pm when it was ended by a cloture petition that passed on a vote of 23-9.  There are 26 republicans in the senate and 23 of them voted to close debate (3 republicans abstained; Paul Sanford, Shay Shelnutt and Larry Stutts).

The bill received final passage at approximately 10:45 pm and was sent to the House for concurrence.  The House rules allow for debate on this motion and it would have required invoking cloture in order to get it passed prior to the midnight deadline.  The House public viewing gallery was packed with lobbyists holding their collective breaths.

What transpired was quite interesting.  The bill was never brought up for consideration.  House Speaker Mike Hubbard later told reporters that there were not enough votes to stop the debate and so the bill died.  Supposedly, many House members were uncomfortable voting on the hastily negotiated substitute.

The Governor, obviously disappointed, is considering whether to call the legislature back to Montgomery to address the issue.

AFA Position:

The Alabama Forestry Association supports the reforms passed in the 2015 session and believes that adequate time should be given to see if this legislation results in positive improvement in the prison crowding challenge.

With respect to new construction, AFA supports a fiscally responsible and transparent solution.  The original construction bill has a $50 million payback requirement that, if the savings are not generated, will fall back to the state’s General Fund appropriations causing even more stress on an already tight budget.  If new prisons are ultimately determined to be the answer, AFA supports building one at a time, rather than a massive construction project.  Additionally, AFA believes that a “design, bid, build” model for construction is better for Alabama’s taxpayers rather than the proposed “negotiated” no-bid solution offered in the current proposal.