AFA Legislative Update

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The Alabama Legislature met for three legislative days this past week and has now completed one third of the allotted 30 working days for the session.

General Fund Appropriation

Senate Finance & Taxation General Fund Chairman Trip Pittman (R- Montrose) quickly moved the General Fund FY17 Appropriation bill through committee and the full Senate this week. The bill allocates $1.82 billion in spending for non-education government agencies.  The bill includes level funding of $685 million for Medicaid. The Alabama Forestry Commission received $6.7 million in General Fund dollars which is a reduction of $300,000 from the current year. The funding bill appears to be on an expedited schedule and now goes to the House of Representatives.

Fuel Tax Increase

The first bill of a two bill package passed out of the Senate’s Transportation and Energy Committee yesterday. A substitute to SB180 was offered by the bill’s sponsor, Senator Gerald Dial (R- Lineville). This bill, referred to as the “Accountability” bill, sets forth the criteria for allocation of any new revenues that may materialize from a planned second bill to increase fuel taxes. Dial’s Substitute made more money available to local uses than the previous proposal. The Substitute sets aside $32 million generated by the increased taxes for a new ATRIP program that will be used as a payment stream for a new bond issue for county road and bridge projects. Additionally, each county will receive an additional $500,000 that was previously available but only with a match requirement. The Substitute removes the match requirement. There is no obligation on the counties to use their money to address structurally deficient bridges.

The second bill will actually increase the tax on diesel fuel and gasoline. Sponsored by Representative Mac McCutcheon, the bill will be introduced in the House of Representatives and is expected to propose an increase of $0.12/gallon on diesel and gasoline over a three year period. A $0.12/gallon increase results in a whopping $400 million tax increase. Local entities would get an increase of $180 million over their current allocation.

Workers Compensation

AFA is promoting a bill to reduce the uncertainty of workers compensation expense regarding future liabilities faced by the Forest Fund and its clients. SB122, sponsored by Senator Arthur Orr (R- Decatur), received a favorable vote in the Senate’s Fiscal Responsibility and Economic Development Committee on a 12-2 vote.

Special thanks should be sent to Senator Orr for handling the bill, Senator Phil Williams (R-Gadsden) the Chairman of the Committee and the following Senators for voting with us; Bill Hightower (R- Mobile), Clay Scofield (R- Guntersville), Clyde Chambliss (R- Prattville), Greg Reed (R- Jasper), Jim McClendon (R- Springville), Larry Stutts (R- Tuscumbia), Paul Sanford (R- Huntsville), Steve Livingston (R- Scottsboro), Tim Melson (R- Huntsville), and Trip Pittman (R- Montrose). You can find the contact information for the Senators at http://www.legislature.state.al.us/aliswww/SenatorsPicture.aspx.

The only two Senators voting against us were Senators Cam Ward (R- Alabaster) and Bobby Singleton (D- Greensboro). Representatives of the plaintiff lawyers association testified at the committee hearing against the bill.

The bill now moves to consideration by the Rules Committee for placement on the Special Order Calendar to allow for consideration by the full Senate.

AFA Legislative Update

capitol.jpgThe Alabama Legislature convenes today for Day 5, the first of an anticipated three day workweek. The pace of activity has been brisk as it appears the members desire to complete their work in an expeditious manner.

Each year, the legislature must address “sunset” legislation by the 10th legislative day. Sunset legislation involves evaluating the need to keep agencies, boards and commissions operational. If the legislature decides that one is not needed, they would simply not vote to extend it or, in effect, “sunset” it. The fact that the legislature is addressing these bills early is indicative of their desire to move quickly through the session.

The only other responsibility the legislature has is the passage of appropriations bills. At this point the General Fund Appropriations (SB125/HB104) and the Education Trust Fund Appropriations (HB117) bills have been introduced but only reflect the Governor’s plan. The legislative versions are expected to be substituted in committee. Currently no committee hearings have been scheduled to address the appropriations bills.

Tax Incentives

A couple of good tax incentive bills are making their way quickly through the process. SB131 creates an income tax for contributions to health savings accounts mirroring what is allowed by federal law. SB131 is sponsored by Senator Paul Sanford (R- Huntsville) and has been given a favorable report out of committee.

HB36 creates a tax incentive for a small business that hires new employees during the course of the year. Sponsored by Representative Kyle South (R- Fayette), the bill has passed the House and has been assigned to the Senate’s Fiscal Responsibility and Economic Development Committee.

Fuel Tax Increase

The plan to increase fuel taxes began its process in the Senate last week. The plan involves the passage of two bills; the first is an “accountability” bill that will determine how the new tax revenue is distributed and spent and the second will be the actual tax increase. SB180, sponsored by Senator Gerald Dial (R- Lineville), was brought up in the Senate’s Transportation & Energy Committee last Thursday. Dial’s bill would allocate 2/3 of the new revenue to the State’s DOT and 1/3 to local entities (counties and municipalities).

Senator Greg Albritton (R- Range) offered a substitute to SB180 that would; (1) distribute the new revenue at 55% to the DOT and 45% to the locals, (2) require any new tax revenues received by the counties to be used to replace/repair structurally deficient bridges first, and (3) allocates the existing diesel tax revenue at 55% to the DOT and 45% to the local entities (currently 98% goes to DOT). If adopted, Albritton’s Substitute would re-prioritize $62 million to counties and municipalities that currently goes to DOT, regardless if whether a tax increase is adopted. AFA is supporting the Albritton Substitute.

The second bill, increasing the fuel tax, is expected to be introduced in the House by Representative Mac McCutcheon (R- Huntsville) only after the Senate has passed the “accountability” bill. The tax increase being discussed is 6 cents/gallon the first year, an additional 3 cents/gallon the second year and an additional 2 cents/gallon the third year. The total 11 cents/gallon increase is equivalent to a $368 million increase.

Legislative Action Alert!

The Alabama Senate’s Transportation & Energy Committee is considering SB180 sponsored by Senator Gerald Dial (R- Lineville). The Alabama Forestry Association and the Alabama Farmer’s Federation are working together to support a Substitute to SB180 that is being offered by Senator Greg Albritton (R- Bay Minette).

Senator Albritton’s Substitute would re-allocate $62 million of existing diesel tax revenue to the counties for road and bridge projects. This would give the counties much needed revenue without having to raise taxes.

Please contact your county commissioners immediately and let them know about Senator Albritton’s Substitute and ask them to call their senators and express support for the Substitute.

If you are able to make contact with a commissioner, please let Bill Harris know the outcome of your discussion at bharris@alaforestry.org. We need to know what contacts have been made.

The Senate Transportation and Energy is chaired by Gerald Allen (R- Tuscaloosa) and is made up of Senators Greg Albritton (R- Bay Minette), Clyde Chambliss (R- Prattville), Linda Coleman (D- Birmingham), Gerald Dial (R- Lineville), Jimmy Holley (R- Elba), Bill Holtzclaw (R- Madison), Steve Livingston (R- Scottsboro), Jim McClendon (R- Springville), Arthur Orr (R- Decatur), Greg Reed (R- Jasper), Quinton Ross (D- Montgomery), Hank Sanders (D- Selma), Clay Scofield (R- Guntersville), Cam Ward (R- Alabaster) and Tom Whatley (R- Auburn).

Supporting us today in committee were Senators Albritton, Allen, Chambliss, Holtzclaw, Livingston, Orr, Scofield and Sanders. Please contact these senators (their contact information can be found at www.legislature.state.al.us/aliswww/ISD/Senate/ALSenators.aspx) and express your appreciation for their support and encourage them to continue to support the Substitute.

The Transportation and Energy Committee is expected to meet early next week on Tuesday, February 16th so time is of the essence.

AFA On the Road to Notasulga

DSC_0033The Alabama Forestry Association will host a Capital District Meeting and Auburn Area Regional Reception on Thursday, February 11th at Coach Pat Dye’s Crooked Oak Lodge in Notasulga.  The District Meeting will begin at 5:00 pm CST and the Reception will last from 6:00 pm CST until 8:00 pm CST.  If you have not already registered, you can do so by going to our website by clicking here.

This is one of our most highly anticipated events and we are very grateful for the generous support provided by our sponsors; First South Farm Credit, Auburn Bank, Southern Loggers Cooperative, King Auto, Daniel & Son, Country & Commercial Properties, Beck’s Turf Farm and Southeastern Land Group.

The world famous and always popular Barbecue House of Auburn will once again cater the event and we expect an excellent turnout just for the purpose of sampling their superb food.

In addition, we appreciate Dave Milton with Southeastern Land Group for being a sponsor and he will have a special presentation to make regarding our late friend and long-time AFA member Mason Dollar.

Please plan on joining us this Thursday to enjoy fellowship, good food, refreshments and to get an update on what AFA is planning for 2016.

 

 

Ala Legislature- Day 2

The Alabama legislature met briefly yesterday to accept committee reports and bill introductions.  The next meeting day will be Tuesday, February 9th.

Of note, both the GF Budget Appropriation (HB104/SB125) and the ETF Budget Appropriation (HB117) bills advanced by the Governor were introduced.  Every indication points to the members wanting to address their constitutional mandate to pass a balanced budget quickly.

sanford2Senator Paul Sanford (R-Huntsville) has introduced several bills to address the funding distribution between the GF and the ETF.

SB130 would direct that 100% of the “use” tax , excise tax and the insurance premium tax be directed to the GF.  This would have the effect of transferring $181 million from the ETF to the GF.  This bill is the Governor’s bill and the foundation for his budget that he delivered to the legislature yesterday.

Alternatively, Sanford has also introduced (again) his bill, SB16 to “pool” all revenues and then distribute them 78% to the ETF and 22% to the GF.  This mechanism would allow the GF to participate in growth taxes.

As a reminder; the FY16 ETF Appropriations (current year) is the largest appropriation for education (other than the federal stimulus years) in the State’s history.  The ETF FY17 appropriation is anticipated to be even larger.

Medicaid continues to be the main problem for the GF.  Last year it was funded at $685 million (out of a total $1.65 billion GF appropriation) and this year the Governor is seeking an additional $100 million increase.  In an effort to address this issue, Senator Vivian Figures (D-Mobile) introduced SB136 yesterday which would increase property taxes by 5 mills to be directed towards Medicaid.  This is not likely to pass.

Other action yesterday:

SB62 by Senator Tom Whatley (R- Auburn) and HB43 by Representative Alan Boothe (R- Troy) both passed out of their respective committees yesterday.  Their bills would eliminate the prohibition of hunting whitetail deer and feral swine over bait.

HB36, The Small Business Act, sponsored by Representative Kyle South (R- Fayette) passed out of committee and is ready for consideration by the House.  This bill, part of the Republican House Caucus agenda, provides a $1,500 tax credit for employers that bring on new employees during the year.

Alabama Legislature 2016 – Day 1

statehouseThe Alabama Legislature convened yesterday for the first day of the 2016 Regular Legislative Session.  Both chambers met briefly and then adjourned to attend the Governor’s State of the State Address.

The first day saw 207 bills introduced, less than a normal first day.  This is most likely indicative that the mood of the body is to pass the budgets and get out of town.  Frankly, the legislators are still worn-out from a contentious 2015 that saw the regular session and two special sessions keep them in Montgomery for a great part of the year.

The good news is that the legislature and the Governor have indicated that they will not be seeking any new taxes.  Clearly, after last year, the members went home and heard a loud and clear message from their constituents that no new revenues are needed in state government.  The focus should be on doing the most with what revenues are available.

The focus this year will be on “zero-based” budgeting.  While many opinions are held regarding what that really means, generally it is understood that state agencies must approach their budgets with first identifying the priorities of the services they provide and then determining what resources are needed to achieve those priorities.  Lower priorities will most likely not be funded.  The current system of budgeting essentially takes last year’s appropriation and adjusting it to reflect increased costs and new programs.  This process does not allow for setting priorities.

Senator Arthur Orr (R-Decatur) introduced SB122, an Alabama Forestry Association sponsored bill that addresses workers compensation reform that will be beneficial to ForestFund, AFA’s sponsored workers compensation self insurance fund.  The bill was assigned to the Senate’s Fiscal Responsibility and Economic Development Committee chaired by Senator Phil Williams (R- Gadsden), who plans to hold a committee hearing to address the legislation as early as next week.  There will be opposition to this bill.

Also of note, Senator Cam Ward (R- Alabaster) introduced SB15 to un-earmark approximately $400 million in taxes to direct them to the General Fund as opposed to specific state agencies.  Included in his bill is the Forest Products Severance Tax and the Forest Product Processor’s Privilege Tax.  These taxes amounted to $5.865 million in FY15 and had previously been directed to the Alabama Forestry Commission.  AFC’s total budget for FY15 was $22.4 million which included the $5.865 earmarked tax and also a $8.757 million General Fund Appropriation.  AFC’s budget for FY16 (the current year) is $25.2 million which includes a $7.042 million General Fund Appropriation.  Potentially losing the earmark for AFC will have a dramatic effect on services provided to Alabama’s timberland owners.  Additionally, by removing the earmark, the bill also removes the statutory requirement that AFC must use 85% of the severance tax for fire protection.