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Trump administration cutting regulation while State lawmakers do the opposite

Bill Britt



By Bill Britt
Alabama Political Reporter

As the administration of President Donald J. Trump moves to dismantle Obama-era regulations on lending, the opposite is true here in Alabama, where some legislators are pushing for more rules, not less.

Earlier this month, the Trump administration signaled its intentions to roll back and limit the powers of the Consumer Finance Protection Bureau (CFPB), as part of the Republican effort to end the Dodd-Frank Act.


The centralized structure of the CFPB was conceived by Democrat Sen. Elizabeth Warren and strongly opposed by Republican Sen Richard Shelby who in a 2011 Wall Street Journal Op-Ed warned against “The Danger of an Unaccountable ‘Consumer-Protection’ Czar.” A case now before the federal bench will determine if President Trump can even fire the head of the CFPB.

Under President Obama, the CFPB targeted, “financial market largely abandoned by banks, where borrowers take out short-term loans of a few hundred dollars, paying effective annual interest rates over 300 percent,” as well as vehicle title loans and other types of installment loans, according to The National Review.

State Sen. Arthur Orr (R-Decatur), the powerful chairman who oversees the Education Trust Fund Budget is one such legislator who believes CFPB-style regulations should be enacted by the State legislature. Orr is sponsoring sweeping legislation that critics say would end payday lending and other small loans. Orr’s SB287 would specify a minimum term for certain small loans; to prohibit a lender from charging an additional acquisition fee for a small loan refinanced and further regulate money advanced in exchange for a security interest in such as titled personal property owned by a consumer,


However, the Trump administration is sending strong signals that it wants to repeal many of the CFPB’s mandates including caps on small high-risk loans. Earlier this month, speaking at the National Association for Business Economics’ annual economic policy conference, Mark Calabria, Chief Economist to Vice President Mike Pence, addressed changes likely to occur within the CFPB. Rather than repealing the agency altogether as some Republican lawmakers have called for, the administration will refocus CFPB’s efforts to “actually goes after bad actors, rather than mak[ing] policy decisions that have nothing to do with bad actors.” Calabria also cited CFPB’s efforts to “limit payday loan rates,” characterizing such limits as paternalistic and asserting that officials should not “second-guess terms freely agreed to by lenders and borrowers,” according to published reports.

Orr is not the only lawmaker or operative going against the idea embraced by Trump, at the State House a group of paid political operatives, registered and some unregistered, falsely claiming to be supported by the Alabama Federation of Republican Women are citing old resolutions and outdated press reports to convince Republican lawmakers to back CFPB type legislation on small borrowing, which has swayed several Republican Legislators.

Calabria’s comments on the CFPB are not surprising given his background as former director of the Cato Institute’s financial regulation studies. The Libertarian policy group has long railed against the Nanny-state, and its “Government knows best,” guardianship.

On his Senate web page, Orr says he’s a “doer.” Over the last two years, has joined forces with Arise Citizens’ Policy Project, Alabama Appleseed, the Alabama State Conference of the NAACP, the Alabama Citizens’ Action Program, and the Southern Poverty Law Center, to enact legislation, the groups say, will protect poor and lower income consumers from themselves.

This is contrary to the market-driven approach favored by the Trump administration, and one Orr embraces for the sale of alcohol. He is again sponsoring legislation to privatize the State’s Alcoholic Beverage Control Board, preferring a free market to determine the future of liquor.

Thaya Brook Knight, Associate Director of financial regulation studies at the Cato Institute, sees the CFPB’s attitude toward small loan borrowers, “paternalism (and a whiff of classism).”

This is not to say that small lenders shouldn’t be regulated, but they shouldn’t be driven out of business by the sympathies of those who think they know what’s best for everyone.

Brook Knight citing a Pew study says, “81 percent of [small loan] borrowers said that if they did not have access to payday loans, they would cut down on expenses such as clothes and food. The fact that people buy food with their loans is not an argument for abolishing them; people having enough to eat, is a good thing.”

Of course, those who use ATM’s outside of their network pay hefty fees. “If you pay $3 every Friday night to take $40 out of an ATM, that would also get you close to 400 percent on an annualized basis, if you were to pretend that paying $3 every week was the rate you were paying for the same $40,” Brook Knight points out.

But, ATM charges, along with credit cards, and overdraft fees are not questioned by those who champion for small lending reform. Rallying against such bank fees doesn’t stir heartstrings or encourage donations.

Orr has another piece of legislation aimed at the poor. This one will place more restrictions on those who receive Public Assistance, with additional requirements for TANF and SNAP, termination of some benefits, and a review of specific EBT card purchases.

In the House, Rep. Bob Fincher (R-Woodland) is sponsoring a Constitutional Amendment that would cap “certain” loans at 36 percent interest. Fincher is joined by several Republican and Democrat lawmakers.

In Washington DC, the Trump administration said it wants fewer regulations, but that message is not resonating with some of the lawmakers here in Alabama.


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House passes General Fund Budget

Brandon Moseley



By Brandon Moseley
Alabama Political Reporter

The Alabama House of Representatives passed the state General Fund Budget on Tuesday.

The General Fund Budget for the 2019 fiscal year is Senate Bill 178. It is sponsored by Sen. Trip Pittman, R-Montrose. State Rep. Steve Clouse, R-Ozark, carried the budget on the House floor. Clouse chairs the House Ways and Means General Fund Committee.


Clouse said, “Last year we monetized the BP settlement money and held over $97 million to this year.”

Clouse said that the state is still trying to come up with a solution to the federal lawsuit over the state prisons. The Governor’s Office has made some progress after she took over from Gov. Robert Bentley. The supplemental we just passed added $30 million to prisons.

The budget adds $50 million to the Department of Corrections.

Clouse said that the budget increased the money for prisons by $55,680,000 and includes $4.8 million to buy the privately-owned prison facility in Perry County.

Clouse said that the budget raises funding for the judicial system and raises the appropriation for the Forensic Sciences to $11.7 million.

The House passed a committee substitute so the Senate is either going to have to concur with the changes made by the House or a conference committee will have to be appointed. Clouse told reporters that he hoped that it did not have to go to conference.

Clouse said that the budget had added $860,000 to hire more Juvenile Probation Officers. After talking to officials with the court system that was cut in half in the amendment. The amendment also includes some wording the arbiters in the court lawsuit think we need.

The state General Fund Budget, SB178, passed 98-1.

Both budgets have now passed the Alabama House of Representatives.

The 2019 fiscal year begins on Oct. 1, 2018.

In addition to the SGF, the House also passed a supplemental appropriation for the current 2018 budget year. SB175 is also sponsored by Pittman and was carried by Clouse on the floor of the House.

SB175 includes $30 million in additional 2018 money for the Department of Corrections. The Departmental Emergency Fund, the Examiners of Public Accounts, the Insurance Department and Forensic Sciences received additional money.

Clouse said, “We knew dealing with the federal lawsuit was going to be expensive. We are adding $80 million to the Department of Corrections.”

State Representative Johnny Mack Morrow, R-Red Bay, said that state Department of Forensics was cut from $14 million to $9 million. “Why are we adding money for DA and courts if we don’t have money for forensics to provide evidence? if there is any agency in law enforcement or the court system that should be funded it is Forensics.”

The supplemental 2018 appropriation passed 80 to 1.

The House also passed SB203. It was sponsored by Pittman and was carried in the House by State Rep. Ken Johnson, R-Moulton. It raises securities and registration fees for agents and investment advisors. It increases the filing fees for certain management investment companies. Johnson said that those fees had not been adjusted since 2009.

The House also passed SB176, which is an annual appropriation for the Coalition Against Domestic Violence. The bill requires that the agency have an operations plan, audited financial statement, and quarterly and end of year reports. SB176 is sponsored by Pittman and was carried on the House floor by State Rep. Elaine Beech, D-Chatham.

The House passed Senate Bill 185 which gives state employees a cost of living increase in the 2019 budget beginning on October 1. It was sponsored by Sen. Clyde Chambliss, R-Prattville and was being carried on the House floor by state Rep. Dimitri Polizos, R-Montgomery.

Polizos said that this was the first raise for non-education state employees in nine years. It is a 3 percent raise.

SB185 passed 101-0.

Senate Bill 215 gives retired state employees a one time bonus check. SB215 is sponsored by Senator Gerald Dial, R-Lineville, and was carried on the House floor by state Rep. Kerry Rich, R-Guntersville.

Rich said that retired employees will get a bonus $1  for every month that they worked for the state. For employees who retired with 25 years of service that will be a $300 one time bonus. A 20-year retiree would get $240 and a 35-year employee would get $420.

SB215 passed the House 87-0.

The House passed Senate Bill 231, which is the appropriation bill increase amount to the Emergency Forest Fire and Insect and Disease Fund. SB231 is sponsored by Sen. Steve Livingston, R-Scottsboro, and was carried on the House floor by state Rep. Kyle South, R-Fayette.

State Rep. Elaine Beech, D-Chathom, said, “Thank you for bringing this bill my district is full of trees and you never know when a forest fire will hit.

SB231 passed 87-2.

The state of Alabama is unique among the states in that most of the money is earmarked for specific purposes allowing the Legislature little year-to-year flexibility in moving funds around.

The SGF includes appropriations for the Alabama Medicaid Agency, the courts, the Alabama Law Enforcement Agency, the Alabama Department of Corrections, mental health, and most state agencies that are no education related. The Alabama Department of Transportation gets their funding mostly from state fuel taxes.

The Legislature also gives ALEA a portion of the gas taxes. K-12 education, the two year college system, and all the universities get their state support from the education trust fund (ETF) budget. There are also billions of dollars in revenue that are earmarked for a variety of purposes that does not show up in the SGF or ETF budgets.

Examples of that include the Public Service Commission, which collects utility taxes from the industries that it regulates. The PSC is supported entirely by its own revenue streams and contributes $13 million to the SGF. The Secretary of State’s Office is entirely funded by its corporate filing and other fees and gets no SGF appropriation.

Clouse warned reporters that part of the reason this budget had so much money was due to the BP oil spill settlement that provided money for the 2018 budget and $97 million for the 2019 budget. Clouse said they elected to make a $13 million repayment to the Alabama Trust fund that was not due until 2020 but that is all that was held over for 2020.

Clouse predicted that the Legislature will have to make some hard decisions about revenue in next year’s session.


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Day Care bill delayed for second time on Senate floor, may be back Thursday

Sam Mattison



By Samuel Mattison
Alabama Political Reporter

The day care bill, which would license certain day care centers in Alabama, was once again delayed on the state Senate floor after one lawmaker requested more information.

Its brief appearance Tuesday ended with state Sen. Gerald Dial, R-Lineville, saying a compromise had not yet been worked out with the bill’s detractors.


Alabama’s Senate has been hesitant to act on the legislation because of complaints of state Sen. Shay Shelnutt, R-Trussville, who has been an opponent of the bill since its introduction last year. The bill’s delay on Tuesday marks the second time its been taken off the Senate’s agenda.

The bill has had a rocky time in this year’s session, but the bill’s sponsor state Rep. Pebblin Warren, D-Tuskegee, said she is still confident about its passage out of the Legislature.

Warren, D-Tuskegee, filed the bill this session with the support of influential lawmakers including Gov. Kay Ivey, who told reporters last year that she though all day cares should be licensed.

Mainly sparked by the death of 5-year-old boy in the care of a unlicensed day care worker, the bill had great momentum coming into this year’ session.

Despite the growing support from lawmakers, Religious groups had concerns that the bill would increase state-sponsored reach into religious day cares in churches and non-profit groups.

Spearheading the dissenters was Alabama Citizens Action Program, a conservative religious-based PAC.

Warren, proponents, and ALCAP announced a compromise to the bill while it was still in the Alabama House.

Announced by ALCAP originally, the new bill was a weaker version in that it did not require that all day cares in the state be regulated. Instead, religious-based day cares would only need to be registered if they received federal funds. At a Senate committee meeting in February, Warren said a similar requirement was about to come from federal law in Congress.

The bill moved through the House in a overwhelming vote in favor of the proposal and passed unanimously out of a Senate committee a few weeks ago.

Warren, speaking to reporters after its passage from the House, said she was unsure if the bill would encounter resistance in the upper chamber.

It was the Senate that killed the daycare bill last year amid a cramped last day where senators took the bill off the floor. The bill may face similar complications this year, as lawmakers seem to be preparing to adjourn within a few weeks.

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Fantasy sports bill fails on Senate floor

Sam Mattison



By Samuel Mattison
Alabama Political Reporter

Would-be Fantasy Sports players in Alabama will have to wait to legally play in the state following a Senate vote on Tuesday.

The Alabama Senate decisively killed a bill to exempt fantasy sports from the state’s prohibition on gambling.


Not even entertaining a debate on the Senate floor, the proposal was killed during a vote for the Budget Isolation Resolution, which is usually a formality vote preluding a debate.

Fantasy sports are contests where participants select players from real teams to compete on fantasy teams using the real-world players’ stats.

Since 2016, the practice has been illegal in Alabama following a legal decision by the Attorney General’s Office that categorized it as gambling.

The bill’s sponsor, state Sen. Paul Sanford, R-Huntsville, predicted the bill’s failure during a committee meeting two weeks ago, where the bill passed unanimously.

Sen. Paul Sanford speaks to reporters after a Senate Committee meeting on Feb. 28, 2018. (Samuel Mattison/APR)

Speaking to reporter’s after the committee meeting, Sanford said the decision to file the bill was mainly a philosophical belief that the practice shouldn’t be illegal.

Sanford, a fantasy sports player before its ban, said that fantasy sports are a way to bring people closer together and not a means to win money. The Huntsville senator is not seeking re-election.

The bill’s failure in the Senate follows its trajectory last year too. A similar version of the bill, also sponsored by Sanford, failed in the Senate during the final days of the 2017 Legislative Session.

Since Sanford is retiring, it is unclear if the bill will even come back next session, or if it will even have a Senate sponsor.

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Trump administration cutting regulation while State lawmakers do the opposite

by Bill Britt Read Time: 5 min