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Senate Republicans float income tax break in “Fighting for Alabama” agenda

Chip Brownlee

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By Chip Brownlee
Alabama Political Reporter

Ahead of what is expected to be a quiet and relatively non-controversial Legislative Session, Senate Republicans released a four-pronged agenda highlighting priorities that include an income tax break and a push for broadband in rural communities.

Republican senators announced the agenda — notably less partisan and low key than previous years — before heading into the second day of this year’s session on Tuesday.

“It’s not a real long agenda,” said Senate President Del Marsh, R-Anniston. “We’re more concerned, myself and my colleagues, about quality not necessarily quantity.”

While the income tax deduction and broadband expansion incentives are sure to attract a lot of attention, Republicans also say they will prioritize making sex trafficking a capital offense in Alabama and streamlining Medicaid resource recovery procedures in order to save money on the state’s biggest budget item.

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“I think it’s a real aggressive thing and addresses a lot of the problems we have in this state,” said Sen. Gerald Dial, R-Lineville. “It will give us an opportunity to look forward and goals to look to.”

The Income Tax Break

Senators said Tuesday that the proposed income tax break, filed as Senate Bill 76 sponsored by Marsh, would include an expansion of the adjusted gross income range for the maximum standard deduction, meaning families would have to pay taxes on less of their income.

“If you look at this income tax break, it really affects working-class Alabamians. The high-income folks don’t get anything on this one,” Marsh said. “It’s the working class and lower income.”

Alabama’s standard income tax deduction is different for individuals depending on their filing status and income, and it decreases the tax burden for low-income filers, as a portion of income, to a larger degree than those of higher incomes. Above a certain income level, the deduction falls steadily until it hits either a $4,000 minimum for those who file joint tax returns or $2,000 for those who file individually.

“The bottom line is this is not a tax break for the rich, it’s a tax break for working-class Alabamians,” Marsh said.

Current tax law allows those making up to $20,499 and filing jointly to deduct $7,500 off their taxable income. The new bill would expand the maximum income that allows for the largest deduction from $20,499 to $23,000, allowing a larger segment of the population to utilize the largest deduction. The standard deduction then decreases by $175 for every $500 of additional income until the minimum standard deduction of $4,000 is reached.

The bill also expands the income range for those filing individually.

The proposed income tax deduction is one of several proposals made possible this year by an improving financial footing for the state. The Education Trust Fund, the main recipient of state income and sales taxes, saw a large increase in revenue this year after strong economic growth.

“The men and women in the Legislature have passed pro-business legislation, and it’s finally put us in a position to have a 3.5 percent unemployment rate and great opportunities looking forward,” Marsh said. “It’s a time we can justify a small tax break for the working class in Alabama.”

Marsh indicated Thursday that the financial footprint of the tax break, while not neutral, would be small. He estimated their bill would only reduce budget revenues by $4 million to $6 million, a small portion of this year’s estimated $6.6 billion education budget. In addition to floating pay raises for teachers, the governor’s proposed education budget this year is $216 million larger than last year — a little more than 3.3 percent — and allows for $23 million in new appropriations for the state pre-K program along with $50 million for higher education.

Dial said he believes pay raises for educators will amount to somewhere between 2.5–3 percent along with a bonus for retired teachers.

“They’ve been ignored for the past 10 or 12 years, so we’re going to address that issue,” Dial said. “We’re going to continue to expand the pre-K program. That is phenomenal, so I’m excited about this education budget as well.”

Democrats have been supportive of spending more on education and signaled they would support the Republican budget, at least in theory, but Sen. Bobby Singleton, D-Greensboro, said he would need to know more about the income tax deduction plan before signing on.

“It’ll be interesting to see how they’re going to do that because income taxes are a large part of our budgeting as we come in,” Singleton said. “I’d like to see how they’re going to carve that out.”

Balancing an income tax break with a heftier education budget won’t be difficult, Dial said, as the continue continues to expand.

“When you lower unemployment by 1 percent, you create about $250 million in new revenue,” Dial said. “It’s self-growth. Get jobs, jobs create the money, and the money goes to education. So we’re going to grow our way through this without raising taxes.”

Expanding High-speed Broadband in Rural Alabama

Republicans will push a bipartisan bill this session, the Alabama Rural Broadband Act, that would offer incentives to telecommunications and cable companies for expanding broadband infrastructure into rural areas.

Marsh said the bill would spur private investment into infrastructure by providing tax credits and incentives to companies that invest in network facilities in rural areas. Among the incentives are income tax credits, property tax exemptions, and sales and use tax exemptions on equipment used to operate networks.

“If we want Alabama’s economy to grow and Alabama to be all we want her to be, we’re going to have to have economic growth not only just in the cities and along the interstates but also in rural areas in our community,” said Senate Majority Leader Greg Reed, R-Jasper. “That’s going to require that broadband access be something that’s important.”

Singleton and other Democrats, including Minority Leader Billy Beasley, D-Clayton, are listed as co-sponsors on the broadband bill currently filed. Singleton said he is supportive of efforts to bring better connection to rural areas.

“We definitely need to give our children and schools access and the ability to move forward,” Singleton said.

Sex Trafficking as a Capital Offense and Streamlining Medicaid

Sen. Cam Ward, R-Alabaster, chair of the Senate Judiciary Committee, said Alabama currently said the Republican agenda item of making child sex trafficking a capital offense is badly needed.

“We’ve found several loopholes in our sex trafficking laws, and you’re seeing young kids being trafficked from all over the world and them getting nothing more than a slap on the wrist,” Ward said. “You’re an adult preying on a small child, a young child, who has their whole life in front of them. It’s wrong. It should be penalized and deterred in any way we can.

Human trafficking in Alabama is currently a Class A felony.

Other states, including Utah, have pursued making human trafficking a capital offense punishable by the death penalty if a victim dies, though the law has not yet been passed.

Capital offenses in Alabama include murders in the process of other crimes including rape, kidnapping, robbery and burglary.

The last portion of the Republican agenda would create a streamlined recovery process for when state Medicaid Agency officials need to recover agency resources from deceased beneficiaries and their estates, which is required under federal law. The streamlining will save the state money, Republicans say, on it’s largest budget item.

The Senate adjourned Thursday afternoon and will return for its second week of session on Tuesday, Jan. 16, at 2 p.m.

 

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House passes General Fund Budget

Brandon Moseley

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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.

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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

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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.

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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

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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.

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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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Senate Republicans float income tax break in “Fighting for Alabama” agenda

by Chip Brownlee Read Time: 6 min
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