By Bill Britt
Alabama Political Reporter
MONTGOMERY—Every year the State’s budget process turns into a sort of jousting match to enhance a department’s revenue. In some cases it’s a battle for survival and in others, it’s a contest of wills. In the case of the Office of the State’s Attorney General, it has even become a source of conspiracy theory.
For Fiscal Year 2015, the AG’s Office has requested funding at $23,700,000, but the line item on the Governor’s budget spreadsheet was zero.
But what are the actual facts behind the request by the Attorney General’s Office and the funding offered by the Governor and the House and Senate General Fund Budgets?
When looking at the State’s Education Trust Fund Budget or the General Fund Budget, the story is not to be found so much in the spreadsheet, but in the accompanying text.
Once again this year, the Governor’s Office submitted a General Fund Budget that had a zero in the line for appropriations for the Office of the Attorney General. In certain circles this has caused wild imaginings of a war between the Governor and the AG. Some have even gone so far as to spread a rumor that Governor Bentley was sending a political message that he wanted the Special Grand Jury investigation of Speaker of the House Mike Hubbard (R-Auburn) ended.
This is little more than fictitious court intrigue of the highest order. All public and back channel information says that the Governor is truly committed to seeing justice, not political brinksmanship, prevail, in the investigation into suspected wrong doings by Hubbard.
According to Bill Newton, Acting Director of the Alabama Department of Finance, the general public thinks of only the State’s Education Trust Fund Budget or the General Fund Budget when they are talking about funds. Newton points out that there are, “…more than 200 funds,” to be considered.
“In State government you can think of a fund like a checking account. Each department has more than one fund (more than one checking account). When you talk about the General Fund appropriation, it is not all of the money that agency has to operate. It is just one of the sources.”
This is the case with the funds available to the Attorney General’s Office.
Newton points out that the AG has a large pool of money available from the National Mortgage Settlement. This settlement is the largest consumer financial protection settlement in United States history.
According to the National Mortgage Settlement site:
“The agreement settles state and federal investigations finding that the country’s five largest mortgage servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct. Both of these practices violate the law. The settlement provides benefits to borrowers in the signing states whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service.”
Each of the 49 State’s Attorney’s General were permitted to write his or her own terms for allocations for the funds from the settlement received by the state. The award and distribution of funds for the State of Alabama is as follows:
EXHIBIT B2 ALABAMA
The Court awards the State of Alabama a judgment in the amount of $25,305,692, which shall be paid by electronic transfer to the Office of the Attorney General.
Of this amount, the Court awards $2,530,569 dollars in civil penalties (or 10% of the total) as defined by and in accordance with Code of Alabama, 1975, §8-19-11 for misconduct relating to the bank’s robo-signing in violation of Alabama’s Deceptive Trade Practices Act.
The remaining amount shall be used by the Attorney General, at his sole discretion, for costs of investigation and litigation, for law enforcement efforts to prevent and prosecute financial fraud, and/or for public protection purposes, such as to defray the operating cost of any function of the Attorney General’s Office that protects citizens, whether through investigation, representation, regulation, mediation, prosecution, victims’ assistance, or consumer education concerning consumer-related financial or other crimes, or, at the sole discretion of the Attorney General, to be used for housing programs, housing counseling, legal assistance, foreclosure prevention hotlines, foreclosure mediation and investigation of financial fraud or other wrongdoing overseen by any division of the Attorney General’s Office.
In addition, the Attorney General may distribute any amount from the funds, at his sole discretion, to other governmental entities or charitable organizations whose eleemosynary purposes benefit those affected by the aforementioned misconduct.
The Office of the Alabama Attorney General has held the position that the $25,305,692 from the settlement, cannot be used for general operational expenses. It is believed that the AG has over $17,000,000 of the settlement monies on hand in a separate banking account.
The Alabama Political Reporter has tried continually to receive direct information from the Office of AG Luther Strange, but the office has limited its communications to just a copy of the terms of the agreement.
The use of the $17 million from the National Mortgage Settlement has become quite a contentious issue.
According to the General Fund Budget passed by the House, “…there is hereby conditionally appropriated up to $8,000,000 from the State General Fund. These funds are conditioned upon the Office of the Attorney General depositing all available revenue into the State Treasury.”
The $8 million in appropriations plus the $17 million being held by the Attorney General, would meet the request from the AG’s office.
Rep. Steve Clouse the House Chairman of the General Fund Budget seems to be sending a message to the AG.
In an effort to come to a resolution on the matter Senator Author Orr (R-Decatur), Chairman of the Senate F&T General Fund Committee asked that Norris Green the Director of the Legislative Fiscal Office prepare a memorandum explaining the different sides of the argument.
In summary, it is believed that the Attorney General Office should use the funds it has on hand, until they are exhausted, at which time the AG can make a request for up to the $8,000,000 that would be held by the Alabama Department of Finance to fill out the rest of the needed funds.
It has been said “off the record” that the AG’s Office finds this method troubling, as it might make the AG subservient in someway to the Executive Branch.
This brings to mind the $7.9 million that Gov. Bob Riley transferred to in coming AG Luther Strange just days before leaving office. In a report in the Gadsden Times, Dana Beyerle wrote, “ Gov. Bob Riley on the Friday before he left office in January transferred $7.9 million to the attorney general’s office to help new Attorney General Luther Strange as he entered office. The money revenue received related to the BP oil spill clean-up. The rumors surrounding this transfer of funds has become legend around the Capitol.
Some say Riley cut a deal with Strange to go after gaming magnate, Milton McGregor. Other’s say it was a gift to keep the AG from ever looking into potential wrong doings by the Riley clan. But, like all rumors around the State House, they must be treated as mere gossip.
As for the funding for the Attorney’s Office: Acting Finance Director Newton says, “The Attorney General’s office has ‘other funds’ from which to operate in 2015. So, the Governor’s proposal did not zero out the Attorney General’s office, it zeroed the appropriation from the General Fund. It included a proposal for funding from these other funds, and they have quite a few over there.”
During the National Mortgage Settlement Agreement process, each of the 49 State’s Attorney’s General were allowed to write the conditions for allocations of their portion of the settlement.
According to the National Conference of State Legislatures, Alabama used only $3,865,956 or about 15 percent of its settlement funds for mortgage or housing-related issues.
A Breakdown by USA Today showed that Texas put almost all of its entire $135 million into the State’s general fund budget and then spent it on non-housing issues. The State of Georgia set aside its entire $99 million for economic development and Nebraska placed its entire $8 million into its rainy day fund.
According to a synopsis by USA Today, “Connecticut, allotted $22 million of its $26 million on emergency mortgage assistance. While Colorado spent nearly half of its $50 million to help homeowners modify their loans, and the rest of the money on counseling and legal services. Also Pennsylvania set aside 90 percent of its $67 million for its housing finance agency.”
Strange’s Office has not made clear what it wants to do with what remains of the settlement it received. Again the AG’s office has refused request for information.
It appears that the Governor and the budget Chairs want to see Strange use the funds for operating his office.
Mimi Penhale, Russell Bedsole advance to GOP runoff in HD49
Republican voters in House District 49 went to the polls Tuesday to nominate their next representative. Miriam “Mimi” Penhale and Russell Bedsole received the most votes and will advance on to the special Republican primary runoff scheduled for Sept. 1.
“What an incredible day!” Bedsole said. “Thank you friends and family for your love, support, and prayers. We had a great showing today and we are on to a runoff. Looking forward to getting back out and winning this thing on September 1st.”
“THANK YOU Bibb, Chilton and Shelby County!” Penhale said on social media. “I’m looking forward to earning your vote, again, on September 1 in the runoff.”
The election was very tight between the two. Mimi Penhale received 829 votes, or 31.4 percent of the votes. Russell Bedsole received 919 votes, or 34.8 percent.
The rest of the votes was split among the other four candidates. James Dean received less than 1 percent, Chuck Martin received 24.3 percent, Jackson McNeely received 2.16 percent and Donna Strong received 6.71 percent.
There were 2,639 votes cast on Tuesday. Voter turnout was 8.88 percent.
Bedsole serves on the Alabaster City Council, Pemhale is the director of the Shelby County Legislative office.
The eventual winner of the Republican nomination will face Democrat Cheryl Patton in the special general election on Tuesday, Nov. 17.
The vacancy in House District 49 was created when State Rep. April Weaver, R-Briarfield, announced her resignation to accept an appointment as a regional director of the Department of Health and Human Services.
House District 49 consists of portions of Bibb, Shelby and Chilton Counties. The winner will serve the remainder of Weaver’s term, which ends in late 2022.
Jimmy Reynolds, Ben Robbins qualify as Republicans for Alabama House District 33
The Alabama Republican Party on Tuesday closed its candidate qualifying period for the Alabama House of Representatives District 33 special primary election scheduled for Tuesday, Oct. 6.
Jimmy Reynolds Jr. and Ben Robbins have qualified to run for the District 33 seat in the special Republican primary.
“Our district is a wonderful place to raise a family,” Robbins said in a statement. “We owe it to our children and grandchildren to leave them with more opportunities than we had, and I believe fresh ideas, bold leadership and true conservative values are the foundation of that success.”
Robbins serves on multiple community boards, including Habitat for Humanity, as co-president of Leadership Sylacauga and serves the Talladega Rotary Club as a past-president. He is also active with several local Chambers of Commerce and the Sylacauga Young Professionals. He is a seventh-generation Talladega County resident and the grandson of former Childersburg Mayor Robert Limbaugh. He and his wife Melanie have one son.
Jimmy Reynolds Jr. is a visual arts teacher at Sylacauga City School System. He previously worked for HHGregg Inc. and Tweeter Home Entertainment. Reynolds has a business management degree from Auburn University and lives in Hollins.
The Republican Special Primary Election will be held on Oct. 6, 2020, with the General Election scheduled for Jan. 19, 2021.
The vacancy in House District 33 occurred following the sudden passing of State Rep. Ron Johnson, R-Sylacauga, in July.
House District 33 consists of portions of Clay, Coosa and Talladega Counties.
Sens. Doug Jones, Cory Gardner introduce the American Dream Down Payment Act
Democratic Alabama Sen. Doug Jones and Republican Colorado Sen. Cory Gardner have introduced the American Dream Down Payment Act of 2020, a bipartisan piece of legislation that would help prospective homeowners save for a traditional 20 percent down payment by creating special tax-advantaged savings accounts for eligible housing costs.
“As the coronavirus pandemic continues to devastate our nation’s economy, it is getting even harder for many folks in Alabama and across the country to put money away in savings and to work toward the American dream of owning a home,” Jones said. “Down payments are the biggest barrier to homeownership for first-time homebuyers, especially among low-income and minority Americans, and make it harder to build generational wealth that is often tied to home-ownership. Our legislation would provide a new path to help make the dream of buying a home a reality by making it easier to save money for down payments and other housing-related costs.”
“A down payment on a home can be a significant barrier to becoming a homeowner,” Gardner said. “Inspired by the popular 529 education savings accounts, this bipartisan bill will make it easier for people to save for a down payment, which will aid both our unique housing challenges in Colorado and our economic recovery from the COVID-19 pandemic. I’m proud to work with Senators Jones and Brown to help more families achieve the American Dream and own a home.”
These accounts would be similar to the popular 529 Plan accounts that encourage people to save pre-tax money to pay for future education expenses. Sen. Sherrod Brown, D-Ohio, is the ranking member of the Senate Banking and Housing Committee and an original co-sponsor of the legislation.
The sponsors cite a recent survey by the Urban Institute that found that more than two-thirds of renters view down payments as a barrier to owning a home. As rents and student loan debt rise, it can be harder for prospective homeowners to save for a down payment, especially if they are a first-time homebuyer or aren’t able to receive help from family members.
“Borrowers of color have been locked out of affordable homeownership for decades,” Brown said. “The gap in Black and white homeownership rates remain as large now as it was before the Fair Housing Act was signed into law. These troubling and persistent inequities in homeownership rates have prevented generations of Black and brown families from obtaining the American dream of owning a home. The American Dream Down Payment Act is a new tool to help make homeownership a reality.”
Even though the nationwide homeownership rate is relatively stable, there are significant disparities in homeownership by age, race and ethnicity. The Black homeownership rate, which peaked just prior to the Great Recession, has fallen to a 50-year low in 2016, at just 41.7 percent. That remains nearly 30 points below the white homeownership rate. This is before the recent COVID-19 economic panic. Millennials are less likely to own a home by age 34 than their parents or grandparents were. If these trends continue, a growing number of Americans will be locked out of homeownership.
“The introduction of the American Dream Down Payment Act offers Black American families and individuals the opportunity to build legacy wealth through homeownership,” Brown added. “The ability to accumulate tax-free savings funds breaks down/eliminates one of the most prominent barriers to achieving homeownership, the down payment. This Act serves as a tangible springboard to increase Black homeownership and real wealth-building prospects which the National Association of Real Estate Brokers (NAREB) includes in the meaning of its time-honored slogan, Democracy in Housing,” said Donnell Williams, National President, National Association of Real Estate Brokers.”
The American Dream Down Payment Act would let states establish American Dream Down Payment Accounts, which they would manage in the same way they manage 529 Plan accounts today. It would also allow prospective homeowners to save up as much as 20 percent of today’s housing cost, indexed for inflation, to use for an eligible down payment and other housing costs. It would facilitate long-term savings for a down payment and allow contributions from family and friends and allow homebuyers using their American Dream Down Payment Account savings and earnings to use those funds tax-free at withdrawal for eligible expenses.
To protect American Dream Down Payment Account holders, the Securities and Exchange Commission would be required to set standards for the investments of eligible accounts and allowable fees.
This legislation is supported by the National Association of Realtors, Habitat for Humanity and the National Association of Real Estate Brokers.
Jones is a member of the Senate Banking and Housing Committee. Both Jones and Gardner face tough re-election battles this year.
Payroll Protection Program deadline has been extended to Saturday
Congresswoman Martha Roby, R-Montgomery, this week reminded business owners that the deadline to apply for the Payroll Protection Program, knowns as the PPP, has been extended to Saturday.
“The Small Business Administration’s Paycheck Protection Program (PPP) application deadline was recently extended to Saturday, August 8,” Roby wrote in an email to constituents. “Do not forget to fill out your application if you are a small business that has been impacted by the Coronavirus pandemic.“
The PPP was a loan program administered by the Small Business Administration. It was part of the bipartisan CARES Act to address the economic collapse caused by the COVID-19 global pandemic and the forced economic shutdowns, which were implemented in the early months of the public health emergency in an attempt to slow the spread of the novel strain of the coronavirus and allow public health agencies and health care systems time to build up testing, contact-tracing and hospital bed capacity.
The PPP loans are 1 percent interest loans available through the SBA. If the business uses the money to make payroll and pay standard operating expenses then the loans will be forgiven. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. The loan forgiveness form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers.
The PPP has been very popular, so much so that that program ran out of money just weeks after Congress passed it. Congress had to go back and provide more funding for the PPP.
Businesses can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.
Senate Democrats are meeting with the Trump Administration, Senate Republicans and House leadership on a compromise plan for a fifth coronavirus relief package. A big point of contention has been the size of the total package. Speaker of the House Nancy Pelosi, D-California, supports a $3.2 trillion coronavirus relief bill while Republicans prefer a more modest $1 trillion relief bill. The two sides are expected to continue to negotiate through Friday in an attempt to reach a compromise before the August recess.
Roby is serving in her fifth term representing Alabama’s 2nd congressional district. She is not seeking re-election.