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Amid Allegations of Threats ALFA Says Premium Tax Credit Fair

Bill Britt

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By Bill Britt
Alabama Political Reporter

MONTGOMERY— A spokesmen from the Alabama Farmers Federation (ALFA) says they will fight the Governor’s proposal to make Insurance Premium Tax fairer to all insurance providers.

Insurance Premium Taxes paid into the State’s General Fund Budget are the single largest revenue generator for the beleaguered fund. According to Gov. Bentley, one of the long term cures to the constant budget shortfall would be to reduce the Premium Tax Credit loopholes passed in 1995.

However, ALFA’s Communications Director Jeff Helms says Bentley’s plan would raise the Premium Tax to the detriment of business development and job growth. According to Helms, the Governor’s proposal would take away tax credits that “encourage job creation and investment in the State.” Helms also points out that on several occasions, tax incentives are used to attract a single company. Helms admits that ALFA benefits to a greater degree from Premium Tax credits than any other company but says, “We are writing more insurance and paying more premium tax than other companies.” Helms say that he sees it as a “issue of fairness because any company can take advantage of it.”

Former Gov. Bob Riley’s revenue commissioner Judge Tim Russell, a leading expert in State insurance, says he believes the State’s Premium Tax laws are why fewer domestic companies do business in Alabama, and points out that since the passage of the bill in 1995, outside investment, because of premium tax credits, has never materialized:

“It could be legal, but it may not be fair. Every tax should be fair and this is why we have fewer domestic companies in Alabama today.”

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Critics of the 20-year-old tax credit say it has not been successful in bringing more business to the State or offering consumers lower prices through greater competition.

Since our story broke revealing ALFA’s advantage in Premium tax credits, two State Representatives said they have been been threatened by ALFA lobbyists and told not to vote in favor of the Governor’s proposal.

Speaking on background for fear of retaliation, one lawmaker revealed that an ALFA lobbyist told him that if he voted to repeal the tax credit, he would face an ALFA-backed candidate in the next primary. While these threats are not uncommon in the back halls of the State House, this lawmaker found the thuggish manner in which this message was delivered very shocking.

Upon being informed of the alleged threats made by an ALFA lobbyist, Helms said this was not a policy of the company and that an investigation of the incident(s) would be conducted and appropriate measures taken if wrong-doing can be proven.

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The Premium Tax and the Tax Credit represent large sums of money for the State and for a handful of insurance carriers, so it is not surprising that arms are being twisted on both sides of this high-stakes contest. While Bentley sees leveling the playing field for all carriers, this does not sit well with those who have enjoyed its benefits for decades.

According to Alabama Department of Insurance (ALDOI), over the last four years, the State’s General Fund has received $1,001,414,336 in revenue from the Premium tax paid in. In the same period ALFA and State Farm have taken a combined total of $96,230,401 in tax credits, (estimated for 2014). The total for all companies taking advantage of the Premium tax credits was $110,443,705, (estimated for 2014).

It is important to note tax credits vary from ALFA’s property and casualty tax of 1.6 percent to Allstate’s at 3.45 percent, whereas companies like GEICO do not take a tax credit, therefore they pay the maximum of 3.6 percent.

ALFA claims that over 1100 companies take advantage of the tax loophole but is in the above example the credits are unevenly applied because of the way the 1995 legalization was written.

These numbers show that if every insurer received the same tax credit as ALFA, the General Fund Budget would collapse.

Bentley said, all companies should be taxed fairly: “If we are to pay our debts, cover the shortfall and create a stream of growth revenue for our stagnant General Fund, we must look to increase our revenue.”

Again, Helms sees this as having a negative impact on the future growth of the industry, stating that the Premium Tax Credit offers incentives to those who invest in Alabama.

Bentley has recently embarked on a speaking tour to sell his plan, but veteran politicos see weakness in the fact that Democrat Rep. John Knight is carrying the Premium Tax bill in the House.

Observers say, it is unusual that Bentley, a republican, can’t find a member of his own party to carry his bill.

ALFA and State Farm contributed $1,609,984 and $290,200 respectively in the 2014 election cycle. This is another investment which may very well give these companies a dominant position over legislation.

Big campaign contributions and the allegations of threat may very well carry the day, defeating Bentley’s plan and diminishing the Governor’s statute.

However, those in the Governor’s inner circle say, it is way too early to count the governor out.

Bill Britt is editor-in-chief at the Alabama Political Reporter and host of The Voice of Alabama Politics. You can email him at [email protected] or follow him on Twitter.

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National

Today is Thanksgiving

Today is a national and state holiday. Schools, banks, government offices and many private businesses are closed.

Brandon Moseley

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(STOCK PHOTO)

Four hundred years ago, on Nov. 11, 1620, after 66 days at sea, a group of English settlers landed near what is today Cape Cod in Massachusetts. Onboard the Mayflower were 102 men, women, and children, including one baby born during the Atlantic crossing, who made up the Pilgrims.

The Mayflower, captained by Christopher Jones, had been bound for the mouth of the Hudson River. The ship took a northerly course to avoid pirates, but the decision to avoid the then widely traveled sea lanes to the New World took the ship into bad weather, which had blown the Mayflower miles off course and left the ship damaged. Off Cape Cod, the adult males in the group made the fateful decision to build an entire colony where none had existed prior. They wrote and signed the Mayflower Compact.

“In the name of God, Amen. We whose names are underwritten, the loyal subjects of our dread Sovereign Lord King James, by the Grace of God of Great Britain, France, and Ireland King, Defender of the Faith, etc. Having undertaken for the Glory of God and advancement of the Christian Faith and Honour of our King and Country, a Voyage to plant the First Colony in the Northern Parts of Virginia, do by these presents solemnly and mutually in the presence of God and one of another, Covenant and Combine ourselves together in a Civil Body Politic, for our better ordering and preservation and furtherance of the ends aforesaid; and by virtue hereof to enact, constitute and frame such just and equal Laws, Ordinances, Acts, Constitutions and Offices from time to time, as shall be thought most meet and convenient for the general good of the Colony, unto which we promise all due submission and obedience. In witness whereof we have hereunder subscribed our names at Cape Cod, the 11th of November, in the year of the reign of our Sovereign Lord King James, of England, France and Ireland the eighteenth, and of Scotland the fifty-fourth. Anno Domini 1620.”

After a few weeks off Cape Cod, they sailed up the coast until they reached Plymouth. There they found a Wampanoag Indian village that had been abandoned due to some sort of plague. During the Winter of 1620-1621 they lived aboard the Mayflower and would row to shore each day to build houses. Finally, they had built enough houses to actually move to the colony, but the cold, damp conditions aboard the ship had been costly.

Some 28 men, 13 women (one of them in child birth), and 8 children died in that winter. Governor John Carver would die in April. His widow, Kathrine White Carver, would follow a few weeks later. There is some recent archaeological evidence suggesting that some of the dead were butchered and eaten by the survivors.

The Mayflower and her crew left for England on April 5, 1621, never to return.

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About 40 of the Pilgrims were religious Separatists, members of a Puritan sect that had split from the Church of England, in defiance of English law. In 1609, they immigrated to Holland to practice their religion but ran into problems there too. Others in the group had remained part of the Church of England but were sympathetic to their Separatist friends. They did not call themselves Pilgrims, that term was adopted at the bicentennial for the Mayflower voyage. The members of core Separatist sect referred to themselves as “Saints” and people not in their sect as “Strangers.”

In March 1621, an English speaking Native American, named Samoset, visited the Plymouth colony and asked for beer. He spent the night talking with the settlers and later introduced them to Squanto, who spoke even better English. Squanto introduced them to the chief of the Wampanoag, Massasoit.

Squanto moved in with the Pilgrims, serving as their advisor and translator. The friendly Wampanoag tribe taught the Pilgrims how to hunt and grow crops. The two groups began trading furs with each other.

William Bradford, a Separatist who helped draft the Mayflower Compact, became the longtime Plymouth Governor. He was also the writer of the first history of the Plymouth Colony and the Mayflower. Bradford’s more notable descendants include author, dictionary writer and scholar Noah Webster; TV chef Julia Child; and Supreme Court Chief Justice William Rehnquist.

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In the fall of 1621, 399 years ago, the Pilgrims invited their Wampanoag Indian friends to a feast celebrating their first harvest and a year in the New World with a three-day festival. This has become known as the first Thanksgiving.

Today is a national and state holiday. Schools, banks, government offices and many private businesses are closed.

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Health

Alabama hospitals nearing COVID-19 summer surge levels

Wednesday was the 18th straight day with more than 1,000 people in hospitals in Alabama with COVID-19. 

Eddie Burkhalter

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UAB Chief of Hospital Medicine Dr. Kierstin Kennedy.

Alabama hospitals reported caring for 1,483 people infected with COVID-19 on Wednesday, the highest number of patients since Aug. 11, when the state was enduring its summer surge. Wednesday was also the 18th straight day with more than 1,000 people in hospitals in Alabama with COVID-19. 

The seven-day average of hospitalizations was 1,370 on Wednesday, the 36th straight day of that average rising. The Alabama Department of Public Health reported 2,453 new cases Wednesday. The 14-day average of new cases was — for the eighth day in a row — at a record high of 2,192. 

Across the country, more than 80,000 people were hospitalized for COVID-19 on Tuesday, a record high and the 15th straight day of record hospitalizations nationwide, according to the COVID Tracking Project, a coronavirus tracking website.

The CDC this week recommended people not travel for Thanksgiving to help prevent the spread of coronavirus. 

“The only way for us to successfully get through this pandemic is if we work together,” said Dr. Kierstin Kennedy, UAB’s chief of hospital medicine, in a message Tuesday. “There’s no one subset of the community that’s going to be able to carry the weight of this pandemic and so we all have to take part in wearing our masks, keeping our distance, making sure that we’re washing our hands.” 

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Kennedy said the best way she can describe the current situation is “Russian Roulette.” 

“Not only in the form of, maybe you get it and you don’t get sick or maybe you get it and you end up in the ICU,” Kennedy said, “but if you do end up sick, are you going to get to the hospital at a time when we’ve got capacity, and we’ve got enough people to take care of you? And that is a scary thought.” 

The Alabama Department of Public Health on Wednesday reported an increase of 60 confirmed and probable COVID-19 deaths. Deaths take time to confirm and the date a death is reported does not necessarily reflect the date on which the individual died. At least 23 of those deaths occurred in November, and 30 occurred in other months. Seven were undated. Data for the last two to three weeks are incomplete.

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As of Wednesday, at least 3,532 Alabamians have died of COVID-19, according to the Department of Public Health. During November, at least 195 people have died in Alabama from COVID-19. But ADPH is sure to add more to the month’s tally in the weeks to come as data becomes more complete.

ADPH on Wednesday announced a change that nearly doubled the department’s estimate of people who have recovered from COVID-19, bringing that figure up to 161,946. That change also alters APR’s estimates of how many cases are considered active.

ADPH’s Infectious Disease and Outbreak team “updated some parameters” in the department’s Alabama NEDSS Base Surveillance System, which resulted in the increase, the department said.

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Corruption

Judge reduces former Alabama Speaker Mike Hubbard’s prison sentence

The trial court judge ordered his 48-month sentence reduced to 28 months.

Eddie Burkhalter

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Former Alabama House Speaker Mike Hubbard was booked into jail to begin serving his four-year sentence for ethics violations in September. (VIA LEE COUNTY DETENTION CENTER)

Lee County Circuit Court Judge Jacob Walker on Wednesday reduced former Alabama House Speaker Mike Hubbard’s prison sentence from four years to just more than two. 

Walker in his order filed Wednesday noted that Hubbard was sentenced to fours years on Aug. 9, 2016, after being convicted of 12 felony ethics charges for misusing his office for personal gain, but that on Aug. 27, 2018, the Alabama Court of Criminal Appeals reversed convictions on one counts. The Alabama Supreme Court later struck down another five counts.

Hubbard’s attorneys on Sept. 18 filed a motion to revise his sentence, to which the state objected, according to court records, arguing that “Hubbard’s refusal to admit any guilt or express any remorse makes him wholly unfit to receive any leniency.”   

Walker in his order cited state code and wrote that the power of the courts to grant probation “is a matter of grace and lies entirely within the sound discretion of the trial court.” 

“Furthermore, the Court must consider the nature of the Defendant’s crimes. Acts of public corruption harm not just those directly involved, but harm society as a whole,” Walker wrote.

Walker ruled that because six of Hubbard’s original felony counts were later reversed, his sentence should be changed to reflect that, and ordered his 48-month sentence reduced to 28 months. 

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Alabama Attorney General Steve Marshall on Wednesday said Walker’s decision to reduce Hubbard’s sentence was the wrong message to send.

“Mr. Hubbard was convicted of the intentional violation of Alabama’s ethics laws, the same laws he championed in the legislature only later to brazenly disregard for his personal enrichment,” Marshall said in a statement. “Even as he sits in state prison as a six-time felon, Mike Hubbard continues to deny any guilt or offer any remorse for his actions in violation of the law.  Reducing his original four-year sentence sends precisely the wrong message to would-be violators of Alabama’s ethics laws.”

Hubbard was booked into the Lee County Jail on Sept. 11, more than four years after his conviction. On Nov. 5 he was taken into custody by the Department of Corrections.

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News

Nick Saban tests positive for COVID-19, has “mild symptoms”

It’s unlikely Saban will be able to coach in person during Saturday’s Iron Bowl against Auburn.

Eddie Burkhalter

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University of Alabama head football coach Nick Saban.

University of Alabama head football coach Nick Saban has tested positive for COVID-19 ahead of the Iron Bowl and has mild symptoms, according to a statement from the university on Wednesday. 

“This morning we received notification that Coach Saban tested positive for COVID-19,” said Dr. Jimmy Robinson and Jeff Allan, associate athletic director, in the statement. “He has very mild symptoms, so this test will not be categorized as a false positive. He will follow all appropriate guidelines and isolate at home.” 

Saban had previously tested positive before Alabama’s game against Georgia but was asymptomatic and subsequently tested negative three times, a sign that the positive test could have been a false positive. He returned to coach that game. 

It’s unlikely Saban will be able to coach in person during Saturday’s Iron Bowl against Auburn, given the Centers for Disease Control and Prevention’s guidelines for quarantining after testing positive and with symptoms. Neither Saban nor the university had spoken about that possibility as of Wednesday morning.

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