By Brandon Moseley
Alabama Political Reporter
On Wednesday, May 27, State of Alabama agency head after agency head paraded in front of the Senate Finance and Taxation Committee warning about how their agency will be impacted if they are forced to endure cuts to their budgets.
The Senate Committee introduced a substitute version of HB135; but their 2016 budget is still $1.62 billion. About $200 million less than what the budget was for the 2015 fiscal year which ends on September 30.
Chairman Arthur Orr (R-Decatur) told reporters that there are a number of bills which are moving through the legislature in the next four legislative days that could make up most of that $198 million gap. Orr said that he hoped that if the Senate and the House both passed the new revenue bills that he could substitute a General fund budget from the Senate floor.
The Governor’s $541 million package of tax increases on car sales, cigarettes, tobacco, car leases, publicly owned utilities, banks, insurance, etc. is languishing in committee and is unlikely to be acted on by either House.
Similarly Chairman Orr made no mention of gaming revenues. Senate President Pro Tem Del Marsh’s (R-Anniston) plan to create a state lottery, negotiate a gaming compact with the Poarch band of Creek Indians, and allow casinos at four dog tracks appears to be dead. On Friday Marsh had promised to bring his controversial gambling package to the floor if after polling the Senators over the weekend on their opinions he felt that he had the votes. Gambling did not come up in the Senate session on Tuesday…meaning it is likely that there are enough Senators to filibuster that plan so nothing gets done in the remaining days of the session. Thursday could prove different; but for the fifth consecutive year it appears that gaming will not be debated on the floor of either House.
The last time gambling was voted on by the Senate, people pled guilty to bribery and four Senators were indicted by federal authorities. Juries later found all the alleged conspirators not guilty.
Chairman Orr instead is laying his hope on a package of individual bills released by his committee in the past two days. The biggest of these is SB496, sponsored by Sen. Orr which reallocates existing use tax dollars. The bill would transfer $80 million a year of existing sales taxes from the ETF to the SGF.
SB497 is sponsored by Sen. Greg Albritton (R-Bay Minette). It broadens the definition of who is an instate business. Senate Bill 497 “establishes a factor presence nexus standard for business activity for purposes of business privilege tax, income taxes, and/or financial institution excise taxes which could increase receipts to the Education Trust Fund and State General Fund by an estimated $2 million to $8.5 million annually combined,” according to the fiscal note which is based on information obtained from the Department of Revenue.
Senate Bill 501 sponsored by Sen. Clyde Chambliss (R-Prattville) will increase auto sales receipts by an estimated minimum of $2,000,000 of which $840,000 would be credited to the State General Fund and $1,160,000 would be deposited to the Education Trust Fund by applying Alabama automobile sales tax to out-of-state residents who purchase a vehicle in Alabama and whose resident state does not allow Alabama residents to purchase a vehicle in their state for first titling and registration in Alabama without the payment of tax to that state.
SB507, sponsored by Roger Smitherman (D-Birmingham) would increase the current pharmaceutical privilege tax from 10 cents to 25 cents for each prescription filled or refilled for a citizen of Alabama. The pharmacists would be recompensated however by the Alabama Medicaid Agency raising the amount it pays the pharmacies to fill prescriptions. Since most of the Medicaid dollars come from the federal government the net effect of all of these moves is estimated to be over $8 million a year. Part of that is however negated because to get the independent pharmacists of Alabama to go along with this scheme the state has to agree not to hire a pharmacy benefits manager (PBM) for the costly Alabama Medicaid program.
SB504 sponsored by Sen. Shay Shelnutt (R-Trussville) would end the practice of individuals being able to file a certificate of exemption from income tax withholding. The increase to the ETF would be an estimated $12 million.
Orr said that House Bill 140 which passed the House on Tuesday also could generate some revenue for the general fund. It makes it unlawful to possess or use an automated sales suppression device or phantom-ware in Alabama. Orr said that some restaurants and other retailers use the devices to keep two sets of books. The Committee gave favorable report to SB505, sponsored by Sen. Tim Melson (R-Florence) which is the Senate version of the same bill.
Senate Bill 216, sponsored by Senator Gerald Dial (R-Lineville) would, “Allow state agencies authorized to statutorily levy or assess fees retained by the agency used to fund its operations or programs to review their fee schedule and request an increase of any such fees based upon a percentage increase in the Consumer Price Index since the last fee adjustment or over the preceding ten-year period of which the fee is to be increased, whichever period is shorter. Each five years thereafter, the agency may repeat this process.”
The bill could increase revenues to various agency funds and the SGF depending upon the number of agencies with approved requests to increase eligible fees and the amount of the fee increase. The committee agreed to leave the Alabama Public Service Commission or the State Banking Department out of the purview of this bill on the agencies request.
Chairman Orr said that because they could not project how much revenues this might generate it could not be used to prepare the 2016 SGF; but $60 million a year was the number discussed in committee.
The Senate Finance and Taxation Committee also gave favorable report on a 9 to 4 vote to SB502, sponsored by Sen. Dial, merging the SGF and ETF into one budget and doing away with all earmarking. This is a Constitutional Amendment and would have to be ratified by a vote of the people.
The target number we have been hearing is about $180 million. That will take significantly more than the fiscal notes in the bills that are listed here.
The Alabama Political Reporter has spoken with members of the House who are still adamant that they will not raise taxes on the people of Alabama and are skeptical of the idea that the leadership can cobble together enough votes to pass the BIR or cloture debate on all of the revenue bills. They remain skeptical of the idea that the House will ever pass the Senate’s beefed up General Fund budget. Some favor some version of the $1.63 billion austerity budget or shutting everything down and coming back in special session awaiting a better solution.