This week, the Alabama legislature held a three-day week, which is considered an accelerated pace but is necessary to make up for the lost work days from the Special Session in March. The legislature has now completed 10 days out of a possible 30 legislative days, and at this pace the session is expected to wrap up in early-to-mid-June. Details of this week’s action are provided below.
Economic Incentives Bills Make Progress
On Thursday, the Alabama House of Representatives approved the four-bill economic development package to renew and expand the tax breaks and other incentive programs the state uses to lure industries. Dubbed the “the Game Plan” by Governor Kay Ivey, the bills were approved without a dissenting vote and now move to the Alabama Senate where a vote is expected next week. The centerpiece of the Game Plan package is a bill that reauthorizes and expands the Alabama Jobs Act, which gives tax credits for capital investments and cash rebates for job creation. The program is the state’s primary economic recruitment tool and will expire this year unless renewed. The legislation authorizes the program for another five years, and incrementally increases the cap on incentives from $350 million for 2022 to $475 million for 2027. Ivey’s office has said the increase is needed to keep the state competitive for large projects. As detailed last week, the four House bills and their Senate companion bills are comprised of the following:
• Enhancing Alabama’s Economic Progress Act – HB241 by Rep. Danny Garrett (R-Trussville) and SB164 by Sen. Greg Reed (R-Jasper). This bill would renew the Alabama Jobs Act and the Growing Alabama program and extend their sunset dates to 2028. Passed in 2015, the Jobs Act is set to sunset this year unless renewed by lawmakers. It gives companies tax rebates for eligible payroll taxes paid the previous year. The bill is expected to raise the annual incentive cap from $350 million to $375 million. Also set to sunset this year, the Growing Alabama program offers tax credits to companies as an incentive for the development of certain infrastructure and capital improvement projects.
• Site Evaluation and Economic Development Strategy Act (SEEDS) – HB257 by Rep. Danny Garrett (R-Trussville) and SB165 by Sen. Arthur Orr (R-Decatur). The SEEDS Act will allow the State Industrial Development Authority to issue grants to help fund site development. Sites would have to have at least 200 contiguous acres. Local financial participation in the development would be required, but on a sliding scale so that smaller, rural communities would contribute less than larger ones.
• Innovation and Small Business Act – HB247 by Rep. Anthony Daniels (D-Huntsville) and SB152 by Sen. Bobby Singleton (D-Greensboro). This Act aims to enhance growth in Alabama’s innovation economy and support underrepresented businesses and enterprises in rural areas, with a goal of transforming the state into a hub for technology and innovation. Reportedly the act would create a $25 million Innovating Alabama Tax Credit to encourage the development of small tech-related and innovative industries.
• Enhancing Transparency Act – HB240 by Rep. Cynthia Almond (R-Tuscaloosa) and SB151 by Sen. Garlan Gudger (R-Cullman). Amends the Jobs Act to require the Alabama Department of Commerce to publish eligible incentivized project information online to “serve a valid public service and increase confidence in the process.”
Education Reform Bills Introduced
This week, highly anticipated school choice bills related to the establishment of an education savings account (ESA) program were filed – SB202 by Sen. Larry Stutts (R-Tuscumbia) and HB295 by Rep. Ernie Yarbrough (R-Trinity). Referred to as the Parental Rights in Children’s Education (PRICE) Act, the bills would allocate $6,900 annually for each participating student. Under the proposed ESA framework, those dollars could be used by families for a variety of educational purposes. Such eligible expenses include coverage of tuition costs, extracurricular activities, tutoring and/or test preparation – amongst other items. Many school choice advocates in Alabama are lining up behind the ESA bills, but the outlook for their passage is mixed as of this writing. Many newly elected members of the Legislature campaigned in 2002 on the need for more parental rights and choice; it’s very likely those same lawmakers will soon be held to account for promises made. Grassroots organizations such as the Eagle Forum and Republicans on a Mission (ROAM) are expected to play leading roles in pushing a campaign promoting action on the topic. Alabama is currently trailing other red states on progress with school choice measures, which will be a key message in the weeks ahead. Other potential reform measures (i.e. modifications to the existing charter school law) are also on the horizon. Recent comments from key Republican leaders, including Speaker of the House Nathaniel Ledbetter (R-Rainsville) and Senate President Pro Tem Greg Reed (R-Jasper), appear to signal that progress on education issues will be more gradual than rushed through the process.
GOP Poll Favors Cutting Grocery Tax Over Tax Rebates
With record revenue for the state’s budgets, this session has featured considerable discussion about tax rebates and phasing out or substantially reducing the state’s 4% grocery tax, among other tax break proposals. A new poll conducted by the Alabama Republican Party raised eyebrows this week indicating that Alabamians overwhelmingly prefer eliminating the sales tax on groceries to a one-time income tax rebate. The Alabama GOP’s survey of 1,600 registered votes produced the following results:
• 70% of Republicans support eliminating the state sales tax on groceries. Similarly, Democrat responses showed 70 percent support cutting state sales taxes on food.
• Asked about the proposal to use the budget surplus to provide rebate checks, just 34% of Republican voters signaled support, while 42% said they opposed the idea and 24% were unsure. Among Democrats, 49% supported the idea of a tax rebate, while 30% were opposed and 21% remained unsure.
• Given a choice between the grocery tax cut and the tax rebate check, the results were overwhelming regardless of party: 83% of Republicans said they preferred a grocery sales tax cut while 17% said a tax rebate. Among Democrats, 80% chose the grocery tax cut while 20% chose a rebate. And among independents, 85% preferred the grocery tax cut to 15% who preferred the rebate.
The grocery tax issue has historically been a priority for Alabama Democrats, but it has received a notable boost in support this session from Lt. Governor Will Ainsworth (R-Guntersville) and other Republicans in legislative leadership. Ainsworth announced his support for addressing the grocery tax in response to Gov. Kay Ivey’s tax rebate proposal. In addition, last week the House and Senate education budget chairmen introduced legislation to phase out the grocery tax. HB250 by House Ways & Means Education Chairman Danny Garrett (R-Trussville) and SB177 by Senate Finance & Taxation Education Chairman Arthur Orr (R-Decatur) would begin phasing-out the state sales and use tax on food beginning September 1, 2023. Future rate reductions would be contingent upon certain growth requirements in the Education Trust Fund. Alabama is one of only three states in the country still taxing groceries at the full rate.
Controversial Bills on CRT and Transgender Athletes Emerge
Controversial bills on the topics of Critical Race Theory and transgender athletes were a hot topic nationwide and in the 2022 legislative session, and now the two issues have re-emerged in the 2023 session. HB7 by Rep. Ed Oliver (R-Dadeville) and co-sponsored by 22 other House Republicans, has been dubbed the “divisive concepts bill” and would limit discussions of race, sex, and religion in public schools from kindergarten to college. The bill also provides criminal penalties for teachers who violate the law. This week, HB7 received a favorable vote in the House State Government committee, putting it in position for a vote by the full House. Oliver said the bill “simply prevents the teaching of some divisive concepts, which we have discussed in great detail, that we believe would tend to teach them racist ideas.” African-American legislator Rep. Prince Chestnut (D-Selma) called the bill a “slap in the face” and added, “It’s divisive that not a single white person on this committee is going to vote against this bill. That’s divisive.” A similar “divisive concepts” bill passed the House last year and died in the Senate, and Oliver and Chestnut’s comments offer a preview of coming fireworks when the bill moves forward. Though not as controversial as Divisive Concepts/Critical Race Theory, the transgender athletes issue has been no less talked about at the national and state level. This week, the House Education Policy Committee approved HB261 by freshman Rep. Susan Dubose (R-Hoover), which would extend a 2021 ban on transgender athletes in K-12 sports to the college level. HB261 now goes to the full House of Reps for consideration. At least 19 other states have now imposed restrictions on transgender athletes.
Bills of Interest to the Concrete Industry
Senate Bill 24 by Greg Albritton which would preclude certain indemnification requirements in construction contracts appeared before the Judiciary Committee last Wednesday. A public hearing was called on the bill and representatives from the Alabama Realtors Association, McWane Pipe, and Nucor Steel spoke in opposition of the bill.
The ACIA has been working with the Subcontractors Association of Alabama, AGC, and ABC for the past three years to come up with a solution to the issue. We had hoped to see the legislation passed in 2023, but due to opposition from large manufacturing firms in the state, it appears unlikely in 2023. We will work with the groups to attempt a solution but to date, the groups have only requested owners be removed from the legislation. Removing owners would shift all of the liability to GC’s which is a non starter.
The Sponsor Greg Albritton asked the bill be considered at a later date so the committee did not vote on the bill.
The legislature will reconvene Tuesday, April 18th.