Goat Hill Report- Week ending Feb. 9, 2024

The 2024 Regular Session of the Alabama legislature began at noon on Tuesday, February 6, and later that evening Governor Kay Ivey delivered her State of the State address. Most observers are predicting an eventful and even contentious session, with issues like gambling and school choice on the agenda. Since the legislature is planning to take off two weeks in March for Spring Break (the weeks of March 11 and March 25), legislative leaders are increasing the session schedule to 3-day weeks in February – meaning the two chambers will convene on Tuesday, Wednesday and Thursday, with committee meetings scheduled around that. Typically, the schedule is Tuesday and Thursday with committee meetings on Wednesday. The 2024 session is expected to conclude by mid-May.

The notable news items for this first week are detailed below.

State of the State

Governor Kay Ivey utilized her annual State of the State address on Tuesday night to announce her support for gambling legislation, school choice, and absentee ballot legislation that stalled in the final days of the 2023 session amidst partisan disagreement. In her remarks, Ivey expressed support for gambling legislation originating in the Alabama House of Representatives that would authorize a statewide vote on a state lottery, sports betting, and a select number of casino sites (see details below). Like many elected officials in the state, Ivey couched her support in terms of letting the people vote: “Now is the time for Alabama voters to have another say on this issue.” There has not been a statewide vote on gambling since former Gov. Don Siegelman’s proposed lottery failed in 1999. Ivey also announced details of her proposal for the creation of education savings accounts that will allow families to tap public funds for private school tuition or other expenses. The proposed $100 million fund would provide up to $7,000 tuition vouchers initially aimed at low- and middle-income families, as well as families of students with disabilities (additional details below). The Governor also voiced support for a Senate bill, which received a favorable committee vote on Wednesday, that would make it a crime to help voters cast absentee ballots unless they are close family or a household member. Similar legislation sparked heated debate last year, with proponents characterizing the bill as an effort to combat voter fraud while opponents have called it an attempt to make it harder for people to vote.

Budget Hearings

On Monday, the day before the 2024 session kicked off, the House and Senate budget committees held joint hearings with presentations from key state agencies – Pardons & Paroles, the Alabama Law Enforcement Agency, Department of Corrections (DOC), Department of Human Resources (DHR – child welfare agency), Department of Mental Health and Alabama Medicaid. The budget hearing continued into Tuesday with reports from legislative and executive budget officers, as well as education officials from the Alabama Community College System, the Alabama Commission on Higher Education, and the Alabama State Department of Education.

Presentations from the department heads had a consistent theme of requests for significant budget increases due to inflation, litigation and program expansions. Medicaid Commissioner Stephanie Azar detailed a budget request of $955 million, a $92 million increase over the previous year. Medicaid is the largest component of the State General Fund budget, accounting for 29% of the State General Fund, which covers all non-education appropriations. Azar pointed to inflation as a significant component in the increased request, with nursing home, pharmacy and Medicare Advantage costs increasing by more than 5%. Medicaid utilization increases, along with a decrease in federal dollars flowing into the state, were also cited as reasons for the increase. Legislators had several questions for Department of Corrections chief, John Hamm. Outside of Medicaid, DOC is the largest General Fund expense. Hamm asked for $819 million in 2025, a $150+ million increase from the current year General Fund allocation of $661.4 million. Of that increase, $83.5 million would go to court-ordered requirements, including increases in inmate medical care ($25 million) and ADA upgrades ($55.5 million). Hamm also updated lawmakers on the progress of the nearly $1.1 billion prison under construction in Elmore County, due to be completed in 2026.

Regarding the education budget, on Wednesday the two budget officers highlighted continued growth trends in state revenues. Kirk Fulford, director of the Fiscal Division of the Alabama Legislative Services Agency, estimated that the Education Trust Fund budget (ETF) would grow from about $8.8 billion in the current year to $9.3 billion in fiscal year 2025 – an increase of about $550 million. State Finance Director Bill Poole, the Governor’s chief budget official, echoed Fulford’s outlook when he told legislators that Gov. Ivey would propose an ETF of $9.3 billion, a 6.25% increase over the current year. Poole said that in the ETF, Ivey planned to prioritize education savings accounts; more money for turnaround schools; targeted K-12 funding such as the Literacy Act which aims to have students on grade level by the end of 3rd grade; and additional funding for the Alabama Public Charter School Commission. The Alabama State Department of Education is requesting $22 million to help struggling readers in fourth grade and beyond. The state’s Literacy Act, passed in 2019, requires third graders to read at a third-grade level to advance in school, and the retention portion of the law goes into effect this year. State Schools Superintendent Eric Mackey told legislators Tuesday afternoon that he was concerned about students who passed with only a few points, saying there’s not much difference in proficiency between a passing grade of 70 and a failing grade of 69. Alabama Community College System Chancellor Jimmy Baker said the ACCS was seeking more money for a capital improvement fund and increase in operations and maintenance funds.

School Choice: Education Savings Accounts (ESAs)

As highlighted by the Governor in her State of the State address as her biggest legislative priority this session, legislation was introduced on Tuesday allowing Alabama families to use up to $7,000 per year on private and parochial school expenses and $2,000 for homeschool costs. The tax credit legislation was drafted by Gov. Kay Ivey’s office and supported by GOP leadership in the State House. SB61 by Sen. Arthur Orr (R-Decatur) was filed on Tuesday, and Rep. Danny Garrett (R-Trussville) will carry the bill in the House. Both Orr and Garrett are the Education Budget Chairman in their respective chamber. The Creating Hope and Opportunity for Our Students’ Education — CHOOSE — Act Tax Credit program would cover expenses including tuition, textbooks, fees for after-school or summer education programs, private tutoring, educational software and applications and education services for students with disabilities. It also covers contracted services at public schools, including classroom instruction. The legislation says lawmakers will dedicate at least $100 million per year state spending on the program. And in its first two years, there would be income limits for participating families. The first 500 ESAs each year would be reserved for students with special education needs. Private schools must be accredited, or in the process of obtaining accreditation and opt to participate in the tax credit program. As for home schoolers, those families could receive a credit of $2,000 per student for allowed educational expenses, capped at $4,000 per family. If approved by lawmakers, the tax credit would begin in the 2025-2026 school year. There is an eligibility provision which makes the ESAs available to families with an income of up to 300% of the federal poverty level in the preceding tax year – this year, that’s $90,000 for a family of four. Starting in 2027, there is no income limit. There has been much conversation about accountability measures for the ESA funds, and the bill features a testing requirement that participating students “take a standardized assessment aligned to the curricula of the participating school, a nationally norm-referenced achievement assessment, or a nationally recognized aptitude assessment of the participating school’s choice.” Students with disabilities are exempt from that requirement if they are not able to participate in testing. Parents could also use the tax credit to send their children to public schools outside their zoned districts. The bill does not require any public or non-public school to participate in the program or enroll students under it.

Anticipated Gambling Legislation is Introduced

After much anticipation, speculation and secrecy about specifics, legislation to expand gaming in the state was introduced on Thursday. As a constitutional amendment, when and if the legislation passes the legislation by a 3/5 vote, the issue will go before Alabama voters in the November general election – which would be the first such public vote on gambling since a proposed lottery was rejected in 1999. The legislation would create a state lottery, allow sports betting at in-person locations and through online platforms, and authorize up to 10 casino sites with table games and slot machines. Lawmakers have two bills before them. One is an amendment to the Alabama Constitution to allow gambling. The other is a 143-page bill that spells out operating details including where the casinos would be located and how gambling would be regulated. The proposal would put a 24% tax on gaming revenues and a 17% tax on sports betting revenue, but an official revenue estimate from the Legislative Services Agency is not yet available. Supporters estimate the proposal will generate more than $800 million in annual revenue. That revenue would largely be steered to two new state trust funds: a Lottery for Education Fund and a Gaming Trust Fund for other state needs. The legislation says lottery revenue shall be distributed to education needs including two-year college and technical school scholarships, local school systems and university research programs. The listed uses for other gambling revenue include, but are not limited to, rural health care, roads, bridges, state parks and health care for low-income people.

Legislation of Interest to the Concrete Industry

House Bill 110 by Representative Russell Bedsole would increase the air miles allowable for truckers who operate under the intrastate tolerance to 150 from the current 75. The legislation is a top priority for the ACIA. Under current rules, ready mix drivers who operate under the intrastate tolerance are allowed 12 hours of drive time and 15 hours on the clock time so long as they start and end at the same location and do not go outside 75 air miles. However, haulers of sand and cement frequently exceed 75-air miles and must operate under the more restrictive interstate tolerance of 11 hours of drive time in a 14-hour day. Ready mix drivers who assist other divisions on large pours would also periodically go beyond the 75-air mile rule causing confusion.

Please let us know if you have any questions about this report. The Alabama Legislature will reconvene on February 13, 2024.

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