Goat Hill Report for Week Ending March 24, 2023
The Alabama Legislature’s 2023 Regular Session resumed this week after the hiatus for the Special Session to allocate federal ARPA funds. The legislature met two days this week but will be off this week for Spring Break.
On Tuesday, Governor Kay Ivey submitted her proposed Fiscal Year 2024 budgets for the Education Trust Fund and General Fund to the Alabama legislature. The FY2024 proposals allocate $8.8 billion in the ETF, which funds pre-K through higher ed as well as other education programs, and $2.9 billion in the General Fund, which funds all the other functions of state government. The Governor’s ETF and General Fund proposals both feature 2% raises for educators and state employees. Two of the most significant increases in the General Fund budget are for the Alabama Medicaid Agency and the Department of Corrections. Finance Director Bill Poole attributed a $69 million increase in Medicaid expenses as due in part to the expiration of federal public health emergency funds, increasing state obligations for funding. Poole stated that the $58 million in new funding for Corrections is largely due to the department’s new prison healthcare contract.
Along with the proposed ETF and General Fund budgets for FY2024, the Governor also submitted supplemental proposals to spend surplus tax revenues in the current fiscal year (FY2023). Supplemental budget proposals only occur when revenues in a particular year exceed expectations – and more specifically, those revenues exceed what was appropriated. These funds are generally considered “one time money” since they may not recur in future, less prosperous years. In the ETF, the surplus, is an unprecedented $2.7 billion. Ivey’s spending proposal includes targeted capital improvement projects in both K-12 and higher education and numerous items that are generally characterized as “economic development.” Over $960 million of the surplus is aimed at a tax rebate that the Governor previewed in her State of the State address earlier this month. Ivey’s rebate proposal provides single tax filers a one-time payment of $400 and a family of four would get $800. Legislators’ reaction to the tax rebate proposal was mixed, with some expressing support, some favoring permanent tax cuts, and others suggesting that the $960+ million in surplus funds could be better invested in critical needs. The Governor’s supplemental appropriation proposal for the General Fund totals about $200 million. Finance Director Poole stated that the proposal seeks to increase reserves, reduce debt, and make infrastructure investments in mental health, law enforcement and the State Capitol, among other items.
Criminal Law measures headline the week
The Alabama House of Representatives unanimously voted on Thursday to pass HB1 by Rep. Matt Simpson (R-Daphne) to impose mandatory prison time for possession of one or more grams of pure fentanyl. Fentanyl has been produced for decades as a treatment for severe pain such as that suffered by patients with advanced cancer, but law enforcement officials say that more recently drug dealers have begun mixing it with other drugs like heroin, cocaine, and methamphetamine to increase the potency. Fentanyl was a factor in 1,069 deaths in 2021, up from 463 the year before, according to the Alabama 2023 Drug Assessment. The strong vote did not come as a surprise because legislative leaders and Gov. Kay Ivey have said for weeks that cracking down on fentanyl is a priority. HB1 now moves to the Senate.
The Alabama Senate on Thursday passed SB1 by Sen. April Weaver (R-Brierfield) reducing how much time state inmates can reduce their time behind bars by good behavior and to set new rules on the sentence reduction policy. The bill amends the Alabama law on correctional incentive time, better known as “good time.” The good time law has come under criticism over the last two years because suspects charged in the fatal shootings of two law enforcement officers had accumulated large amounts of good time while behind bars. Gov. Ivey and Attorney General Steve Marshall have spoken out about what they said were inconsistent and lax policies on good time. In January, Ivey issued an executive order setting new rules for good time, including sanctions to take away good time for inmates who commit certain violations. Ivey said the changes were needed because the system was too lenient and the rules were applied differently in different prisons. SB1 now goes to the House for consideration.
Look ahead after Spring Break
As previously mentioned, this week the legislature will be off for Spring Break. Many key bills are slated for debate when the Legislature returns to work on Tuesday, April 4th. According to members of leadership in both chambers, the number one priority in the first two weeks of April will be a package of economic incentives-related legislation. Two major state incentives, the Alabama Jobs Act and the Growing Alabama Act, are set to expire in this year and thus need to be re-authorized in order to provide certainty for economic development purposes. Substantial modifications to a tax credit for businesses utilizing the Port of Mobile are also expected, as well as the introduction of a new credit for the rapidly expanding innovation and technology ecosystem in the state.
The pace of the session will rapidly accelerate after consideration of the incentives. Other non-budgetary topics which are likely to receive close attention are competing proposals regarding the elimination of the state’s grocery tax (amidst outcry from legislators about the need for permanent tax relief measures), several measures to enhance school choice in Alabama – to include increased charter school funding and adoption of education savings accounts, and liability bills backed by retail/restaurant affiliated groups and emergency medical service providers. There are also still looming questions as to whether a comprehensive gambling proposal will be filed after recent attempts have stalled in the House of Representatives.
As the number of overall bills continues to increase, many signs point to three-day legislative work weeks ahead – which will be a grueling pace in the hopes of members and advocates being rewarded with session ending prior to Memorial Day. It still remains to be seen how quickly some of the “top of the ticket” items noted here will move through the entire process, a key indicator as to whether the Legislature will indeed be forced to stay in session until mid-June to conclude its business.
Bills of Interest to the Concrete Industry
This week Representative Chip Brown introduced House Bill 214 related to a statewide building code. The state of Alabama is one of the few states in the country that still does not have a statewide residential building code. This legislation would help improve the level of construction across the state.
Senate Bill 24 by Senator Greg Albritton which would regulate indemnification clauses commonly seen in construction contracts caught the attention of many groups this week. Several large organizations have come out in opposition to the legislation. The ACIA has worked for several years to develop the legislation with AGC and ABC and believe the bill creates a level playing field for all parties in a construction contract.
The Legislature will reconvene on April 4, 2023.