March 5, 2019 — The first day of the 2019 Regular Session of the Alabama Legislature began at noon today. But unlike in most years, the big question in Montgomery is when the session’s second day will start.
While nothing will become official, if at all, until her State of the State speech later tonight, Governor Kay Ivey is expected to call legislators into a Special Session starting tomorrow. The primary focus of the extraordinary session, of course, will be her “Rebuild Alabama” infrastructure plan, which not only gradually increases the state’s motor fuel tax over the next three years – 6 cents the first year, 2 cents the second year, and 2 cents the third year – but also subsequently increases the tax using a built-in pricing index. The new revenue would be allocated to the state, counties, and cities, as well as to the Port of Mobile, where funds will be used to widen the port and expand its usefulness. Rep. Bill Poole (R-Tuscaloosa), chairman of the committee that writes the Education Trust Fund budget, will sponsor the bill, which, because it raises revenue, is constitutionally required to begin in the House of Representatives. In the Senate, the bill is expected to be managed by Sen. Clyde Chambliss (R-Prattville), the Republican Floor Leader and a veteran public funds appropriator, having spent time not only in the state Senate but also on the Prattville City Council and Autauga County Commission. Though the gas tax is supported by Republican heavyweights such as Gov. Ivey, Lt. Gov. Will Ainsworth (R), Speaker of the House Mac McCutcheon (R-Huntsville) and Senate President Pro Tempore Del Marsh (R-Anniston), the legislation still faces somewhat of an uphill climb from some legislators, especially after the Executive Committee of the state Republican Party officially voted last month to oppose the gas tax plan. Rest assured, this issue will be the “one to watch” in 2019.
But while legislators are debating the gas tax in the Special Session, what’s going on with the Regular Session? The short answer is…nothing. The law does not allow two sessions – one regular and one special – to run at the same time. In effect, then, having a special session inside a regular one just puts the Regular Session on pause. During a regular session, legislators can meet for no more than 30 legislative days over 105 calendar days, meaning the session must end before midnight on June 17. Chances are, then, that the second legislative day of the 2019 Regular Session will also be its 14th calendar day, leaving plenty of time – albeit less time than usual – for legislators to meet for the remaining legislative days of the session. In fact, the most impactful decision of holding the special session inside the regular session is that legislators, and the staff and lobbyists who follow the legislative process, will likely not take a “spring break” week at the end of March.
Truth be told, the gas tax is just one of several contentious issues on the radars of policymakers. Other major issues – prison reform, Medicaid expansion, lottery and gaming, and changes to the ethics laws – are on tap as well. And any one of those issues could, by itself, clog up time on the House and Senate floors.
Without question, the most important legislative issue for Alabama’s banking industry is the passage of a bill known as The Future Advance Mortgage Protection Act. Last September, the Alabama Supreme Court issued an opinion that upended the industry’s longstanding concept of lien priority. In GHB Construction v. West Alabama Bank and Trust, the Court ruled in a 5-4 decision that the creditor who first incurred debt – in this case, a homebuilder – had lien priority over the creditor who first executed an agreement to extend credit and recorded a “future advance” mortgage to secure that credit – in this case, the bank. The Future Advance Mortgage Protection Act cures this problem by returning Alabama law to the way it existed prior to the Court’s ruling. In other words, the bill simply provides that when determining the lien priority of a future advance mortgage, whether executed before or after the act’s passage, it is as if all of the funds under the future advance mortgage were advanced at closing, even if they were actually advanced in the future. If this legislation fails to pass and the Court ruling stands, every bank in the state – not to mention bank customers – will have to reevaluate how, or if, it issues future advance mortgage products.
To be clear, the uncertainty around the West Alabama case impacts not just the banking industry but also the entire financial services industry. That’s why the Alabama Bankers Association is pleased to partner with the League of Southeastern Credit Unions, the Credit Union Coalition of Alabama, the Mortgage Bankers Association of Alabama, and the Alabama Land Title Association to lobby for The Future Advance Mortgage Protection Act. It’s our hope that these groups’ combined efforts will put the legislation on a fast-track to Gov. Ivey’s desk.
As always during session, the Association will plan to publish Capitol Notes each week, usually on Friday. Every edition will provide you with a real-time update on what happened in the State House during the week as well as on the pieces of legislation directly impact Alabama’s banks and bankers. If you’re not receiving Capitol Notes, make sure to let ABA Vice President of Marketing and Business Development Shelley Hildebrand know at (334) 244-9456 or at email@example.com.
In the meantime, don’t hesitate to contact ABA Vice President of Legal and Governmental Affairs Jason Isbell with any questions or concerns about what’s going on with the Alabama Legislature. He can be reached at (334) 244-9456 or at firstname.lastname@example.org.