May 5, 2016 – At the stroke of midnight on Wednesday, the Alabama Legislature’s 2016 Regular Session came to a close. Generally speaking, the news around the State House centered on the failure of two major pieces of legislation. But from the association’s perspective, several important bills passed the Legislature and were sent to the governor during the session’s waning days and hours.
Late last week, House and Senate leaders made a big push on a plan to use money promised to the state from the BP oil settlement to, among other things, pay back state debt, fund important road projects, and provide supplemental funding to the Alabama Medicaid Agency. The idea was to issue nearly $700 million in bonds immediately and use the nearly $1 billion coming to the state from the BP settlement to pay back that debt. Two competing bills emerged: Senate Bill 267 by Sen. Bill Hightower (R-Mobile), and House Bill 569 by Rep. Steve Clouse (R-Ozark). After passing the House 82-12, the Senate was poised to move House Bill 569 on the last two days of the session, but tensions over how much of the revenue would be allocated to south Alabama road projects ultimately doomed the bill and it never made it out of a Senate committee. As for Senate Bill 267, Rep. Napoleon Bracy (D-Mobile) attempted to bring the bill up with about five minutes left in the session and erase the changes made to the bill by a House committee, thus giving it a chance to be sent to the governor and signed into law. Bracy’s efforts failed 37-50, and the session ended.
The other major effort that failed to cross the finish line was legislation that would have issued bonds to build new prisons. The plan was spearheaded by Gov. Bentley, and was handled in the Senate and the House by Sen. Cam Ward (R-Alabaster) and Rep. Mike Jones (R-Andalusia). Originally, the idea was to issue $800 million in bonds to build three new men’s prisons and one new female prison. On the last legislative day, a House and Senate conference committee scaled back the plan so that $550 million in bonds would be issued to build two men’s prisons and a female prison. The Senate approved the committee report 23-12, but the House did not even consider the report.
Importantly, the failure of these two ideas could result in Gov. Bentley calling for a special legislative session over the summer.
On the banking side, the following bills affecting our industry passed the Legislature on the 29th or 30th legislative days:
Senate Bill 90, sponsored by Sen. Arthur Orr (R-Decatur), and House Bill 217, sponsored by Rep. Alan Baker (R-Brewton): This bill, the “Thompson Apprenticeship Tax Credit Act,” would provide an income tax credit of $1,000 to an employer for each qualified apprentice of an employer, based on Department of Labor standards of “qualified apprentice.” Thanks to an amendment the association worked to add to this bill, banks can qualify for this tax credit. The Senate bill passed the Legislature on the 29th legislative day and the bill now awaits the governor’s signature.
Senate Bill 262, sponsored by Sen. Shay Shelnutt (R-Trussville), and House Bill 266, sponsored by Rep. David Faulkner (R-Mountain Brook): This bill would standardize several insurance-related laws that apply to “transportation network companies” such as Uber. The association worked to have an amendment added to the bill that improved a bank’s position if it is a lienholder on a vehicle used by an Uber driver. The Senate bill passed the Legislature on the 29th legislative day and the bill now awaits the governor’s signature.
Senate Bill 281, sponsored by Sen. Clay Scofield (R-Arab), and House Bill 280, sponsored by Rep. Randy Wood (R-Anniston): This bill would, among other things, require the Department of Revenue to be properly notified whenever a motor vehicle was involuntarily transferred by operation of law, thus providing lenders and other lienholders with ample opportunities to protect vehicles in which they have a security interest. The House bill passed the Legislature on the 29th legislative day and the bill now awaits the governor’s signature.
Senate Bill 291, sponsored by Sen. Quinton Ross (D-Montgomery), and House Bill 293, sponsored by Rep. Kyle South (R-Fayette): This bill would ensure that heath care providers could, upon request, receive reimbursements from health insurers via ACH. Importantly, the bill also ensures that alternative electronic payment methods, such as virtual credit cards, are allowed under Alabama law. The Senate bill passed the Legislature on the 29th legislative day and the bill now awaits the governor’s signature.
Senate Bill 385, sponsored by Sen. Slade Blackwell (R-Mountain Brook): This bill would require application to, and prior approval by, the state superintendent of banks for a bank shareholder to acquire 25 percent of the voting shares of a bank, or application and approval to acquire 10 percent of the voting shares if another person already had a majority ownership. These requirements are consistent with federal regulations, but reduce the 50 percent “change of control” threshold currently applicable to state-chartered banks and the State Banking Department. The department is advocating for the bill because, as the primary regulator of a state-chartered bank, they feel they deserve to be more involved in the change of control process. The department plans to use the same change of control forms that are required at the federal level. The Legislature passed the bill on the 30th legislative day and Gov. Bentley signed it into law the next day.
Senate Bill 428, sponsored by Sen. Jimmy Holley (R-Elba), and House Bill 370, sponsored by Rep. A.J. McCampbell (D-Demopolis): This bill would improve the lien position of the Federal Home Loan Banking system in the event a member insurance company goes into receivership. By improving the lien position, FHLB members, including banks, could potentially see higher rates of return. The House bill passed the Legislature on the 29th legislative day and now awaits the governor’s signature.
House Bill 451, sponsored by Rep. Oliver Robinson (D-Birmingham): This bill would allow the Department of Revenue to have more flexibility in prescribing regulations that address how multi-state financial institutions calculate their taxable income in Alabama. Current law requires such a regulation to be “substantially the same” as the allocation and apportionment regulation recommended by a group known as the Multistate Tax Commission. This bill, introduced at the association’s urging, eliminates this particular requirement. The Legislature passed the bill on the 29th legislative day and now awaits the governor’s signature.
Please thank your representatives and senators for supporting these important measures.
All total, 574 bills were introduced in, and 205 were passed out of, the House of Representatives, while 431 bills were introduced in, and 204 were passed out of, the Senate. As of this writing, counting bills and joint resolutions, 275 measures have been signed into law. Now that the session has adjourned, the governor must sign a bill passed on the 29th or 30th legislative day (and more than 150 bills meet that description) on or before May 14 in order for it to become law. Once that “pocket veto” period has expired, the association will publish a Capitol Notes outlining all general laws passed during the session, including the association’s involvement in the passage of these new laws.
Questions or comments? Email Jason Isbell, vice president of legal and government affairs.