Feb. 16, 2016 – The Legislature met in session for two days last week, Tuesday and Thursday, and held numerous committee meetings last Wednesday.
The action that most impacted Alabama banks occurred last Tuesday on the House floor, when the House passed House Bill 36, the “Alabama Small Business Jobs Act,” on an 88-12 vote. Sponsored by Rep. Kyle South (R-Fayette), the bill would give Alabama businesses with 75 or fewer employees the ability to earn an income tax credit for making new hires. As introduced, the bill would have applied to banks and other taxpayers subject to the state’s Financial Institution Excise Tax (FIET). On the House floor, however, an amendment was added that eliminated FIET taxpayers from tax credit eligibility. When asked, Rep. South said he was told that no Alabama-based banks would qualify for the credit, so he thought that his floor amendment would have no real impact. Obviously, that information is not correct. In reality, according to the State Banking Department, 76 percent of state-chartered banks (98 of 130 banks) have 75 or fewer employees and could have been eligible for the tax credit. Armed with this information, Rep. South committed to working with us to have the language re-inserted in the bill on the Senate side. ABA has also spoken with leaders in the House Republican Caucus – House Bill 36 was a Caucus agenda bill – and they have assured us that they will work to have the changes approved if the bill comes back to the House of Representatives.
One bill that received a lot of attention in the State House last week was House Bill 174, the “Alabama Uniform Minimum Wage and Right to Work Act.” Sponsored by Rep. David Faulkner (R-Birmingham), the bill would prohibit Alabama cities from raising the minimum wage (currently $7.25 per hour) and would roll back Birmingham’s planned minimum wage increase ($8.50 per hour), which is scheduled to become effective July 1. Republicans argue that the bill will allow municipalities to have a uniform minimum wage rate across the state. Democrats counter that an increase in the minimum wage rate will help the working poor earn their way out of poverty. With 50 Republican cosponsors, the bill has widespread support in the House, but Democrats are expected to mount a filibuster to at least slow the bill down. On a 10-3 vote, the House State Government Committee favorably reported the bill out of committee last Wednesday.
At the end of the fourth legislative day, 227 bills have been introduced in, and four have been passed out of, the House of Representatives, while 228 bills have been introduced in, and 14 have passed out of, the Senate. Some of the measures that could impact Alabama banks include the following:
Senate Bill 67, sponsored by Sen. Cam Ward (R-Alabaster): This bill, the “Alabama Consumer Lawsuit Lending Act,” would regulate the process of consumer lawsuit lending in the state. The bill includes provisions related to consumer lawsuit lending agreements as well as interest rates applicable to such agreements (currently capped at 10 percent APR). The Senate Judiciary Committee held a public hearing on the bill last week, and is expected to vote on the bill this Wednesday.
Senate Bill 90, sponsored by Sen. Arthur Orr (R-Decatur), and House Bill 217, sponsored by Rep. Alan Baker (R-Brewton): This bill 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.” As written, banks and FIET taxpayers would be ineligible to obtain the credit. The ABA is working to have banks added into the bill, as several DOL-approved positions could be of interest to banks and other financial institutions.
Senate Bill 91, sponsored by Sen. Arthur Orr (R-Decatur): This bill makes significant changes to laws related to payday loans, including a provision that caps the annual finance rate at 45 percent. The bill is on this Wednesday’s agenda for the Senate Banking and Insurance Committee.
Senate Bill 144, sponsored by Sen. Cam Ward (R-Alabaster) and House Bill 113, sponsored by Rep. Matt Fridy (R-Montevallo): This bill makes a declaratory finding that the term “transfer” in the Alabama Fraudulent Transfer Act includes transfers made pursuant to a divorce settlement or domestic settlement. While the bill merely seeks to clarify, rather than amend existing law, this bill is written as a response to a recent ruling of the Alabama Court of Civil Appeals that could potentially have a negative impact on banks. The Senate Judiciary Committee, after adopting a technical amendment, favorably reported Senate Bill 144 out of committee last week.
Senate Bill 202, sponsored by Sen. Linda Coleman (D-Birmingham): This bill would amend the corporate income tax law to require the operations of all related entities involved in a unitary business to file one corporate income tax return on a combined based, known as combined reporting. ABA, as well as other business advocacy groups, will undoubtedly oppose this measure if it ever makes it onto a committee agenda.
Senate Bill 209, sponsored by Sen. Bill Holtzclaw (R-Huntsville): This bill would make substantial, but mostly technical, revisions to Alabama’s Credit Union statute. The Alabama Credit Union Administration drafted the 51-page bill, which includes specific provisions about the appellate rights of persons affected by a suspension of operation of a credit union. These changes, and others, were likely prompted in the wake of the ACUA’s actions towards the Tuscaloosa-based Alabama One Credit Union. The bill is on this Wednesday’s agenda for the Senate Banking and Insurance Committee. The ABA is working with Credit Union advocates on several of the technical changes proposed in the legislation.
House Bill 36, sponsored by Rep. Kyle South (R-Fayette): This bill, the “Alabama Small Business Jobs Act,” would, as introduced, give businesses, including banks, an income/FIET tax credit under certain conditions. Specifically, a bank headquartered in Alabama with 75 or fewer employees would receive a one-time tax credit valued at $1,500 for each employee hiring that results in a “net employee growth” from one tax year to the next. As noted above, an amendment on the House floor made banks ineligible to receive the credit. ABA will work to get this changed on the Senate side.
House Bill 62, sponsored by Rep. Victor Gaston (R-Mobile): This bill would authorize a seven-year extension of the tax credit against the tax liability of certain taxpayers, including banks with an FIET liability, for the substantial rehabilitation of qualified structures. Currently, up to $20,000,000 in tax credits are available each year for rehabilitation projects involving certified historic structures (credit equals 25 percent of the qualified rehabilitation expenditures, up to $5,000,000 per project) or qualified pre-1936 non-historic structures (credit equals 10 percent of qualified rehabilitation expenditures, up to $5,000,000 per project). The tax credit program, which expires in April, would under this legislation be renewed until 2022. The House Ways and Means Education Committee will hold a Public Hearing on the bill on Wednesday.
The Legislature has met for four legislative days as of this writing. A Regular Legislative Session can contain no more than 30 legislative days, and all legislative days must take place on or before May 16, which is 105 days after the beginning of the session. The House of Representatives and Senate will convene today for the fifth legislative day. The House will begin at 1 p.m. and the Senate will begin at 2 p.m. The House and Senate are expected to meet for three legislative days this week.
