The association’s top legislative priority, the Financial Exploitation Prevention Act, was in line to be on the floor of the House as well as the floor of the Senate on Thursday, but both chambers adjourned before getting to the bills. Even though they did not advance, their inclusion on the day’s calendar is a great sign of support from the Legislature. The association appreciates Rep. Randy Wood (R-Anniston) and Sen. Jabo Waggoner (R-Vestavia Hills) for putting the bills on the floor calendars. After adjournment on Thursday, the House Rules Committee met and selected the bills to be debated on the House floor on next Tuesday. Thanks to Speaker Mac McCutcheon (R-Monrovia), House Bill 207 will be the second bill on the day’s calendar. Such a favorable position gives the legislation a greater chance of being considered before the House adjourns for the day. Stay tuned!
Thursday also saw the introduction of companion bills in the House and Senate related to corporate income taxes. Rep. Danny Garrett (R-Trussville) and Sen. Dan Roberts (R-Mountain Brook) introduced House Bill 352 and Senate Bill 249, a constitutional amendment named the Alabama Business Tax Competitiveness Act that would (a) eliminate the federal corporate income tax deduction and (b) reduce the state corporate income tax rate from 6.5 percent to 4.75 percent. Beginning in 2021, these changes would apply to corporations, which pay the state corporate income tax, as well as to financial institutions, which pay the Financial Institution Excise Tax. Other related changes to the tax code are also being proposed in companion legislation by Garrett and Roberts, House Bill 353 and Senate Bill 250. But most of the changes in those bills make the same modifications to the corporate income tax statutes that financial institutions received in the Financial Institution Excise Tax Reform Act of 2019.
These bills join several other bills aimed at reforming Alabama’s tax code, such as House Bill 3 and House Bill 4 by Rep. Mike Holmes (R-Wetumpka), which replaces the state income tax with a “consumption” tax, and House Bill 130 by Rep. Andrew Sorrell (R-Florence), which phases-out the Business Privilege Tax over a 10-year period.
A reminder to readers of Capitol Notes to head to the polls this Tuesday, March 3, for the 2020 primary elections. In addition to the presidential election, Alabamians will be able to vote in the race U.S. Senate, U.S. House, state Supreme Court, state appellate courts, Public Service Commission, and the state board of education. Additionally, voters will have the opportunity to approve or disapprove of Amendment 1, a proposed statewide constitutional amendment that would replace the elected state board of education with an appointed board. Make sure to be an informed voter!
As always, Capitol Notes provides readers with a brief summary of legislation that might impact Alabama’s banking industry. Those summaries are as follows:
House Bill 21 by Rep. Chris Pringle (R-Mobile) expands the Alabama Residential Mortgage Satisfaction Act to include commercial agricultural property, meaning secured creditors would be required to record the satisfaction of a mortgage for commercial agricultural property upon a written request of a mortgagor or a creditor of the mortgagor. The bill was favorably reported by the House Financial Services Committee on February 19 and is now able to be voted on by the full House.
House Bill 159 by Rep. Craig Lipscomb (R-Rainbow City) clarifies how a Credit Union calculates its taxable income for state income tax purposes. Current law allows a Credit Union to deduct “reasonable additions to reserves for losses, bad debts, or extraordinary expenses” from its calculation of taxable income. With the 2019 passage of the Financial Institution Excise Tax Reform Act (“FIETRA”), the Alabama Department of Revenue became more focused on the breadth and scope of this deduction. So, working with the Credit Union industry, legislation was developed to ensure that this deduction was only used for its intended purpose. This legislation does not in any way impact how a bank calculates its tax liability. The bill was favorably reported by the House Financial Services Committee on February 19 and is now able to be voted on by the full House.
House Bill 207 by Rep. Chris Blackshear (R-Phenix City) and Senate Bill 166 by Sen. Shay Shelnutt (R-Trussville), the Financial Exploitation Prevention Act, gives financial service providers the authority to refuse or delay a financial transaction if there exists a reasonable belief that an elderly or vulnerable adult customer is or could be the target of financial exploitation. The bills also give financial service providers more discretion to contact persons, including non-accountholders, during an investigation into potential financial exploitation. The Alabama Bankers Association is the primary advocate for this legislation, though numerous other groups also support the bills. Both bills have passed through their respective House and Senate committees. The House bill is scheduled to be on the House floor on March 3 and the Senate bill is in position to be voted on by the full Senate.
Senate Bill 103 by Sen. Linda Coleman-Madison (D-Birmingham) increases the fee paid to probate judges to record mortgages and earmarks the additional revenue to the Housing Trust Fund. Under current law, the recording tax equates to $75 for every $50,000 of indebtedness, with the revenue distributed to probate judges, counties, and the state. Under this proposal, the recording tax would equate to $100 for every $50,000 of indebtedness. The revenue would still be distributed to probate judges, counties, and the state, but one-tenth of the revenue would also be distributed to the Housing Trust Fund. This fund was created several years ago but has never been funded by the Legislature. Funds would be allocated by an Advisory Board to non-profit entities around the state that work to provide low-income housing. The bill was originally referred to the Senate Governmental Affairs Committee but was re-referred to the Senate Finance and Taxation – General Fund Committee. It was originally placed on that committee’s agenda on February 19 but was carried over at the request of the sponsor. Several trade associations oppose the legislation and it is unlikely to reappear this session.
As of the end of the eighth legislative day, legislators have introduced 611 bills – 360 in the House and 251 in the Senate – and 108 resolutions. The 2020 Regular Session can last for no more than thirty legislative days and must end on or before May 18.
The Legislature will reconvene for its ninth legislative day on Tuesday, March 3.
