Legislative Week 5: Budgets, Innovation Grants, Small Business Closure Protection, and COVID Recovery Tax Credits Move Forward

Luck may have run out for the gambling bill last week, but Alabama’s economic developers, small businesses, the Alabama Innovation Commission and even the Governor’s budget all got dealt into the game. The biggest whale in the room showed up as the American Rescue Plan bring $4 billion in relief funding to be dispersed around the state, and this week, the Education budget will get its chance in the Senate Finance and Taxation Education Committee.
 
Here is what you need to know to get up to speed on last week’s action and what to expect this week.
 
Gambling
Sen. Del Marsh’s gambling bill, SB 214, fell two votes short of passage in the Senate last week. While there were 19 “yes” votes and 13 “no” votes, a three-fifths super majority of all elected members is required for legislation that would amend the Constitution. Marsh’s bill may have failed, but the larger issue may not be dead. Senators Jim McClendon and Garlan Gudger have already introduced bills proposing a lottery only, a concept that could be more palatable to many legislators. Historically, however, certain gaming interests have opposed legislation that does legalize others forms of gambling.
 
Innovation / Economic Development
HB541, introduced by Rep. Poole on Thursday, would create the Innovate Alabama Matching Grant Program. Matching grants would be provided to eligible businesses that have received federal Small Business Innovation Research or Small Business Technology Transfer Research grants or both. It is an initiative of the Governor’s Innovation Commission. This bill would provide funding that would support the Chamber’s work to promote and assist new business recruitment, cyber, technology and innovation growth.
 
Tax Credit Hiring Requirements
The Senate and House education budget committees approved legislation to give new and expanding industries in the state a break on workforce requirements if COVID-19 caused hiring delays. The state’s capital credit program allows an annual tax credit based on a percentage of businesses’ capital costs. To qualify, the businesses must meet hiring and wage requirements. Senator Bobby Singleton introduced SB 274 and Rep. Kyle South introduced HB 211 that would create the COVID-19 Recovery Capital Credit Protection Act of 2021, providing an extension to the employment and wage requirements for a qualifying project placed into service during 2019, 2020, and 2021. Initial wage and employment requirements will be extended up to two years for projects “that have been directly affected by the COVID-19 pandemic” the bills say. Both bills are now poised to be considered by their respective chambers.
 
Business Closures During States of Emergencies
The Senate Fiscal Responsibility and Economic Development Committee approved HB103 by Rep. Jamie Kiel. It would allow businesses and places of worship to remain open during declared states of emergencies if they comply with any emergency order, rules or regulations issued by the governor and state, or local agencies. The bill is favorable seen as protection for small businesses who were forced to shut down while big box stores could remain open. Having already passed the House, the bill is a Senate vote away from the Governor’s Desk.
 
Charter Schools
After an extensive hearing last Wednesday, the House Ways and Means Education Committee approved a bill that would change how public charter schools are funded. For each student who resides within the county where a public charter school is located, HB 487 would direct “a per student share of the net local tax revenue” to the school. The local traditional school system could retain the current per-student allocation under the Foundation Program, but some of any additional tax revenue would follow students to charter schools. If a student comes in from outside the charter school’s county, none of the local money would follow the student. HB 487 now moves to the full House for consideration.
 
General Fund Budget
The House overwhelmingly passed a budget for the State’s General Fund last Tuesday. The $2.47 billion budget represents an increase of $78.9 million above FY21 and $15 million above Governor Ivey’s February proposal. The bill includes an additional $26.3 million for the Department of Corrections, a $10 million increase for the Department of Mental Health, a $7.9 million increase for the Alabama Law Enforcement Agency, and a 2% raise for state employees. While Medicaid and CHIP would be level funded, the State would save $63 million due to increased federal cost share. The proposed budget has moved to the Senate for consideration.
 
Education Budget
The Senate Finance and Taxation Education Committee will consider the education budget this week. The Governor’s proposed budget represents a $441 million increase (or 6.1%) in spending year over year. The $7.66 billion budget includes a 2% pay raise for teachers.
 
American Rescue Plan: Its impact on Alabama
Alabama will receive more than $4billion in federal funds. According to news sources, $2.1 billion is earmarked for a state relief fund, $192 million is for state capital projects, $417 million will go directly not metropolitan cities, $362 million will go to smaller towns and $951 million will go to counties. State lawmakers and the Governor’s office will determine how to spend about $2,3 billion between the relief fund and the capital projects fund. The state has until December 2024 to spend the money.
 
Remaining Schedule
The Legislature has now completed 14 days of their 30 day constitutionally allotted meeting days for the 2021 Regular Session. The House and Senate will convene this week for two legislative days. Legislative spring break is scheduled for next week, March 22nd – 26th. The Legislature will be more than halfway through the Regular Session when they leave this week for Spring Break.