Big week in the Alabama Senate
The Alabama Legislature met three days this week and got quite a bit done. I’ll start with the Senate that had spent weeks locked-down on an electronic bingo bill for Macon County.

On Tuesday, Lt. Governor Folsom used the power of the chair to carry over the gambling bill on a voice vote despite boisterous objections from a contingent of GOP senators. Moments before the vote, Senator Hank Erwin (R-Pelham) was at the microphone requesting a roll-call vote which is permitted under the rules of the Senate and in the Constitution. Folsom told the senator afterwards that he had a duty to the people of Alabama to ensure that the Senate functioned properly. Following the gambling bill, the Senate stalled again over Senator Ben Brooks’ (R-Mobile) objections to his coastal insurance bill not being included on the special order calendar presented by the Rules Committee.

Wednesday produced the first day of productivity for the Senate this year as they passed thirty-something non-controversial bills off a special order calendar and killed a few bad ones. Noteworthy from Wednesday’s session which lasted until 10:30 p.m. was the failure of the senate version of the bill repealing the grocery tax to secure the 21 votes necessary to be brought up for debate. The House passed their version and that bill is still pending in the Senate. They also approved a bill to exempt stimulus money from state income tax.

Thursday played out much like Wednesday with another calendar of non-controversial bills. The day ended when Senator Phil Poole (D-Moundville) began to filibuster a House Republican’s bill. Senator Poole has blamed them for the removal of road money he had in last year’s budget.

Same for the Alabama House of Representatives
The House began the week in the same posture they left in last week—locked down on HB 350 by Rep. Richard Lindsey (D-Centre). HB 350 is the corporate tax bill that changes the Alabama add-back statute and removes the dividends paid deduction for corporate-owned captive Real Estate Investment Trusts (REITs). Bank-owned REITs were excluded from the bill. The addition of the REIT language pushed the fiscal note to $82 million in new taxes.

As reported last week, the House GOP Caucus cut a deal linking HB 350 to HB 144 by Rep. Jay Love (R-Montgomery), a bill that provides an increased health insurance premium deduction for employers with 25 or fewer employees. Though many Republicans still opposed the measure and helped filibuster for business, the combined efforts of the Governor’s Office and AEA made it an uphill battle in the House.

HB 350 now heads to Senate Finance and Taxation-Education Committee, where at least some key senators also seem primed to balance the Alabama education budget on the backs of business. Following passage of HB 350, the House passed the Education budget that included the revenue generated by HB 350.

Here’s how your House member voted on the $82 million tax increase

Background
HB 350 was introduced to codify a recent Alabama Court of Civil Appeals interpretation of a 2001 corporate tax law (add-back statute) that continues to be the subject of litigation. A number of versions of the bill have been floated with some including language taxing captive Real Estate Investment Trusts (REITs) that would impact banks. The version that the House leadership would like to pass contains language taxing corporate-owned captive REITs but does not include any taxes on banks.

HB 350, which is supported by Governor Riley and AEA, generates $82 million in new revenue and would make all fifty-something tax refund cases moot avoiding $100 plus million in potential revenue loss to the Education Trust Fund. The Alabama Supreme Court has agreed to hear the appeal of the Vanity Fair case from which this issue arose. Should they agree with the lower Court, the refund cases the bill addresses are cured. Should they overturn the lower court, the impact of refunds becomes a very likely possibility.

The biggest issue for BATC is that the bill would change tax law for any corporate taxpayer with an open tax year (defined as a year for which the taxes have not been paid or are under appeal) making the bill retroactive.

Double Dipping Bill Passes House
If you ever doubted the strength of the Alabama Education Association (AEA) in the Alabama Legislature, DON’T! Yesterday in the House, a substitute special order calendar was offered that contained HB 787 by Rep. Marcel Black (D-Tuscumbia) that would permit “employees of the State or any subdivision thereof” to serve in public office (ie—double dipping).

In a rare move by the House Leadership, they substituted the calendar determining the order of business with one containing the bill opposed by the many in the GOP. And, to add insult o injury, the Democrats successfully clotured the GOP Caucus ending their filibuster and forcing a vote.

This bill is an AEA response to Governor Riley’s call for a ban and Alabama Two-Year School Chancellor Bradley Byrne’s policy of not allowing legislators to work in the two-year system. AEA is funding a lawsuit challenging the State School Board adopted policy.

Want to know who favors double dipping?

ABA Legislation
The Alabama Bankers Association has submitted three bills for passage this session:

1. Bank Impersonation bill—HB 478 by Rep. Vance (D-Phenix City) and SB 149 by Sen. Bedford (D-Russellville) - This bill restricts the use of lender information that is publicly available including loan numbers, amounts and trade names in solicitations for services or products without the consent of the lender. Awaiting passage by the Senate.
2. Lost Note bill—HB 399 by Rep. Hill (R-Columbiana) and SB 273 by Sen. Griffith (D-Huntsville) - This bill codifies a Supreme Court decision that an assignee of a creditor may enforce a lost note just as the creditor could. Both bills are out of the banking committees in their house of origin.
3. Commercial Property Redemption bill—HB 272 by Rep. Hill (R-Columbiana) and SB 267 by Sen. Griffith (D-Huntsville) - Currently, all property is subject to a one-year right of redemption to the owner. This bill removes that the redemption period for commercial property. The Senate Banking and Insurance Committee substituted a version of HB 338 by Rep. Ford (D-Gadsden) for Sen. Griffith’s bill. SB 267 now reduces the right of redemption on commercial and residential property to six months. We will now push the Griffith and Ford bills. This issue is simply a perception problem for the Black Caucus and will be hard to get passed.

FEDERAL ISSUES

SEN. LIEBERMAN INTRODUCES CURIA IN SENATE—Sen. Joe Lieberman (D-CT) introduced yesterday a Senate companion bill (S. 2957) to the Credit Union Regulatory Improvements Act (CURIA). The American Bankers Association (ABA) wrote to all Senators to state our strong opposition to the legislation and to urge them not to become cosponsors. The bill currently has no additional cosponsors.

The “credit unions’ efforts to obtain increased commercial lending authority and lower capital requirements, which primarily benefit large, diversified conglomerate credit unions, illustrates the reality that a portion of the credit union industry has out-grown its preferential regulatory and tax treatment,” ABA wrote. “This legislation would be harmful to small credit unions that observe the intent of the law and to tax-paying community banks and savings associations.”

The legislation would increase credit unions’ commercial lending authority while lowering their capital requirements, and would make it more difficult for credit unions to convert to mutual savings bank or savings association charters.

The legislation would increase credit unions’ commercial lending authority to 20 percent of their total assets, up from the current 12.25 percent. It also would require at least 30 percent of credit union members to participate in a conversion vote before one could be approved. Current law does not have a minimum participation requirement. The bill also would allow all federal credit unions to add “underserved areas” to their membership.

Sen. Dodd Introduces Credit Card Reform Bill—Senate Banking Committee Chairman Christopher Dodd (D-Conn.) yesterday introduced a bill intended to improve credit card billing, marketing and disclosure practices. The legislation, among other things, would require cardholders to be given 45 days notice on interest-rate increases; prevent card issuers from raising interest rates if consumers are late paying other bills; prohibit issuers from changing the terms of a credit card contract for the length of the agreement; and prohibit charging interest on transaction fees such as late-payment and over-limit penalties.