Double Dipping bill
First, a quick update on HB 787 by Rep. Marcel Black (D-Tuscumbia) which would permit what is known as “double dipping” (i.e.—public employees to serve in public office), and was reported on last week. Following its passage by the House last Thursday, the Senate adjourned without having received the bill meaning it could not pass before the 30th and final legislative day. What that means is that Governor Riley could pocket veto this measure making it pointless to bring up for a vote in the Senate.

General Fund Budget
Peace and harmony again prevailed in the Alabama Senate as they had another productive week. On Tuesday, they passed the state’s General Fund budget which funds Medicaid, corrections and most all other state agencies. The $2 billion budget passed by the Legislature is up from $1.84 billion this year. While most sate agencies saw little to no increase, $150 million in additional dollars did go to the state Medicaid Agency to maintain services for the poor. The Medicaid Agency pays for nearly half of the births in the state and nearly three-fourths of the nursing home residents. Also included in this budget was a 3.5 percent pay raise for state employees. This budget is off to the Governor’s desk and will reportedly be signed.

Education Budget
The Education Trust Fund reported out of the Senate Finance and Taxation Committee this week shrank by $368 million to $6.3 billion dollars. AEA, BATC leadership, the administration and a few senators continue to negotiate on HB 350 by Rep. Richard Lindsey (D-Centre) which would make changes to Alabama’s “add-back” statute and tax corporate owned captive REITs. The current revenue number on the negotiated version is at $74.25 million. The Senate is scheduled to take up both bills on Monday, May 19th, the last legislative day.

Grocery Tax bill
On Thursday this week, the Senate again voted against consideration of the bill abolishing the state’s four cent tax on groceries funded by removing Alabama’s federal income deduction. While this measure is not dead it has been voted down twice in the Senate. Another tax measure passed by both houses was legislation to exempt federal economic stimulus rebate checks from Alabama income taxes.

House
The Alabama House of Representatives, while productive, did operate a little slower than normal following last week’s cloture of most Republicans opposed to the “double dipping” bill. Cloture is a motion to end debate on a particular measure and has become a very offensive maneuver to those it is employed against. In retaliation, the GOP Caucus has slowed things down a little bit.

Important Unemployment bill passes
SB 147 by Roger Bedford (D-Russellville) has finally passed the State Unemployment Tax Act which brings Alabama into conformity with U.S. Department of Labor laws and preserves federal grants for Alabama’s Unemployment Service Centers and more importantly, the per employee discount provided to Alabama employers. The business community has attempted to pass this legislation for on numerous occasions. Without it, Alabama’s per employee charge would have gone from $56 to $433 costing Alabama’s employers some $700 million.

Coastal Insurance bill passes
SB 3 by Rep. Ben Brooks (R-Mobile), a bill that will allow captive insurance companies to sell residential insurance along the Alabama coast received final passage. The House and Senate voted without dissent Thursday to give final approval to changes in the bill sponsored by Sen. Brooks. Proponents of the bill said the measure should create and encourage competition in the homeowners' insurance business along the coast because companies have cut back coverage since Hurricanes Ivan and Katrina. A captive insurance company is a closely held insurance company that might be organized around a particular city or a group of condominiums.

Retainage bill amended
SB 157 by Sen. Rodger Smitherman (D-Birmingham) would have capped retainage from the owner to contractor, contractor to the sub, and subcontractor to the sub-subcontractor at 5 percent until 50 percent completion. Yesterday, we successfully amended the bill to move it to 10 percent and 90 percent completion and exempted financial institutions. Final passage is unlikely this year but we will need to work with interested parties on this issue going forward.

ABA Legislation
The Alabama Bankers Association has submitted three bills for passage this session:
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. Both bills remain viable for final passage on May 19th, the final legislative day.

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. Stick a fork in this one, it’s done.

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

HOUSE PASSES HOUSING BILL
The House passed an omnibus housing package (H.R. 3221) yesterday that includes legislation by Financial Services Committee Chairman Barney Frank (D-MA) that would allow the Federal Housing Administration (FHA) to refinance up to $300 billion in new guarantees for troubled subprime mortgage loans. Under the voluntary program, lenders would substantially write down the original mortgages and, in exchange, be paid from proceeds of the new FHA loans.

A revised, narrowed version of an amendment by Rep. Brad Miller (D-NC) and Rep. Steven LaTourette (R-OH) involving banking regulators’ ability to preempt state foreclosure laws could not be included in the House-passed housing package (H.R. 3221) because of procedural difficulties. Instead, the broader version of the amendment was included, by a vote of 256-160.

However, Chairman Frank and Rep. Miller assured House Members that they had accepted the revised language, and Chairman Frank underscored his assurance by saying in a letter to his colleagues that, in a conference with the Senate, “we will…only include this provision if this agreed-upon clarifying language is included.”

ABA is confident that if this issue is addressed during conference negotiations with the Senate, any final version of the legislation will include revised, narrower language.

The housing package also includes housing-stimulus tax legislation that, among other things, would give first-time homebuyers a tax credit of up to $7,500 that would be repayed over 15 years, and two previously passed, ABA-supported measures that would modernize the FHA and reform regulation of the government-sponsored enterprises.

ABA, BANKERS KEEP FCS PROVISIONS OUT OF FINAL FARM BILL
House and Senate Farm Bill (H.R. 2419) negotiators announced yesterday that they have reached an agreement on a final bill. The agreement does not contain any provisions that would expand the lending authority of the Farm Credit System (FCS), capping ABA and the banking industry’s more than two-year campaign to thwart the FCS’s expansionist agenda known as the Horizons Project.

It constitutes a major victory for ABA, grassroots bankers, and state bankers associations, who have been unrelenting in their efforts to keep first the Farm Bill free from FCS measures throughout the legislative process. ABA thanks its many members who have participated in this lengthy undertaking.

ABA also successfully kept the legislation from including an ABA-opposed provision that would have required card companies to report aggregate payments made to merchants.

Farm Bill conferees are now awaiting final budget estimates from the Congressional Budget Office, and the Senate and House are expected to pass a final bill next week. The legislation remains under a veto threat from the White House, but a statement of support that House Agriculture Committee Ranking Member Bob Goodlatte (R-VA) issued yesterday bodes well for the bill’s chances of being enacted into law.