Resource: Fact Sheet

SB 55: Allowing ALEA to issue hardship driving permits makes sense for Alabama

By Dev Wakeley

Update: SB 55 is now law! Gov. Kay Ivey signed the bill on March 22, following votes in the Alabama House (95-1) and Senate (26-1) to pass a conference committee version of the bill on March 15. Earlier, the House voted 88-5 for a similar version on March 1, while the Senate voted 26-1 for its own version on Feb. 1.

Suspending driver’s licenses hurts thousands of Alabamians every year. One of the greatest obstacles to employment is the lack of a driver’s license. Thousands of people in Alabama have their driver’s licenses suspended every year for convictions unrelated to driving.

These Alabamians risk losing their jobs in a nation where 90 percent of us need to drive to work. And the challenges go further: Mothers with suspended licenses cannot go buy groceries, drive to the doctor, or drop their children off at school. People undergoing addiction treatment cannot legally drive to see their sponsors to get help in preventing a relapse.

SB 55, sponsored by Sen. Clyde Chambliss, R-Prattville, would go a long way toward fixing these problems by allowing people who have had their licenses suspended or revoked, but who still need to drive, to drive on a limited basis. These Alabamians could obtain a hardship driver’s license by demonstrating to the satisfaction of the Alabama Law Enforcement Agency (ALEA) that they are not a risk to public safety and cannot obtain other reasonable transportation.

This bill would allow people who need to take their children to school, go to the doctor, or help family members see a doctor to do so without breaking the law. SB 55 is a reasonable, common-sense response to a problem that hurts thousands of Alabamians every year.

BOTTOM LINE: SB 55 would remove unnecessary obstacles to essential participation in society for people who need to drive to work, go to the grocery store and attend to other everyday tasks. Allowing ALEA to issue limited driver’s licenses makes sense and would help tens of thousands of people throughout Alabama.

4 reasons why a new state tax break for private school tuition would hurt public education in Alabama

By Kimble Forrister

Update: Arise members stopped this plan in its tracks! After lawmakers received hundreds of emails and phone calls from our supporters opposing this bill, the Senate amended HB 251 on March 14 to remove the language that would have created a tax break for private school tuition. The House agreed to the change on March 16 and sent the revised bill to Gov. Kay Ivey, who signed it into law on March 22.

Alabama allows a state income tax deduction for contributions to college savings accounts known as 529 plans. But HB 251 and SB 189 would let Alabamians use 529s to get a state tax break on tuition at K-12 private schools as well. Proponents say the move would do little harm to Education Trust Fund (ETF) revenues. But there are four reasons to believe the change would cost the ETF millions of dollars a year:

1. This bill would change the nature of 529s in Alabama. 529 plans originally were designed as long-term savings plans for college costs. But if this proposed change is enacted, Alabama’s 529s could end up looking much more like a short-term tax break for private K-12 school tuition instead. By simply putting up to $10,000 for tuition payments in a 529 and then immediately withdrawing it, a couple could save up to 5 percent in state income taxes on that amount.

2. It’s reasonable to expect that participation rates in 529s for K-12 private school tuition would be much higher than those for college. Many parents can’t afford to save for their children’s college, so they hope for scholarships and loans to help cover the cost. But most parents of Alabama’s 83,000 private school students obviously can afford to pay tuition – because they already do.

3. Private schools and tax professionals likely would promote 529s in a whole new way.Colleges generally don’t promote 529s. Instead, they promote themselves as the college to choose. But many K-12 private schools likely would promote 529s for their students, as 529s essentially would offer parents a tax break of up to 5 percent on tuition. Many tax advisers also would urge parents with children in private school to use 529s as a tax-savings device.

4. The ETF’s revenue loss could add up quickly. Alabama allows couples to deduct 529 contributions of up to $10,000 per year. At a 5 percent income tax rate, each maximum contribution would cost the ETF $500 a year. And the potential revenue loss for the ETF could extend even further: Alabama allows grandparents to deduct contributions to their grandchildren’s 529s as well.

Read the Institute on Taxation and Economic Policy’s report on how states can prevent revenue losses in the wake of the 2017 changes to federal law on 529 plans.

Alabama’s renter protections at risk under HB 421

By Dev Wakeley

Just three days. If HB 421 becomes law, that’s all the time Alabama renters would get to correct a minor lease violation before landlords could kick them out of their homes. It would be a bad deal for more than 1 million Alabamians who rent their homes.

HB 421, sponsored by Rep. David Sessions, R-Grand Bay, would undermine important safeguards for Alabama renters. This bill would reduce the time for renters to cure, or fix, a lease violation from the current seven days to just three days. That would apply not just to unpaid rent but to any other breach of the contract. The bill also would change current state law so that any second breach of the same provision, no matter how minor, within a 12-month period would be incurable.

Current law allows tenants to cure up to four lease violations within a 12-month periodas long as those breaches don’t involve activities such as illegal drug use or criminal assault. Here’s one example of just how unforgiving HB 421’s changes would be for tenants: If a landlord on a Friday found a tenant’s guest’s vehicle parked outside a rental home for a second time without a valid tag, the tenant could end up on the street by Tuesday.

Alabama’s 2006 Landlord-Tenant Act set out a balanced set of protections for both sides of rental relationships. Families shouldn’t be kicked out of their homes over minor mistakes. But HB 421 would tilt the scales back in landlords’ favor by allowing disproportionate responses to minor breaches, while giving tenants no meaningful chance to fix issues before losing their homes.

New Medicaid hurdles would create barriers to health in Alabama

By Alabama Arise

The Trump administration is encouraging states to impose work requirements on “non-elderly, non-pregnant adult Medicaid beneficiaries who are eligible for Medicaid on a basis other than disability.” State Medicaid Commissioner Stephanie Azar told lawmakers the agency likely will seek approval for such a requirement this year. SB 140, sponsored by Sen. Arthur Orr, R-Decatur, and HB 331, sponsored by Rep. Arnold Mooney, R-Birmingham, would mandate this policy and place other statutory conditions on Medicaid eligibility. The bill would:

  • Require Alabama Medicaid to “request approval of the firmest but nonetheless most reasonable work requirements allowed” by the federal government.
  • Require semi-annual, rather than annual, eligibility verification for Medicaid beneficiaries, including a review of financial resources.

Unlike Alabama, most states seeking to impose work requirements have expanded Medicaid to cover low-income working adults. Most of Alabama’s Medicaid beneficiaries are children in low-income families. The next largest groups are people with disabilities, low-income seniors and pregnant women. Only about 75,000 parents and other caretaker relatives of Medicaid children qualify for Medicaid coverage. Nearly 90 percent of them are women. The income limit for Medicaid parents is just 18 percent of the federal poverty level ($307 per month for a family of three).

SB 140 and HB 331 leave many questions unanswered:

  • Given Alabama’s stringent Medicaid eligibility for adults, what group or groups will a work requirement target?
  • What training and work supports will Alabama offer to help affected beneficiaries find and keep jobs? For example, will the state’s wait-listed program for subsidized child care be expanded?
  • Given Alabama’s strong support for children’s health insurance, how will the state mitigate the harm that occurs to children when parents lose coverage?
  • How will the work requirement apply to parents who are in school? To those awaiting disability determination? To those who lack reliable transportation? To those who live in areas with high unemployment?
  • Is Medicaid equipped and funded to monitor compliance with the new requirements while making sure no individuals eligible for Medicaid fall through the new procedural cracks?
  • Since the Affordable Care Act ended asset tests for Medicaid, how does a semi-annual verification of “financial resources” comply?
  • If health coverage is a privilege for working people, why hasn’t Alabama expanded Medicaid to cover low-income workers who don’t get employer coverage and can’t afford private plans?

BOTTOM LINE: Creating work requirements and more eligibility hurdles for Alabama Medicaid would erect unreasonable barriers to health care. Making Alabama’s bare-bones Medicaid even more stringent is the wrong way to promote a healthier workforce.

Four reasons to oppose work requirements for Alabama Medicaid

By Chris Sanders

(1) The vast majority of enrollees are children or otherwise exempt. Medicaid covers about 1 million Alabamians (roughly one in every five people in the state), and most of them are children. Almost all of the rest are seniors, pregnant women, or people with disabilities who would be exempt from work requirements. Only about 7.5 percent of enrollees – roughly 75,000 people in the “parent and other caretaker relative” category – could be subject to a requirement.

(2) Many Alabamians who would face work requirements have serious barriers to employment. Nearly 90 percent of the 75,000 parents and caretakers covered by Alabama Medicaid are women. Many are going to school or caring for young children at home. Medicaid work requirements would not make child care, transportation or job training more accessible for them.

(3) Adults who lose Medicaid would fall into the coverage gap. Most states seeking to impose work requirements have expanded Medicaid for working-age adults. But Alabama hasn’t. About 300,000 Alabama adults are caught in a coverage gap. They earn too much for Medicaid but too little to receive subsidies for Marketplace coverage.

(4) Work requirements would create a catch-22 for people in poverty. Alabama parents can’t qualify for Medicaid if their income is above 18 percent of the poverty line. Someone working just 20 hours a week at minimum wage earns too much to qualify for Medicaid in Alabama. It’s unfair to require people to work to keep health coverage, only to take it away when they do.

By Chris Sanders, communications director, and Jim Carnes, policy director. Last updated Jan. 26, 2018.

A new way forward: The Alabama Public Transportation Trust Fund

By Alabama Arise

Alabama is one of only five states with no state funding for public transportation. That lack of investment makes it difficult or even impossible for tens of thousands of low-income Alabamians to get to work, the doctor’s office or other places they need to go when they need to get there. It also means our state economy loses out on millions of dollars of federal transportation money every year.

HB 10, sponsored by Rep. Jack Williams, R-Vestavia Hills, and SB 85, sponsored by Sen. Rodger Smitherman, D-Birmingham, offer a new approach to state funding for public transportation. These companion bills would:

  • Create the Alabama Public Transportation Trust Fund to receive future appropriations for expanding public transit options in the state.
  • Authorize the Alabama Department of Economic and Community Affairs (ADECA) to administer the fund, including making and auditing project awards.
  • Require ADECA to adopt trust fund rules, conduct a public transportation needs assessment and make annual reports.
  • Create an advisory committee to ensure that projects supported by the trust fund address the needs of rural areas, seniors, and people with disabilities.

BOTTOM LINE: Every year, Alabama leaves millions of dollars in federal transportation money on the table because our state doesn’t put up the matching funds needed to get it. HB 10 and SB 85 would take a sensible first step toward expanding public transportation options in Alabama and ensuring that all Alabamians can get where they need to go.

Keep kids covered: Congressional inaction threatens ALL Kids coverage for Alabama children

By Alabama Arise

Federal funding for the Children’s Health Insurance Program (CHIP) has expired, and health coverage for millions of American kids is at stake. Despite a history of strong bipartisan support, Congress allowed a Sept. 30 deadline to pass without renewing federal funding for the program, which offers affordable coverage for children whose low- and moderate-income families don’t qualify for Medicaid.

CHIP covers about 150,000 children across Alabama, through both ALL Kids and Medicaid. ALL Kids officials say they have enough funding on hand to maintain coverage until early 2018. But continued uncertainty in Congress may force Alabama to start sending termination letters to many ALL Kids families as soon as next month.

ALL Kids has been a huge success story for Alabama. It was the first plan in the country to win federal approval after Congress authorized the creation of state CHIPs in 1997. Alabama’s uninsured rate for children at that time was 14 percent. Two decades later, that rate is less than 3 percent. It’s a proud achievement that affirms ALL Kids’ consistent performance as a national model program. Alabama also has benefited recently from extra CHIP funding through the Affordable Care Act (ACA). A temporary boost in federal matching funds under the ACA has meant that Alabama has not had to contribute any state money toward CHIP for the past two years. The future of this boost is another question Congress faces on CHIP’s funding.

Failure to renew CHIP funding would put children and families at risk:

  • Nearly 9 million children nationwide, including more than 150,000 in Alabama, receive essential health coverage through CHIP.
  • Families pay a reduced, income-based premium for CHIP, which keeps health coverage in reach for families who otherwise couldn’t afford insurance.
  • The threat of lost coverage puts unnecessary strain on hard-working families.

BOTTOM LINE: Congress needs to lift the cloud of uncertainty over children’s health coverage and renew full CHIP funding for five years.

What’s at stake for Alabama Medicaid?

By Alabama Arise

Our state simply can’t afford any more Medicaid cuts. Alabama’s Medicaid program is essential, and it has already been cut to the bone. More than 1 million people — or one in five Alabamians — have Medicaid coverage, and almost all of them are children, seniors, pregnant women, or people with disabilities. Medicaid covers thousands of people in every Alabama county, and cuts like the federal funding cap that Congress is considering would be devastating for low-income Alabamians and rural communities across the state.

This fact sheet explains who is covered under Alabama’s barebones Medicaid program, how Medicaid cuts would hurt vulnerable Alabamians and how slashing Medicaid would deal a serious blow to local economies and the health care infrastructure that benefits our entire state.

Budgets for FY 2018 fall short of real need

By Carol Gundlach

The Alabama Legislature last week passed 2018 state budgets that once again fall short of meeting critical needs. While lawmakers avoided a repeat of last year’s General Fund (GF) crisis, which required a special session to resolve, the new budgets highlight structural flaws that will continue to hinder public services in our state until leaders and voters approve fundamental tax reform.

Medicaid dodged a bullet this year in the GF. The barebones program that underpins our entire statewide health system squeezed by with so-called level funding – the same roughly $700 million in state funds as last year – plus the second and final $105 million installment of BP oil spill settlement funds. The lack of an increase deepens concerns about the scaled-back launch of regional care organizations (RCOs), already delayed to October 1. Level funding for other GF agencies such as Mental Health, Public Health and Corrections leaves them ill-prepared for contingencies like lawsuits and outbreaks of illness.

On the Education Trust Fund (ETF) side, the picture is only slightly better. The ETF passed by the Legislature on May 18 increased funding for K-12 education by $24 million, allowing for the hiring of about 150 new, and much-needed, teachers for grades 4-6. It also increased funding by $13.2 million for Alabama’s well-regarded, but not universally available, pre-kindergarten program.

Alabama is unusual among states in that we have two major state budgets. The Education Trust Fund (ETF) supports public schools, community colleges and universities, along with a handful of public/private entities like Tuskegee University. The ETF also funds some state agencies that provide education-related services. The General Fund budget (GF) funds the rest of state government.

Alabama is also unusual in the extent to which we “earmark” our taxes, designating the purposes for which certain taxes may be spent. Our constitution earmarks most “growth” taxes – those that increase when the economy is good – to the Education Trust Fund (ETF). Examples of growth taxes are income and sales taxes. Many taxes that don’t grow with the economy are earmarked to the GF and, as a result, the GF fails to grow as the economy and the need grows over time.

The consequences of Alabama’s flawed tax and budget system are clearly visible in the new budgets. Most glaring is the Legislature’s failure to fund the state’s Medicaid program adequately. For the past two years, infusions of $105 million from the BP oil spill settlement have helped prevent massive Medicaid cuts. But this two-year boost, agreed upon during last year’s General Fund negotiations, leaves the state facing a funding cliff for a program that insures more than one in five Alabamians – mostly children, seniors and people with disabilities.

The 2018 GF Medicaid allocation of $701.4 million is still $42.2 million short of the Governor’s already inadequate funding request. At this level, Medicaid will be able to keep providing basic services, but its ability to proceed with regional care organization (RCO) reforms that would emphasize preventive care may be at risk. Alabama would give up $747 million in promised federal funds if it fails to implement RCO reforms.

Of the other GF agencies, only trial courts and the badly stressed juvenile probation officers (JPO) program received small increases ($1.3 million for the courts and $1.8 million for JPOs). But in neither case did increased funding keep pace with the increased need.

In the ETF, higher education received a $4.6 million increase, but nearly every dollar of this went to Alabama’s National Guard scholarship program. Costs for this program have grown very rapidly over recent years, restricting the Legislature’s ability to provide increases for other purposes in higher education. The 2018 ETF also provided a $26.4 million increase to Veterans Affairs for scholarships for disabled veterans, their spouses and their children. Responding to concerns about the rapidly rising costs of these scholarship programs, the Legislature passed SB315 by Senator Gerald Dial (R-Lineville), tightening scholarship eligibility and benefits. Community colleges, which provide much of the workforce development in the state, were essentially level funded, as was the Department of Commerce’s workforce development program.

The Department of Mental Health received $3.5 million more from ETF than in 2017, but this was much less than the $10.5 needed to settle the anticipated lawsuit over mental health services for low-income children. For the first time, the stretched-thin juvenile probation officers program received a small ETF appropriation of $750,000 for truancy enforcement services.

A third way in which Alabama’s budget is unusual is that the ETF’s Rolling Reserve statute has imposed an artificial cap that restricts how much can be appropriated to education, even if additional revenue is available. Funds available above that cap can be given to K-12 schools and universities for one-time infrastructure and technology expenditures. SB307 by Senator Arthur Orr (R-Decatur), passed on May 19, makes $15 million available to universities from the Education Technology fund and $41.3 million for K-12 for technology, buses and other infrastructure needs.

Avoiding an emergency special session to fill a budget gap is a very low bar for legislative success. Even worse is Alabama’s habit of defining “level funding” as “same dollar amount.” A better practice is to calculate a “current services budget” that keeps up with inflation and population growth. Only a bold move on tax reform can stop the steady deterioration caused by inadequate budgets year after year.

SB 284 offers Alabama consumers protections from high-cost loans and moves lending reform forward

By Alabama Arise

Most states have laws against usury, or excessive interest. Alabama’s Small Loan Act of 1959 caps the interest rate on traditional small, short-term loans at 3 percent a month, or an annual percentage rate (APR) of 36 percent. But more recent laws covering payday and auto title lenders allow APRs many times higher than that. For payday loans, the interest rates can go as high as 456 percent a year. Today, 20 states either have banned high-cost payday lending or strictly regulated the practice.

Alabama lawmakers have granted exceptions for certain products, including payday and auto title loans, claiming these are emergency loans for those who can’t get conventional credit. These high-interest loans take as much as $100 million annually in fees from vulnerable Alabamians, trapping many borrowers in a debt cycle that exacerbates poverty and hurts the state’s economy. More than 54 percent of payday borrowers pay more in fees than the original loan amount, a state database shows.

SB 284, co-sponsored by Sens. Arthur Orr, R-Decatur, and Rodger Smitherman, D-Birmingham, would strengthen consumer protections while preserving the availability of “emergency” payday loans. The bill would:

  • Allow 30-day (rather than 14-day) payday loans at the existing fee, reducing the APR to 213 percent while limiting borrowers to four loans in a 12-month period.
  • Protect consumers by creating a seven-day “cooling-off” period between payday loans to eliminate rapid re-borrowing at high interest rates.
  • Create an “off-ramp” by automatically converting unpaid loans to a three-month installment loan with equal payments at a 3 percent monthly interest rate.
  • Allow Small Loan Act lenders to continue charging a 10 percent non-refundable “upfront” fee on small loans, while prohibiting such fees on rollovers.
  • Cap interest rates at 60 percent APR for all loans of more than $2,000 to guard against higher-cost online “payday”-type installment or revolving credit loans.
  • Remove auto title loans from the Alabama Pawnshop Act and allow them under other consumer credit laws.

BOTTOM LINE: SB 284 would protect consumers and make loans more affordable while preserving small, short-term credit options for Alabamians.