“Do Nothing” Legislature Manages to Accomplish Something

Posted on June 28, 2008

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The Alabama Legislature adjourned its regular session on Monday, May 19, 2008 without passing much of the important legislation that came before it—including the education budget.  This lack of productivity matches that of last year’s regular session where little legislation of significance passed due to partisan bickering over Senate rules.  A special session was convened on May 27, 2008 in order to pass the state education budget.  The legislature passed the education budget on May 31, 2008 and it adjourned that same day.  Little else was passed.

I was thoroughly disappointed—as usual—with the lack of productivity of the Alabama Legislature during 2008.  With that cathartic comment behind me, I think it important to point out that two bills of real significance to Alabama business owners did manage to pass despite the filibusters and procedural shenanigans.  The two bills of note are as follows:

  • S.B. 147 (Act 2008-396) deals with state compliance with federal anti-SUTA dumping
    legislation.  SUTA dumping is the practice of moving large blocks of
    payroll from one company to a new company or to a company with a better
    unemployment insurance rate.  The federal anti-SUTA dumping legislation
    passed in August 2004 requires state conformity with its anti-abuse
    provisions.  Due to the Legislature’s failure to pass anti-SUTA dumping
    legislation, the State of Alabama Department of Industrial Relations
    had to receive a compliance waiver from the U.S. Department of
    Labor—which was to expire at the end of the regular session.   Had the
    legislature bungled the passage of this legislation (as it has twice
    before), the 5.4% credit Alabama employers currently receive against
    Federal Unemployment Tax Credit would have expired.      
  • H.B. 61 (Act 2008-559) provides small businesses and their employees some much needed relief
    from the high cost of health insurance.  Businesses with 25 or few
    employees will be allowed to deduct  150% of the cost associated with providing health insurance to their
    qualified employees.  Qualified employees have $50,000 or less per year
    in earned income or $75,000 or less of adjusted gross income ($150,000
    or less of AGI if married filing jointly).  Qualified employees are
    likewise able to deduct 150% of the
    cost of their health insurance under an employer provided plan. 

A few other bills of interest to Alabama businesses did pass during the
regular and special session.  However, these bill are of a more limited
application—involving topics such as the tax treatment afforded to
“captive” real estate investment trust (“captive REIT”) dividends
,
the “add-back” of expenses paid to intangible management companies
(“IMCOs”)
and tax benefits available for hydroelectric and other electricity
generating facilities
.
Perhaps we will see some additional business-related legislation passed
in another special session.  Rumors abound that another special session
may be called to help craft an incentive package to lure Volkswagen to
Alabama.  One can only hope (for more good legislation AND Volkswagen).

Russell M. Cunningham, IV, Cunningham Firm, LLC

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