Alabama Medicaid is safe – for now. State lawmakers wrapped up their special session last week with a sigh of relief after approving a one-time solution to stop deep Medicaid cuts. The Legislature agreed to use BP oil spill settlement money to address Medicaid’s $85 million shortfall for 2017 and to give the program another $105 million in 2018.
HB 36, sponsored by Rep. Steve Clouse, R-Ozark, will reverse the 30 percent Medicaid payment cuts to pediatricians and other primary care doctors that had begun in August. The bill will allow Alabama to move forward with the Medicaid regional care organization (RCO) reforms that will emphasize preventive care in an effort to save the state money and keep patients healthier. The measure also will prevent Medicaid from having to cut outpatient dialysis, prescription drugs and other services next year.
The House on Sept. 7 voted 87-9 to approve the conference committee’s version of the bill. Later that day, the Senate passed it 22-8. This Associated Press story has more about the plan.
“We’re relieved that the Legislature pulled Alabama back from the brink of devastating Medicaid cuts that would have hurt more than 1 million people – mostly children, seniors, and people with disabilities,” Arise executive director Kimble Forrister said. “And we’re pleased to see lawmakers take steps to help shore up Medicaid funding for the next two years. But vulnerable Alabamians’ access to health care shouldn’t be left up to stopgaps or one-time money.”
BP bill was a short-term answer to a long-term problem
The bottom line is that HB 36 is yet another temporary solution. Lawmakers uttered the phrase “kick the can down the road” many times while debating the plan, and with good reason. The bill represents another missed opportunity for the Legislature to meet Medicaid’s need for a permanent, stable source of revenue that can meet the needs of a growing population.
Fortunately, the bill includes some modest relief for the General Fund (GF) budget. Lawmakers freed up a projected $35.2 million a year on average through 2026 for Medicaid and other GF services. That is the result of using most of the BP settlement funds to repay the Alabama Trust Fund (ATF) for money borrowed to prevent GF cuts in recent years. (The ATF receives royalties from oil and gas drilling off Alabama’s shores.) The bill also gives the state longer to repay ATF money borrowed in 2013-15, extending that deadline from 2026 to 2033. Those moves should ease pressure on the GF budget over the next decade, but they are still nowhere close to an adequate solution to Alabama’s recurring GF shortfalls.
The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenue sources, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Read The Alabama Tax & Budget Handbook for more on how this deficit came to be and how Alabama can end it.
The GF’s recurring shortfalls have dire implications for Medicaid, which is the backbone of Alabama’s health care system. Medicaid provides vital health coverage for more than one in five Alabamians – mostly children, seniors, and people with disabilities – and helps many rural hospitals and clinics keep their doors open.
“Medicaid is essential to the hospitals and clinics on which we all rely,” Forrister said. “Putting our state’s health care infrastructure at risk is no way to build a stronger Alabama. Neither is lurching from one crisis to another because of a repeated failure to solve the General Fund’s long-term shortfall.”
Alabama needs a lasting funding solution for Medicaid, and there is a strong economic and financial case that the solution should include Medicaid expansion. Closing the coverage gap for working adults and college students would mean a healthier, more productive workforce. It would mean thousands of new jobs across Alabama. And it would mean big savings for the state on mental health care and other services. Click here to read Arise’s fact sheet on how Medicaid expansion would benefit Alabama’s health, economy and budgets.
Lottery proposal dies, returns to life, then dies again
Alabama’s latest Medicaid funding crisis began in April when the Legislature enacted a GF budget that left Medicaid $85 million short of the amount needed to maintain current services. That move prompted public outcry and motivated the #IamMedicaid social media campaign that Alabama Children First launched with Arise’s support in April to help show the human faces behind the Medicaid debate. Responding to pressure from the public, advocates and health care providers, Gov. Robert Bentley called the Legislature into special session in August to consider two possible solutions to the Medicaid crisis.
Bentley’s proposed long-term answer was a state lottery with proceeds dedicated to Medicaid. (Arise takes no position for or against a state lottery, but no lottery plan would have generated revenue in time to stop the 2017 Medicaid cuts.) As a short-term measure until lottery revenue became available, Bentley proposed a bond issue against the state’s BP oil spill settlement, freeing up state dollars for Medicaid in 2017. Clouse, who chairs the House GF budget committee, had proposed a similar measure during the regular session.
The two plans met drastically different fates. By the slimmest of margins, the Senate passed a proposed constitutional amendment to establish a lottery. After a rollercoaster debate, dozens of proposed amendments and reconsideration of an initial vote against the plan, the House sent the lottery back to the Senate either to approve or refer to a conference committee. Instead, the Senate effectively voted to kill the lottery after passing one only a few days earlier. Disagreement over whether to allow casino-type games at dog tracks and other facilities led to a three-way deadlock among pro-lottery, anti-lottery and pro-casino senators, losing the lottery the supermajority of votes it needed for Senate passage.
Legislature passes BP bill to stop Medicaid cuts after touch-and-go debate
With the lottery dead, the Legislature’s only remaining option was to pass short-term funding for Medicaid during the final days of the special session. The result was a complicated bond issue guaranteed by proceeds from the BP oil spill settlement. By issuing bonds instead of accepting periodic payments from BP, Alabama could pay off state debts and create savings that would help fund Medicaid in 2017 and subsequent years.
The original House-passed bill would have given Medicaid an additional $70 million in 2017. Medicaid supporters in the Senate insisted on longer-term support and full Medicaid funding for 2017. Eventually, both chambers approved a conference committee report that provided Medicaid with the $85 million needed to avoid cuts in 2017, as well as $105 million in 2018.
In addition, the BP bill will support $120 million of road projects in Mobile and Baldwin counties and repay $400 million that the state borrowed in past years from the ATF. Legislators engaged in extensive and often heated debate over how much of the state’s BP settlement money should go to the coastal areas most deeply hurt by the 2010 oil spill. The debate broke largely along regional lines, with many north Alabama lawmakers arguing for more debt repayment and many south Alabama legislators seeking more investment in the Mobile area.
What’s next for Medicaid in Alabama?
Alabama Medicaid’s imminent funding crisis is over, but much work remains to ensure a strong future for our state’s health care system. Revenue from the BP bill should help Medicaid avoid further cuts in 2017 and will reduce the program’s projected shortfall in 2018. But when the Legislature returns in February, Medicaid funding for 2019 and beyond still will be uncertain.
Arise will continue to push for Medicaid expansion and permanent, adequate and stable tax revenue to help secure health coverage for children, seniors, people with disabilities, and working families across Alabama. “Closing the coverage gap for working people and college students would keep folks healthier, create thousands of jobs, and save the state millions of dollars on mental health care and other services,” Forrister said. “Expanding Medicaid would be a victory for Alabama’s economy, budgets and families.”
By Carol Gundlach, policy analyst, and Chris Sanders, communications director. Posted Sept. 15, 2016.
A state lottery bill died, returned to life and then died again in the Alabama Legislature this week. The House voted 64-35 Thursday night for an amended version of SB 3, sponsored by Sen. Jim McClendon, R-Springville, that included revenue earmarks for Medicaid, education, and rural and community fire departments. That move came after the House reconsidered its initial 61-37 vote on the bill, which fell two votes short of the 63 votes required to pass a constitutional amendment. However, the Senate on Friday voted 23-7 against concurring with the House's changes, killing SB 3 for the session.
The House and Senate both adjourned in short order after that vote. The Legislature will take next week off and return Sept. 6 for the 10th of 12 allowable meeting days during the special session. Lawmakers still have not addressed Medicaid’s $85 million shortfall for next year. A state lottery (an issue on which Arise takes no position for or against) would not have generated revenue in time to avert those cuts.
A measure that could help stop the 2017 Medicaid cuts is still alive. HB 36, sponsored by Rep. Steve Clouse, R-Ozark, would use money from Alabama’s BP oil spill settlement to free up $70 million toward Medicaid’s $85 million shortfall. The House passed the bill 91-10 last week. The Senate has debated the bill but has not yet voted on it.
Medicaid provides health coverage for one in five Alabamians, mostly children, seniors, and people with disabilities. Alabama already has cut Medicaid payments to pediatricians and other primary care doctors by 30 percent starting Aug. 1, and even more cuts will follow if lawmakers do not address Medicaid’s funding shortfall.
By Chris Sanders, communications director. Posted Aug. 26, 2016.
2016 legislative update: Lottery bill squeaks through Alabama Senate; BP settlement bill also advances
(The latest: A state lottery bill died, returned to life and then died again in the Alabama Legislature this week. The House voted 64-35 Thursday night for an amended version of SB 3 that included revenue earmarks for Medicaid, education, and rural and community fire departments. That move came after the House reconsidered its initial 61-37 vote on the bill, which fell two votes short of the 63 votes required to pass a constitutional amendment. However, the Senate on Friday voted 23-7 against concurring with the House's changes, killing SB 3 for the session. The Senate has yet to vote on the BP oil spill settlement bill, HB 36. Both the House and Senate have adjourned until Sept. 6. Three meeting days remain in the session.)
By the slimmest of margins, the Alabama Senate on Friday passed a heavily amended version of Gov. Robert Bentley’s state lottery proposal. Senators voted 21-12 for the plan, giving it the 60 percent majority required for proposed constitutional amendments.
SB 3, sponsored by Sen. Jim McClendon, R-Springville, now goes to the House. The Legislature will return Tuesday for its sixth of 12 possible meeting days during the special session.
Passage of SB 3, which its proponents called a “clean lottery bill,” came a day after the Senate failed to pass SB 11, also sponsored by McClendon. SB 11 not only would have created a lottery but also would have expanded gambling at six locations across the state and authorized Bentley to negotiate a compact with the Poarch Band of Creek Indians.
Senators repeatedly amended SB 3 in an effort to make the bill more acceptable to potential opponents. Key changes included earmarking the first $100 million of state lottery proceeds for Medicaid and dedicating 10 percent of proceeds to education. (The bill initially would have directed all lottery revenue to the General Fund, which supports non-education services like health care and public safety.) However, the education provision may have been removed inadvertently during the amendment process, the Montgomery Advertiser reports.
Other amendments that won Senate approval would limit further expansion of gambling, prohibit using state proceeds to advertise the lottery, and bar the lottery commission from hiring lobbyists, legislators or lawmakers’ family.
Bentley estimates the lottery would raise $225 million a year for Alabama. Proceeds from lotteries in states similar in size to Alabama ranged between $128 million and $327 million in 2014. But as more states participate, lottery revenues are declining in many parts of the country. Check out Arise’s fact sheet to learn more about how lotteries affect low-income people and state revenues.
Arise does not take a position for or against a lottery. But it’s important to note that even if a lottery passes the Legislature and wins voter approval, the proceeds would not be available in time to end the current Medicaid funding crisis. The Legislature must find an additional $85 million to address Medicaid’s 2017 shortfall and reverse the 30 percent Medicaid payment cuts to pediatricians and other primary care doctors that began Aug. 1. Medicaid provides health coverage for one in five Alabamians, mostly children, seniors, and people with disabilities.
BP settlement bill in line for Senate vote next week
One measure that could help avert the 2017 Medicaid cuts cleared a Senate committee Friday. HB 36 would issue bonds against BP oil spill settlement funds owed to the state. That revenue would be used to pay off state debts, freeing up $70 million for Medicaid. The House voted 91-10 Wednesday for the bill, sponsored by Rep. Steve Clouse, R-Ozark.
While the Senate committee approved the House version of HB 36, changes likely will be offered on the Senate floor. If the Senate passes a different version, HB 36 would return to the House, which either could agree with the changes or send the bill to a conference committee to negotiate the differences.
By Carol Gundlach, policy analyst. Posted Aug. 19, 2016. Updated Aug. 26, 2016.
2016 legislative update: Lottery, BP settlement bills clear Alabama legislative committees as special session on Medicaid funding continues
(Update: The Alabama House voted 91-10 Wednesday to pass the BP settlement bill (HB 36). A Senate committee approved the bill Friday, positioning it for a Senate vote Tuesday. SB 11 lost a procedural vote in the Senate on Thursday, greatly reducing its chances of passage. Senators are expected to debate SB 3 on Friday.)
Two very different lottery bills won approval in the Alabama Senate’s Tourism and Marketing Committee on Tuesday, the second day of a special session prompted by a Medicaid funding shortfall. Both are sponsored by Sen. Jim McClendon, R-Springville, and the Senate could debate both as soon as Wednesday. (Check out Arise’s fact sheet to learn more about how lotteries affect low-income people and state revenues.)
SB 3, introduced at the request of Gov. Robert Bentley, creates a “simple” lottery consisting only of lottery ticket sales. SB 11 would create a ticket-based lottery but also would allow (and tax) “electronic lotteries” at existing dog tracks in Greene, Jefferson, Macon and Mobile counties. SB 11 also would authorize Bentley to seek additional state revenue by negotiating a compact with the Poarch Band of Creek Indians.
SB 3 would direct state lottery revenue to the General Fund (GF), which supports non-education services like health care and public safety. SB 11 would direct state lottery and gambling tax revenues to both the GF and education budgets. Both plans would require voter approval in November.
Arise does not take a position for or against a lottery. But it’s important to note that a lottery would not produce revenue in time to fund Medicaid fully in 2017, or to reverse the 30 percent Medicaid payment cuts to pediatricians and other primary care doctors that began Aug. 1. More cuts will follow unless the Legislature addresses Medicaid's $85 million shortfall. Medicaid provides health coverage for one in five Alabamians, mostly children, seniors, and people with disabilities.
House approves BP settlement bill that could stop 2017 Medicaid cuts
One measure that could help avert Medicaid cuts in 2017 cleared the House’s GF budget committee Tuesday. HB 36, sponsored by Rep. Steve Clouse, R-Ozark, would use income from the BP oil spill settlement to offset state-issued bonds. Revenue from those bonds would be used to pay off state debts, thereby freeing up $70 million to go toward Medicaid’s $85 million shortfall in 2017. The House could consider the bill Wednesday.
Alabama needs adequate, stable Medicaid funding to avoid cuts that hurt our communities, our neighbors and our health care system. The long-term solution should include passing new revenue and closing the coverage gap for working families, Arise policy director Jim Carnes wrote on Equal Voice News. Expanding Medicaid would allow Alabama to reap considerable state savings on mental health care and other services. (Check out Arise’s fact sheet to learn more about how Medicaid expansion would benefit Alabama’s health, economy and budgets.)
By Carol Gundlach, policy analyst. Posted Aug. 16, 2016. Last updated Aug. 19, 2016.
On the question of a state lottery, Arise’s member organizations hold widely varying positions, some of them based on strong moral or religious beliefs. Because our bylaws prevent us from taking positions that deeply divide our membership or offend members’ deeply held beliefs, Arise Citizens' Policy Project and Alabama Arise are neutral on the lottery. However, objective analysis reveals several lessons Alabama can learn from other states.
This fact sheet by policy analyst Carol Gundlach examines how lotteries affect revenues for public services, how they affect people living in poverty, and what questions Alabama still would have to answer if it approves a lottery.
2016 legislative update: Medicaid cuts loom, payday reform falls just short as Alabama Legislature ends 2016 regular session
The Alabama Legislature’s 2016 regular session, which ended Wednesday, was more notable in many ways for what didn’t happen than for what did.
Lawmakers did not agree on a revenue solution to prevent devastating Medicaid cuts that would reduce health care access for hundreds of thousands of children, seniors, and people with disabilities in Alabama. Despite enormous public support, payday lending reform didn’t cross the finish line in the House. State education funding still hasn’t returned to where it was in 2008. And proposals to expand affordable housing and reform Alabama’s death penalty system gained little traction at the State House.
Still, progress was real on several of Arise’s priority issues. With minutes left in the session, lawmakers passed a bill to expedite voting rights restoration for thousands of Alabamians. Payday lending reform made it further in the Legislature than it ever has before, with a reform bill sailing through the Senate 28-1. And the new #IamMedicaid campaign continues to remind lawmakers and the public of the real human faces behind Alabama’s Medicaid debate.
Here is a recap of what happened on each of Arise’s issue priorities this session – and the action that may yet lie ahead on them this year.
State budgets: Deep Medicaid cuts in Alabama moved much closer to reality Tuesday when a bill that would have averted most of them died in a Senate committee. HB 569 would have used BP oil spill settlement money to help free up $70 million to go toward Medicaid’s $85 million shortfall, but the bill died when the Senate’s General Fund (GF) budget committee adjourned without voting on it. Committee chairman Sen. Trip Pittman, R-Montrose, ended the meeting after his colleagues voted 9-6 to side with a proposed substitute by Sen. Arthur Orr, R-Decatur. Orr’s plan would have reduced the amount of road money in the bill and distributed those funds to all areas of Alabama instead of just coastal areas. The substitute also would have increased the share of settlement money used for debt repayment, fully repaying the Alabama Trust Fund (which receives state revenue from oil and gas drilling) for money that the state borrowed to avoid massive GF cuts in recent years.
The Legislature may return later this year for a special session to address the Medicaid shortfall, but Gov. Robert Bentley said “everybody’s got to rest a little bit” before he makes that decision. Even though the regular session is over, lawmakers are expected to continue a series of weekly hearings on Medicaid’s funding structure and importance to the state’s health care system. Meanwhile, Alabama moves ever closer to a future when deep Medicaid payment cuts could prompt many pediatricians to leave the state and could imperil many of the rural hospitals and doctor’s offices upon which Medicaid patients and privately insured Alabamians alike depend. The cuts could end Medicaid coverage for outpatient dialysis and adult prescriptions and eyeglasses as well. Also on the chopping block could be the Program of All-Inclusive Care for the Elderly (PACE) in Mobile, which saves the state money by allowing participating seniors to live independently in their own homes instead of being sent to a nursing home.
The Education Trust Fund (ETF) budget drew many fewer headlines than the GF this year, but state education funding is still about 15 percent below its pre-recession level of 2008, adjusted for inflation. (Even the 2008 funding level was insufficient to meet many of Alabama’s educational needs.) The 2017 ETF budget includes a 33 percent boost in pre-K funding and provides a 4 percent pay raise for most K-12 teachers. Universities and two-year colleges also received slight increases.
Payday lending reform: Alabama’s payday reform movement enjoyed an unprecedented breakthrough in the Legislature this year when a reform bill passed 28-1 in the Senate, but the plan came up just short of final passage. SB 91, sponsored by Orr, was on the House calendar Tuesday but never reached the floor for a vote after a long day of filibusters. Orr’s bill would have given Alabama payday borrowers a more realistic path out of debt by slashing interest rates, allowing installment payments and giving borrowers at least six months to repay. (Current state law allows payday loans to carry interest rates of up to 456 percent a year.) Arise will work with Alabama Appleseed and other advocates to build on this year’s momentum and growing public support as the reform movement continues into 2017.
Voting rights: Alabama will speed up the voting rights restoration process for thousands of people if Bentley signs a bill that the Legislature passed Wednesday. With just minutes left in the session, the House passed SB 186, sponsored by Sen. Linda Coleman-Madison, D-Birmingham, and sent it to the governor. The clock struck midnight just before the Senate could consider another voting rights bill – HB 268, sponsored by Rep. Mike Jones, R-Andalusia – which would have clarified what counts as a “crime of moral turpitude” that bars someone from voting in Alabama. Other proposals to expand voting access, including multi-day voting and same-day voter registration, died in committee.
Death penalty reform: A bill to establish a state Innocence Inquiry Commission for death penalty cases – SB 237, sponsored by Sen. Dick Brewbaker, R-Montgomery – cleared the Senate this year but died Tuesday when the House Judiciary Committee didn’t vote on it. Other proposed reforms to Alabama’s death penalty system, including a three-year moratorium on executions, went nowhere. The U.S. Supreme Court on Monday ordered further review of Alabama’s capital sentencing scheme, which allows judges to override a jury’s sentencing recommendation. A state circuit judge in March declared Alabama’s judicial override system unconstitutional, but the state has appealed that ruling.
Tax reform: Alabama’s tax system will remain upside down for another year, as the Legislature declined to consider measures to end the state grocery tax or close corporate tax loopholes. A bill to increase the state property tax won Senate committee approval but went no further. A proposed 75-cent cigarette tax increase won the endorsement of the Alabama Health Care Improvement Task Force but was never introduced in the Legislature. Lawmakers did, however, enact new tax breaks for small businesses and for increased use of state port facilities. The Legislature also passed a bill – SB 208, sponsored by Orr – to require annual reports on whether tax incentives are producing their intended economic effects.
“Ban the box” legislation: SB 327, sponsored by Sen. Quinton Ross, D-Montgomery, won Senate committee approval on April 7 but never reached the Senate floor. The bill would have removed the criminal history checkbox from state job and license applications, removing a potential barrier to employment for thousands of Alabamians looking to rebuild their lives and provide for their families after serving their time for a criminal offense.
Housing Trust Fund (HTF): A bill to increase the state mortgage recording fee and distribute some of the revenue to the state HTF died in a House committee. HB 341, sponsored by Rep. Patricia Todd, D-Birmingham, would have created a dedicated state funding source for the HTF, which could create thousands of jobs while addressing Alabama’s need for more than 90,000 affordable homes for residents with extremely low incomes.
By Chris Sanders, communications director. Posted May 6, 2016.
2016 legislative update: Time running short for payday reform as Alabama House committee holds hearing but doesn't vote
The fate of payday lending reform in Alabama this year could hinge on whether the House Financial Services Committee chooses to meet again before next week, and whether its members approve SB 91, sponsored by Sen. Arthur Orr, R-Decatur.
The committee chose not to vote on the bill after hearing nearly two hours of testimony Wednesday morning, including support from Arise and other advocates for payday lending reform. Payday loans are short-term loans for $500 or less, and carry annual interest rates of up to 456 percent in Alabama.
Because committee members didn’t vote after the hearing, they will need to reconvene to determine the fate of the bill, which the Senate passed 28-1 earlier this month. If the committee waits until next week to meet, it will reduce the chance that the bill can reach the House floor in time to pass before the 2016 regular session ends. Just five meeting days will remain in the session after this week.
Rep. Danny Garrett, R-Trussville, presented Orr’s SB 91 to the committee and emphasized the urgent need to act swiftly. “This is the last chance for reform in this session,” Garrett said.
Orr’s bill would reform Alabama’s payday lending laws to be similar to those in Colorado, where prices for borrowers are substantially lower than Alabama’s. SB 91 would reduce interest rates on payday loans and give borrowers at least six months to repay their loans. It also would allow borrowers to pay down the principal in installments, helping them escape debt more quickly.
In addition to Arise, other supporters testifying in favor of SB 91 included representatives of Alabama Appleseed and the YWCA of Central Alabama, as well as Dr. Neal Berte, a former Birmingham-Southern College president who has been a tireless and persuasive advocate for reform.
The committee also heard opposition from payday lending industry representatives, who said Colorado-style reform would prevent them from making loans in Alabama. Colorado has many payday lenders that remain profitable while charging prices roughly one-third of that typically charged in Alabama.
Title loan bill also receives hearing but not a committee vote
The SB 91 hearing Wednesday followed a separate hearing on HB 526, an auto title loan bill sponsored by Rep. Rod Scott, D-Fairfield. That bill would create a special statute for title loans, removing them from the Alabama Pawnshop Act, which caps the maximum interest rate on title loans at 300 percent a year.
Under HB 526, interest rates on title loans in Alabama would be capped at 120 percent a year, in addition to numerous other provisions regulating the issuance of such loans. In an unusual twist, title lenders and consumer advocates (including Arise) both testified in opposition to the bill.
The committee heard testimony but did not vote in February on a reform bill – HB 326, sponsored by Rep. Patricia Todd, D-Birmingham – supported by Arise and other members of the Alliance for Responsible Lending in Alabama (ARLA). The bill would cap title loan interest rates at 36 percent a year.
By Stephen Stetson, policy analyst. Posted April 20, 2016.
2016 legislative update: Plan to help restore voting rights to thousands in Alabama wins Senate committee approval
Thousands of Alabamians could see their voting rights restored under a bill that won a state Senate committee’s approval Wednesday. SB 231, sponsored by Sen. Cam Ward, R-Alabaster, would clarify the types of crimes classified as “crimes of moral turpitude,” a longstanding murky category of crimes permanently disqualifying offenders from voting in Alabama.
Ward’s bill, which Arise supports, now moves to the Senate. It could reach the Senate floor for a vote as soon as Thursday.
The Senate Judiciary Committee quickly approved the bill after adopting two technical amendments that tweaked the bill’s wording without changing the substance of the proposed reforms. Lawmakers had no other debate about the issue Wednesday.
Secretary of State John Merrill has endorsed SB 231, which fits with the state’s Prison Reform Task Force recommendations regarding ex-felons’ ability to re-enter society successfully as participating and productive citizens. The bill is one of more than a dozen proposals this year to expand or protect voting rights in Alabama. Other legislation seeks to allow early voting and streamline voter registration.
By Stephen Stetson, policy analyst. Posted March 16, 2016.
2016 legislative update: Payday lending reform gains momentum as second bill clears committee in Alabama Legislature
Payday lending reform continued to pick up steam Wednesday as an Alabama House committee approved a proposal to reduce interest rates and limit the amount that payday borrowers can borrow each year. HB 297, sponsored by Rep. Danny Garrett, R-Trussville, now moves to the House.
The House Financial Services Committee weakened Garrett’s bill by adopting an amendment offered by Rep. Reed Ingram, R-Montgomery. Still, HB 297 may remain the best hope for payday lending reform in the House this year. (AL.com has more details on Wednesday’s committee debate on HB 297.)
HB 297, as amended, would cap annual interest rates on payday loans at 180 percent in Alabama. Current state law allows interest rates of up to 456 percent a year. Arise testified on Garrett’s original bill last week.
Garrett’s bill originally proposed lowering payday loan fees to $12.50 per $100 borrowed, a reduction from the $17.50 now permitted in Alabama. But Ingram’s amendment would set the fee at $15. Garrett’s bill also would have limited borrowers to six loans per year, or $2,500. The amendment would eliminate the limit on the number of loans per year, and raise the cap on annual borrowing to $4,000.
Those changes allowed the bill to earn the endorsement of state Banking Superintendent John Harrison, who spoke to the committee at length. Harrison’s support could prove important as the bill now awaits debate on the House floor.
“When you don’t have anybody happy, then you’re getting pretty close to getting something that is workable and that will absolutely protect those consumers, and that’s what we want to do,” Harrison told lawmakers.
The committee approved Ingram’s amendment after rejecting an amendment offered by Rep. Oliver Robinson, D-Birmingham. That amendment would have converted payday loans into longer-term debt instruments. Robinson’s amendment was supported by Reps. Marcel Black, D-Tuscumbia; Mike Hill, R-Columbiana; and Thad McClammy, D-Montgomery.
Advocates were thankful to Rep. Merika Coleman-Evans, D-Birmingham, for calling for a roll call vote on each of the recorded votes on HB 297.
Senate expected to consider payday lending reform again next week
Payday loan reform is likely to be a topic again in the Alabama Senate once again next week. SB 91, sponsored by Sen. Arthur Orr, R-Decatur, is expected to return to the Senate floor for debate. The bill cleared an important procedural hurdle last week, but the Senate delayed further debate on it.
SB 91 would reduce interest rates on payday loans and mirror many of Colorado’s 2010 reforms. Orr’s bill, which Arise supports, also would give borrowers at least six months to repay their payday loans, increasing affordability and reducing default risk. In addition, SB 91 would allow payday borrowers to pay down the principal in installments instead of the all-or-nothing, lump-sum payment now required.
By Stephen Stetson, policy analyst. Posted March 16, 2016.
Payday lending reform got a debate but not a vote Thursday in the Alabama Senate. SB 91, sponsored by Sen. Arthur Orr, R-Decatur, cleared a procedural hurdle and received brief debate on the Senate floor, but lawmakers ultimately took no action on the measure. Still, the bill, which is supported by Arise and models Colorado’s payday loan laws, could return to the Senate floor next week.
Payday loans are short-term loans that carry annual interest rates of up to 456 percent a year in Alabama, often trapping borrowers in cycles of debt that can be hard to escape. SB 91 would reduce the interest rates and give borrowers at least six months to repay their loans, increasing affordability and reducing the default risk. The bill also would allow payday borrowers to pay down the principal in installments instead of the all-or-nothing, lump-sum payment now required.
The bill immediately came under heavy fire from several senators. Sen. Bobby Singleton, D-Greensboro, urged Orr simply to wait for the federal government to issue payday loan regulations. Sen. Trip Pittman, R-Montrose, also began to express concerns about the bill, but the Senate postponed further discussion of the bill after rejecting a proposed amendment by Orr.
Perhaps the most significant news from Thursday is that the Senate adopted a budget isolation resolution (BIR) on the bill. The BIR is a procedural vote required to debate any non-budgetary bill before the Legislature passes state budgets. That vote removed an obstacle from SB 91’s path and puts it in position for an up-or-down vote if the bill does return to the Senate floor.
Arise testifies in favor of House lending reform bills
House members may consider other lending proposals next week, representing alternative paths to reform. The House Financial Services Committee heard testimony this week on an auto title lending reform bill and two payday lending reform bills, though no votes were taken. Arise testified in favor of all three bills Wednesday, and the committee could vote on them next week.
Rep. Patricia Todd, D-Birmingham, sponsors two of those bills. HB 342 is the House version of SB 91’s payday lending reforms, and HB 326 would cap interest rates at 36 percent a year on almost all title loans in Alabama.
The committee also could consider another plausible path to payday lending reform: HB 297, sponsored by Rep. Danny Garrett, R-Trussville. The bill would reduce payday loan interest rates and extend repayment periods, though it would not allow installment payments.
By Stephen Stetson, policy analyst. Posted March 10, 2016.