Inside Alabama Politics – June 30, 2020

Inside Alabama Politics – June 30, 2020

Don’t look now, but tomorrow marks the half way point of the year. That means the rough and tumble hellscape that is 2020 is half way over.

Today marks two weeks until the July 14 elections when, at long last, the parties will have set the field for the November elections.

In both situations, the best (and perhaps the worst), is yet to come.

Here’s what’s happening INSIDE ALABAMA POLITICS.

A new Public Health order is coming. But it’s not what you think.

As the coronavirus outbreak continues, state leaders will have to adjust how they make health orders.

The state’s current public health order aimed at slowing the spread of COVID-19 expires this coming Friday. Easy enough to sign a renewal with some amendments, right? Not right. State law says the current order can’t be renewed beyond July 18.

The health order issued in March and amended several times since has been signed by State Health Officer Dr. Scott Harris and is enforceable under state code that says “Any person who knowingly violates or fails or refuses to obey or comply with any rule or regulation adopted and promulgated by the State Board of Health of this state shall be guilty of a misdemeanor…” punishable by a fine of up to $500.

But it’s actually a patchwork of state statutes that allowed Harris to make those orders, and it puts a 120-day limit on them. Normally, public health rules are adopted by the State Board of Health, with a public comment period and review by the Legislative Council. The Code of Alabama says that when the State Committee of Public Health is not in session, the State Health Officer can act on its behalf. State Administrative Code also says the state health officer, if “there is an immediate danger to the public health, safety or welfare” can move forward to adopt an emergency rule without prior notice or hearing.

Emergency rules become effective immediately upon filing a copy of such with the Legislative Services Agency.

And per the Administrative Procedures Act, “Emergency rules are not valid for longer than 120 days, and shall not be renewable.” Additionally, an agency cannot adopt the same or similar emergency rule within a calendar year unless it can demonstrate that it could not reasonably foresee the emergency would continue beyond 120 days.

All this means Harris’ order can’t be extended past July 18. The current “Safer At Home” order expires Friday, July 3. That order allows retailers to operate with 50% occupancy in their stores. Restaurants and bars also have to limit occupancy to allow for six feet of space between patrons.

COVID-19 cases have spiked in Alabama recently. About 36,680 Alabamians have tested positive for COVID-19 since March, more than one-third of those cases confirmed in the last 14 days, according  to the Alabama Department of Public Health. More than 900 Alabamians have died.

Gov. Kay Ivey has a few options for future directivess, should she need or chose to use them, including exercising her emergency powers to regulate the conduct currently covered by the health order or an executive order to suspend the 120-day rule that would end Harris’ original order. However, using emergency powers to expand emergency power and bypass legislative review might lead to tension with the Legislature. Several senators in the spring legislative session co-signed a bill to rein in the health officer’s power and limit a governor’s declared state of emergency to 14 days, then require legislative approval for extensions.

Harris can also continue to advocate social distancing and other precautions, but after July 18, his orders won’t be enforceable.

Ivey has called a news conference for Tuesday to update the state on COVID-related matters. Expect some talk about the new orders then.

What to expect at the State House next week

The leadership of the Alabama Senate has scheduled some highly rare summer hearings to better understand the revenue situation with the coronavirus still impacting state budgets. Beginning Thursday, July 9, the Senate Ways and Means General Fund Committee will meet in Montgomery for a series of hearings with budget writers and agency leaders to see where the state stands amid COVID-19.

According to budget leaders, the meetings weren’t called out of a sense of there already being a problem. Rather, with so many disparate pieces of information floating around about revenues and incoming money from the federal government, legislative leaders thought there out to be a thorough forum for discussion and that it should be public.

Committee Chairman Greg Albritton, R-Range, told IAP the meetings won’t be “full blown” budget hearings like most are used to in the spring, but rather targeted toward agencies that have specific needs. Leaders from Personnel, Corrections, Finance, Revenue, ALEA, Human Resources and Transportation are all expected to attend.

“We need a good sense of where we are with the revenues coming in, especially with the most recent quarter of April through June. Those are the most relevant numbers because they will tell us if we could be facing problems before the end of this fiscal year,” Albritton said. “But the real difficulty, if we’re going to see any, will be getting through the first quarter of next fiscal year. That’s usually when we live off money we have stockpiled from previous months.”

Albritton said the last quarter’s tax and fee returns are relevant to the General Fund, which is why his committee is meeting on the 9th. The state delayed the income tax due date until July 15, the results of which will be more relevant to the Education Trust Fund. That’s why it is not a combined meeting, he said, but Senate ETF Chairman Arthur Orr will be in attendance as he sits on the committee.

Acknowledging there has been friction between the Governor’s office and the Legislature over the last few months, Albritton said he hoped these hearings could provide a fresh start.

“I told a few of my colleagues that it’s time for us to stop talking about each other, and time to start talking with each other.”

Tax receipts on online purchases up; trend concerns educators

By MARY SELL, Alabama Daily News

In the months that Alabamians largely stayed home because of COVID-19, tax collections on goods bought online increased sharply while sales tax on goods bought at bricks-and-mortar locations dropped.

The latter largely supports education in the state. Of the former, the Simplified Sellers User Tax created by lawmakers in 2015, only a fraction currently supports schools, the rest going to state and local governments’ general funds. May tax collections for SSUT were up 84.3%, according to the Alabama Department of Revenue. Sales tax, that collected in bricks-and-mortar stores, was down 12.36%.

While any revenue growth, especially during a pandemic, is largely good news, increases in SSUT collections had education groups concerned prior to COVID-19 and even more so now.

“Many school districts receive a portion of the local sales tax collected from sales that are generated in traditional brick-and-mortar stores in their districts,” Ryan Hollingsworth, executive director of School Superintendents of Alabama, told Alabama Daily News/Inside Alabama Politics. “However, by Alabama defining online sales tax as a ‘use tax’, online sales tax is not considered sales tax.”

And while tax collection at physical locations still far outpaces online retail, sales tax is down about .5% year-over-year. The SSUT collection has about doubled.

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“As the buying habits of people continue to move toward online purchasing, our schools will continue to see the financial losses grow,” Hollingsworth said. “The initial mindset was this online sales tax revenue is new money that we have not been receiving.  While maybe true at that time, it is certainly not true today with the latest reports as proof.”

The SSUT collections in February, March and April were all up 50% to 55% over the year prior.

The statewide SSUT law took effect as a voluntary 8% tax on online sellers in 2015. The law became mandatory for most online retailers beginning in January 2019, at which point online sales tax revenue jumped significantly.

After deducting the cost of collection, 50% of the revenue goes to the state where it’s further split – 75% to the state General Fund and 25% to the Education Trust Fund. The other half is split among local governments – 40% to counties on a population basis and 60% to municipalities on a population basis. Nothing in state law says that locally allocated money has to be given to schools.

Sonny Brasfield, executive director of the Association of County Commissioners of Alabama, said sales tax revenue is essentially flat year-to-date, meaning schools haven’t lost revenue. And increases in SSUT collections are at least in part because of changes made in January of 2019 to capture more online sales, including third-party retailers on Amazon. Counties advocated for those changes, he said.

“That really turned the page on SSUT, from it being a good idea to something that people all over the country were trying to emulate,” Brasfield said.

“We wouldn’t have seen this growth, even with COVID (without those 2019 changes0,” he said.

He also said that it’s not realistic to think SSUT revenue will continue to grow as it has in the last year.

Hollingsworth explains the situation this way: If someone buys a fishing pole at a local sporting goods store, they pay 4% sales tax to the state, which goes to the ETF. Sales tax is the second largest funding source to the ETF, income tax is No. 1. At that local store, a person is also paying local sales tax. The amount varies by location, but at least some of it flows to local schools, Hollingsworth explained. With SSUT, that local tax for schools is gone.

“At the local school level, your revenue comes from federal, state and local dollars,” he said. “Personnel and programs are funded from these same three fund sources.  If the local fund sources continue to decrease, our local systems will have to make cuts in programs and personnel, no doubt about it,” Hollingsworth said.

Brasfield argues that counties need that revenue too. He’s pointed out multiple times this year that 2015 prison reforms in Montgomery have kept more state inmates in county jails, costing them nearly $100 million, he said.

“The state Legislature hasn’t given us a penny for that,” he said. “That’s one example of what counties have been able to do with this revenue.”

 Watching Morgan County

In 2019, at the request of local school leaders, Sen. Arthur Orr, R-Decatur, sponsored a successful bill to send most of the SSUT funds for Morgan County to the county’s school systems. Orr has said the bill was modeled after how local sales tax dollars are distributed.

“It’s clear that the SSUT increases are coming at the expense of bricks-and-mortar taxes that go toward education,” Orr said. “At the end of the day, the internet sales taxes are coming at the expense of school children.”

But Morgan County leaders refused to comply with the local law, saying it was unconstitutional. The Alabama Education Association sued, and later local school systems joined the lawsuit. The county commission’s legal position focused on Section 105 of the Alabama Constitution, which generally prohibits a local law from contradicting a statewide law. Earlier this year, Montgomery County Circuit Court Judge James Anderson ruled that the local law was constitutional. The county commission has appealed and that case is pending.

“There is no doubt, this bill has statewide impact,” Morgan County Commission Chairman Ray Long said on Monday. “It doesn’t just effect Morgan County.”

Long said that traditional sales tax in the county is up, despite COVID-19, 5% year over year.

“Everyone that gets the sales tax is up,” he said about the schools on other entities.

The county commission association isn’t directly involved in the lawsuit, but filed an amicus brief on behalf of Morgan County.

“For us, it’s not about SSUT at all, it’s about counties being expected to deliver programs and services while general fund money is taken away,” Brasfield said.

Orr said groups and lawmakers are watching the Morgan County lawsuit.

“This is a test case and a lot of school districts around the state are watching and I’ve had numerous lawmakers around the state tell me they plan to follow with similar actions,” Orr said.

Hollingsworth agreed other systems are watching Morgan County, but he hopes it won’t take more local legislation.

“You would hope that the local municipalities and the local county commissioners would acknowledge this for what it is and do the right thing and either give that portion to the school districts as they do in a brick-and-mortar store or share that with the school districts,” Hollingsworth said. He said in some counties, those conversations are happening.

In its annual poll earlier this year, the Public Affairs Research Council of Alabama asked respondents if online sales taxes should go to local schools in a similar manner as traditional sales taxes, 76.5% said yes.

Long said that if the original law is going to be changed, it should be done statewide and not county by county.

Meanwhile, both Long and Brassfield said if education groups are worried about SSUT’s impact on education, they should look at where larger portions of the revenue are now going, including municipalities and the state General Fund.

In fiscal 2019, the SSUT was worth $69.9 million for the General Fund and bout $23.3 million for the Education Trust Fund.

Could CARES Act funds make way for a tax break?

Ever since the 2020 legislative session got upended by the coronavirus and Congress gave the state more than $3.7 billion to allocate through the CARES Act, there have been dozens of legislative proposals seeking to steer some portion of those funds to various projects. From expanding broadband to building a new State House, the ideas have been far-reaching in their boldness, with most understanding that the state might not again get that kind of “free money” from the federal government for a long time. Of course, eventually the rules caught up with imaginations and the state pressed forward with strict limits on how it would use Congressional COVID money.

However, there is increasing chatter lately of another way to possibly spend a portion of those funds: tax relief. According to multiple Inside Alabama Politics sources, key lawmakers and executive branch officials have been discussing the possibility of adding a tax cut to the mix of actions the state can take with CARES Act funds. Those sources also told IAP that the idea for a COVID tax cut originated with the Alabama Policy Institute, which has been touting its RESTORE Act to help the state recover economically from the pandemic. While this proposal was not included in the group’s initial RESTORE Act press campaign, it is now being negotiated by API at the highest levels of government and with other interested groups, said those familiar with the talks. The Birmingham-based think tank has done polling showing the idea of the state using federal COVID dollars to provide tax relief has broad bipartisan support, the sources said.

While the CARES Act specifically and strictly prohibited funds from being used to replace revenue in state budgets, sources say there is nothing specifically stopping states from giving it back to citizens in the form of tax relief, especially if it can be considered economic relief from the coronavirus. Other states like Iowa and Kentucky are reportedly looking into this possibility as well, and it stands to reason that Alabama wouldn’t want to be the guinea pig here. After all, if the Treasury Department deems that a state’s CARES Act spending is outside the boundaries of the law, we are on the hook for paying it back. State leaders would likley need assurance from Treasury that a tax break is allowed and wouldn’t be challenged.

If such a proposal is possible, it would potentially allow the state to put most if not all of its COVD-19 funding to use rather than having to send unused funds back to the United States Treasury. Of course, the same could be said of other states, so this could be a good test of whether or not Congress really did want that $2.2 trillion to be spent.

Sources tell IAP we won’t know more about whether state leaders intend to pursue this course for at least a week. If it gains traction, expect it to be a popular item. A “free” tax break in a pandemic-driven economic slow down? Political no brainer.

A timely historic reminder

The Alabama Department of Archives and History recently acknowledged and apologized for decades of helping perpetuate systemic racism by promoting Confederate narratives while ignoring those of Black people. In a “statement of reconciliation,” the department said it “committed extensive resources to the acquisition of Confederate records and artifacts while declining to acquire and preserve materials documenting the lives and contributions of African Americans in Alabama.”

It was the right move by Director Steve Murray, who said Archives would commit to making it right moving forward. Murray has proven an able successor to longtime Archives & History Director Ed Bridges, who left big shoes to fill when he retired in 2012.

Now, in an apparently unrelated occurrence, vestiges from a bygone era are resurfacing in the Archives that document some of the state’s history of systemic racism.

Newsletters from the former state agency that tried to discredit the civil rights movement and connect it to communist organizations are now available through the Department’s website. The State Sovereignty Commission was established by the Legislature in 1963 with the purpose “to safeguard those rights from encroachment by agencies of the federal government, and to preserve those rights necessary for the well-being and safety of its citizens and for the orderly conduct of government affairs.” Its duties included protecting the sovereignty of the state from “encroachment and usurpation” by the federal government and making special inquiries into means for protecting state’s rights.

Three issues of the Sovereignty Commission Bulletin were placed online as part of the department’s ongoing work to digitize a wide array of materials for improved access, Murray said recently. He said the commission’s records were not extensive.

The first issue of the bulletin in July 1968 focused on events in Washington,D.C. and riots that year following the assassination of Martin Luther King Jr.

It quotes J. Edgar Hoover saying civil disobedience is a “pernicious doctrine which undermines respect for law and order.”

“We are living in an age when too many citizens are thinking about their ‘rights and privileges’ and too little about their duties and responsibilities.”

A September 1968 issue focused on the Central Intelligence Agency as a financier of socialism and civil disobedience and implicated the agency in the assassination of President John F. Kennedy.

In early 2019, the Montgomery Advertiser’s Brian Lyman wrote about the commission and an 1965 hour long film it created, “State of Alabama,”  “a bizarre and offensive mix of conspiracy theories, endless crowd shots and racist caricatures of prominent civil rights leaders, including Rev. Martin Luther King Jr.,” Lyman wrote.

The State Sovereignty Commission was one of two civil rights-era organizations set up by state leaders to undermine the civil rights movement, Lyman reported.

Other Archives’ documents from the Commission include a telegraph from executive secretary Eli Howell to television executives at ABC, NBC and CBS in New York City, requesting that they run the documentary.

“During the month of March, your television network devoted several hours to the much-publicized Selma-Montgomery March, furnishing the instigators and promotors of that march with a nationwide forum,” Howell said.

The commission was terminated in 1978.

Sessions and Tuberville turn in to homestretch

It’s been an article of faith among both the hoi polloi and chattering classes that Trump’s endorsement is the only thing that matters in the runoff for the Republican nomination to take on Democratic U.S. Sen. incumbent Doug Jones.

Jeff Sessions’ years of loyal service to the state, his leadership on issues like the Rule of Law, trade and immigration, even his early endorsement of then-long-shot-candidate Donald Trump – all of that went out the window when he followed that law and DOJ protocol to recuse himself from the Russia investigation. Then an air conditioner window unit fell after, dropping on its head when Trump decided not just to slag Sessions in the press, but tweet his explicit endorsement for Tuberville to his millions of followers, which is then pinged through the echo chamber of conservative news sites. To continue the cartoon metaphor, a bus then ran over Sessions’ campaign when news came from CNN correspondent and Prattville native Kaitlin Collins that Trump would have a pre-election rally in Mobile with Tuberville.

It didn’t take Alabama politics observers long to make the connection that it was Mobile where Sessions first rallied with Trump, don’d the red MAGA hat and gave the New York billionaire a major boost in the 2016 GOP primary. The symbolism would be strong. In fact, it could be too strong. Some astute politicos have noted to IAP that there could be a diminishing return to Trump’s repeated dunking on Sessions. When does the indignity of it all become too hard to watch? After all, what voter at this point doesn’t know that the president disdains his former attorney general? And that being the case, why rally in Mobile and risk driving up turnout in an area that most polls show is the only one Sessions is winning? Alternatively, why not return to north Alabama, they ask, where driving up turnout would almost certainly benefit Tuberville?

The rally still hasn’t been officially announced. Also, Collins’ story came before Alabama started reporting some of its worst coronavirus transmission numbers. Mobile Mayor Sandy Stimpson is currently pursuing an ordinance requiring citizens to wear face masks in public to avoid spreading the virus. A masked-up (or not, as it were) Ladd-Peebles Stadium certainly would make for some interesting political television.

What Trump will do or say and its effect on the race is largely out of the campaigns’ hands. What the candidates do and say is not. The two campaigns present a stark contrast in their strategy and tactics during the extended.

Tuberville’s talking points and ads focus solely on Trump and how Sessions failed “Our President.” Sessions tries to draw attention to his philosophy and achievements over the years, while toeing the Loyal Trump Man line.

Tuberville is having his picture made coming off Air Force One, while Sessions tweets that Trump’s rally in Tulsa was ultimately a success.

Sessions seems to be in a damned if you do, damned if you don’t conundrum. His simping for Trump’s affections can’t be doing him any good, and yet a break with the president would seem to doom him all the more.

Tuberville has his “People v The Swamp” Bus Tour and Sessions is also campaigning hand-to-hand when and how he can, to include Zoom calls to Rotary and GOP clubs.

Sessions seems to be doing all the interviews he possibly can, while Tuberville has mostly avoided the limelight and the gaffes that come with it.

Here is a rundown of the latest polls in the Senate race…

May 26-27, On Message (Sessions internal)

  • Tuberville 49%
  • Sessions 46%

May 14-18, FM3 Research (Jones internal)

  • Tuberville 54%
  • Sessions 32%

May 7-10, Cygnal

  • Tuberville 55%
  • Sessions 32%

Battle lines drawn in Congressional runoffs

In the state’s two GOP congressional runoffs, the biggest development is the emergence of the Club for Growth and just how aggressively the group is playing in both. As the campaigns head into the final stretch, it sets up an interesting contest between the Tea Party-esque, vote “No,” burn-it-all-down group from Washington and the steady-as-she-goes business groups from in state like the Business Council of Alabama, the Alabama Trucking Association and Alabama Farmers Federation.

Battle lines between the business and activist sides of the Republican Party are nothing new in Alabama. In fact, in these two southern seats, there has been this same type tension in the primaries almost each election cycle the last ten years. This year, though, the stakes seem higher just because of the sheer amounts of money involved.

In AL-1, Club has been active for almost a year in support of former State Sen. Bill Hightower, but that support has really come to mean something in the last month or so as attacks against Mobile County Commissioner Jerry Carl have ramped up. The Washington-based group is expected to spend more than $1 million on the race when it is all said and done – an astronomical number to those who have slogged to raise federal campaign cash $2,800 at a time in recent years. The cavalry has now come for Carl, as a group of prominent local businessmen set up their own super PAC to compete with Club in the mailbox and on the airwaves. Right for Alabama PAC is organized by some well-known south Alabama businesses and civic leaders, including Wiley Blankenship, former Mayor Mike Dow and Richard Weavil. The PAC is chaired by Jerry Lathan, husband of Alabama Republican Party Chairman Terry Lathan. But Carl is getting plenty of support from Washington now, too. Sources tell IAP that Hightower’s criticism of delegation members Rep. Martha Roby and Rep. Mike Rogers as “big spending Republicans and Never Trumpers” really set off radars in DC among business types who know what that rhetoric means when then hear it. The last publicly available polling taken June 4-5, Carl led Hightower on a runoff ballot test 43% to 24% with 33% remaining undecided.

In AL-2, Club’s involvement is more recent, as it did not endorse former State Rep. Barry Moore until March 16. They’ve done their best to catch up, though, spending as much as $550,00 in efforts to support Moore and attack prohibitive frontrunner Jeff Coleman. Sources tell IAP the Club could spend another $190,000 between now and Election Day. Coleman came into the runoff with a significant edge as he won 38% of the vote in the primary to Moore’s 21%, which was just enough to earn his way into the runoff. The recent revelation that Moore, who touts himself as Trump’s earliest supporter, failed to cast a ballot in the 2016 primary will be the stuff of campaign ads down the homestretch. Rather than undercutting his support for Trump, the story can cast doubts about his judgment and planning.

Should Club for Growth succeed in picking off these two Alabama congressional seats, it would be a major story of the 2020 cycle, both in Alabama and beyond. Current Reps. Roby and Byrne are two of the most business and farmer-friendly congressmen you’ll find on Capitol Hill, and they’ve taken the tough votes to prove it. To flip those seats into the hands of the Freedom Caucus would be a monumental win for the vestiges of the Tea Party, but a painful loss for most business and farming groups. Carl and Coleman are still in the driver’s seat, but with an uncertain electorate in July, these races might be closer than you think.

RIP Wayne McMahan

Curtis “Wayne” McMahan died June 17, 2020 following a severe stroke. Wayne was Chief of Staff to Lt. Governor Jere Beasley, followed by a 30 year tenure as Executive Director of the Alabama Dental Association.

Many a State House denizen and those who have been around Alabama politics for long enough will remember Wayne. He was always a gentleman, and always ready and willing to lend a hand to a cause he believed in.

IAP spoke to Political Consultant David Mowery, Chairman of Mowery Consulting Group, who relayed an anecdote that was a glimpse into the ways of McMahan.

“So I knew Wayne casually from both campaign fundraising, and from just being around the statehouse. He was the kind of guy who would notice who you were, and chat you up. He always wanted to know what campaigns I was working on, and often would ask how he could help. Always dressed very conservatively. Like a 1960s IBM employee 00 and I mean that as a HIGH compliment. Nice guy, but I couldn’t quite tell what his deal was, if you know what I mean?  I got my first real indicator of what this meant in 2009 when I was running Todd Strange’s first race for Mayor of Montgomery. Wayne caught up to me one day, and he told me that he was ‘collecting checks for Todd from the dentists in town, and I’ve got a goal of $25,000. $25K is a big a number for almost anyone ‘to raise,’ and I was kinda skeptical. This industry lends itself to skepticism. Few weeks later he told me he was ‘closing in on 20 but might not get to 25.’ I said anything would help, and he said he just wanted to get them all gathered and then meet with me and Todd.  A few weeks later, our scheduler (the first campaign was a Real Operation, we had probably 10 employees and 50 solid volunteers) comes to me and says ‘This man Wayne keeps insisting that he has a package to deliver to Todd, and he wants you at this meeting, and…..I just don’t know if he rates a meeting.’ I figured out it was Wayne McMahan, and remembered that he had told me he had almost rounded up $20,000 so I told her to schedule it. Sure enough, he came in with an envelope of probably 30 checks from $500 – $2500 and like $19,000. He said what he could do, and he updated me along the way, and in the end, he delivered more than I figured he would. He was just a stolid dude who in a lot of ways is the type of guy who is the real backbone of politics. He’ll be missed.”

Potpourri

Word comes to Inside Alabama Politics that the Governor’s office has a new staffer with a familiar name. Annabell Roth starts this week as Policy Adviser in the Governor’s Policy Office, where she’ll take over the portfolio of Baker Allen. Roth is a recent graduate of the University of Alabama where she studied public relations. She’s the daughter of Toby and Michelle Roth, both professional lobbyists in Montgomery. Toby Roth previously worked as chief of staff for former Gov. Bob Riley.