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Inside Alabama Politics – July 28, 2021

A few date reminders for perspective to start things off…

There are 38 days until Auburn and Alabama kick off the 2022 football season versus Akron and Miami, respectively.

There are 120 days until Thanksgiving and 149 days until Christmas.

There are 167 days until the start of the Alabama Legislature’s 2022 Regular Session on Jan. 11.

There are 300 days until the Republican and Democratic primary elections on May 24 and 468 days until the 2022 general election.

To everyone involved in campaigns, pace yourself!

Here’s Inside Alabama Politics for July 28, 2021.

‘Lost revenue’ could be used in prison fix

By MARY SELL, Alabama Daily News

Alabama fiscal leaders should soon know how much of the state’s Covid relief fund could replace lost revenue, and potentially fund new prisons.

In the $2.1 billion fiscal recovery fund the state of Alabama will receive from the American Rescue Plan Act, a certain portion will be deemed replacement for money the state would have earned through normal business had there not been a pandemic.

The feds set up a formula for calculating that amount of projected revenue that includes looking at the previous three year’s revenue growth. Any drop in that growth in 2020 could be considered lost revenue.

“We’re going through the exercise now, the math to calculate that,” Kelly Butler, Alabama’s finance director, told Alabama Daily News on Monday.

The calculations are complicated, Butler said, because all state revenues have to be factored, not just those that flow to the education and General Fund budgets.

“Things like university tuition revenue count, so we had to reach out to all the public universities and ask them to send that to us,” Butler said. “This is the reason it’s taking a while to get through the calculation.”

He didn’t give an estimate on the amount, but said a figure should be available soon and it would be significant.

The revenue replacement pot of money is of particular interest to many in Montgomery because it will have less restrictions on spending than the rest of that $2.1 billion recovery fund. How it’s spent will be up to Gov. Kay Ivey and lawmakers.

“The biggest thing about the lost revenue and why it’s important to go through the exercise of calculating is its allowable uses,” Butler said. “The strings attached on what you can use the money for mostly go away if it’s deemed to be lost revenue.”

There are a few exceptions, he said. It can’t be used in pension funds or to cut taxes.

Several lawmakers in recent months have said the money should be used to build new or improve existing prisons. Earlier this year, Ivey’s plan to lease new prisons fell apart.

“We see that as a source similar to General Fund money that we could have as a resource to use to attack this prison problem,” Sen. Greg Albritton, R-Range, said. He’s the Senate General Fund budget committee chairman.

He said he’s seen a few estimates on the lost revenue amount.

“No number has been small, we’re talking about potentially hundreds of millions of dollars,” Albritton said.

Albritton said that while leaders are still waiting for a final amount of COVID relief money that could be spent on prisons, plans to fix the crowded, failing sites are ongoing. He’s been in multiple meetings with ADOC and Ivey team members this summer. Another is planned for Thursday.

Albritton said not to expect Ivey to call a special session on prisons until she’s guaranteed the votes to approve a construction and borrowing plan.

“I think it’s clear that construction is part of the answer,” he said. “I think it’s clear that renovation and purchase and use of existing facilities, all of those are going to have to be done, the timelines are pretty well known, the costs are fairly well known at this point. And so we have pieces of the puzzle already in hand.

“…But we’ve got to get the consensus on some of the specifics and we’ve got to get the legislation prepared.”

House General Fund budget committee chairman Rep. Steve Clouse, R-Ozark, has also been involved in recent prison plan conversations.

“We continue to talk about a bond issue, but any amount of money that we were able to use from this Rescue Plan money would help decrease the amount of payments that we would have to make over the next 30 years, so it would certainly be beneficial.”

Clouse said there is still a possibility of a special session on prisons and recovery fund allocations.

The Alabama Department of Corrections asked the U.S. Department of Treasury if new prisons are a potential use for relief funds.

“Gov. Ivey is certainly interested in that option if it is viable, and she continues to have good conversations with legislators on how we can move this forward and find solutions,” spokeswoman Gina Maiola said Tuesday.

She also said “all options are on the table” when asked about a special session on prisons and relief money allocations.

Butler said his office has been involved in some of the prison infrastructure funding conversations, including the possibility of using revenue replacement funds.

“If it’s a way to help the prison problem without having to use state dollars, that’s not a bad thing,” Butler said.

The state has received half of its relief funds — the other half will come next year — and the next step is allocation by the Legislature, much like the regular state budgeting process.

The state will have until December 2024 to obligate the funds and until December 2026 spend them.

“We have time to take a breath and for better planning,” Butler said.

Albritton said for management and accountability, the revenue replacement money will likely be kept in a separate account.

“But it will be used as General Fund money, in my opinion,” Albritton said. He’s specific about the General Fund and said education entities in the state have received directly other COVID recovery funds. Those total more than $4 billion.

Meanwhile, most of the federally suggested uses for the relief money fall within the General Fund and most states only have one budget.

“The biggest factor that we have got to consider is not who is asking for the money —everyone is asking for it,” Albritton said. “The biggest thing is trying to figure out what is our best use long term for these temporary resources.”

He said he’s “acutely aware” of various agencies’ and groups’ pending requests for some of the relief money.

“Everyone is welcome to make their sales pitches, but (the Legislature is) the one that will make that call,” Albritton said.

 

Special session update

By TODD STACY, Alabama Daily News

While some issues like prisons and federal money appropriation could feasibly wait until January, one task that won’t is redistricting. Though it is through no fault of their own, state lawmakers are already late in redrawing new district lines for Alabama’s congressional seats, the State School Board and all 140 State House and Senate seats. The reason they aren’t at fault is they still don’t have the census data needed to redraw all those lines. And, while it is good news that Alabama won’t have to go from seven congressional districts to six, there is still quite a bit of work to be done in combing through the data and putting lines together piece by piece.

Rep. Chris Pringle, R-Mobile, who co-chairs the redistricting committee, described the process like this: “Imagine the state of Alabama is a puzzle made up of 252,000 pieces. That’s what redistricting is. We have about 252,000 census blocks we have to put together to draw all these districts and very little time to do it.”

Pringle said the committee expects to get data by late August, which will take five days to load into the computer system used in the process. The panel plans to travel the state for a series of public hearings in the month of September and then have proposed maps ready to go by mid October.

“So you’re looking at late October or early November for a special,” Pringle said. “That’s just being realistic.”

Lawmakers have an incentive to hurry: the lines they draw and eventually pass will make up the districts they campaign to represent in 2022.

 

How would COVID-19 affect a special?

By TODD STACY, Alabama Daily News

While many had speculated that special sessions may have been called as early as August or September, a later start date may be a blessing for other reasons. With the state in the midst of a summer spike in COVID-19 transmissions and hospitalizations, including from the delta variant, few are eager to return to a State House. In fact, three weeks ago during the Southern Legislative Conference in Nashville, several members of Alabama’s delegation were exposed to the virus. According to an email from Legislative Services Agency’s Kirk Fulford to House and Senate members, two previously vaccinated State House staffers tested positive for COVID-19 and isolated appropriately. Though a relatively isolated incident, it was something of a wake up call to some about this new resurgence of the virus. Many lawmakers, including some in leadership, made a point at the end of the last session to insist that the doors would be open to the public the next time the Legislature met. Perhaps by November that will be more advisable and comfortable.

Legislative ‘blackout’ on campaign fundraising shrinks to 2 weeks

By MARY SELL, Alabama Daily News

Alabama is one of 29 states that has some restrictions on campaign contributions to candidates for state office during legislative sessions, but that “blackout” window is shrinking to two weeks next year.

Candidates and incumbents seeking legislative and statewide office can begin fundraising a year prior to their primary contest, but state law says  they “may not accept, solicit, or receive contributions during the period when the Legislature is convened in session” except “within 120 days of any primary, runoff, or general election…”

While primaries for statewide office have previously been in early June, next year’s contest is May 24. That means the blackout will start Jan. 11, the first day of session, and end Jan. 24. The legislative session can last up to 15 weeks, but during election years, incumbent lawmakers often like to get out of Montgomery and on the campaign trail earlier than that.

In 2018, the blackout was about three weeks, Jan. 9 to Feb. 4.

Secretary of State John Merrill has previously advised candidates to deactivate any webpages that accept contributions online to avoid inadvertently accepting funds. The fundraising freeze does not apply to officials serving at the county or local levels.

According to the National Conference on State Legislatures, 29 states, including Alabama, have some restriction on campaign contributions during sessions. In 14 of those states, the restrictions apply only to contributions by lobbyists.

 

What Congressional Democrats’ $3.5T budget package could mean for Alabama Medicaid

By TODD STACY, Alabama Daily News

Most recent coverage of Washington Democrats’ $3.5 trillion budget reconciliation plan has centered on its relation to the bi-partisan infrastructure package being negotiated between the Senate and the White House. However, the budget package includes much more than infrastructure and one little-known health care provision could have a big impact on Alabama.

Let’s back up for a bit. Alabama is one of 12 states that has chosen not to expand its Medicaid program under the Affordable Care Act mostly on the grounds that it would be unaffordable over the long term. As Alabama Daily News previously reported, the March-enacted American Rescue Plan Act included more than $740 million in incentives for Alabama to expand its Medicaid program to provide families in the “coverage gap” health insurance. That incentive would have paid for an estimated four years worth of the total cost of expansion. There was talk of adding future revenue through taxes on casinos and sports betting during negotiations of the wide-ranging gambling bill last legislative session, but that ultimately did not happen. And so Alabama stands pat, still resisting expansion of Medicaid coverage by citing long term costs to the state’s General Fund.

It turns out Alabama isn’t alone. None of the other 11 non-expansion states have moved to expand Medicaid with these new incentives (Wyoming actually came close, but the bill died in the Senate). Texas, Georgia, South Carolina – go down the list – all 12 non-expansion states aren’t taking the incentives, at least not yet, and Democrats in Congress have noticed.

Though a final deal on budget reconciliation is far from complete, last week House and Senate Democrats came to an agreement that the $3.5 billion package would include funding for health coverage for those in non-expansion states like Alabama. Sen. Bernie Sanders, D-Vermont, who chairs the Senate Budget Committee, told Politico, “we’re going to have to work out the details, but there is money in there to do just that,” Sanders said. “We think that it is unacceptable that some of the poorest people in this country live in states which have denied them Medicaid.”

Those on the inside include Rep. Terri Sewell, D-Alabama, Sen. Jim Clyburn, D-S.C., Sen. Raphael Warnock, D-Ga., and Sen. Jon Ossoff, D-Ga. – all Democrats from states that have resisted Medicaid expansion.

As Sanders said, details are not complete. One proposal is to create a new federal program through the Department of Health and Human Services that would bypass state Medicaid agencies to offer health insurance directly to residents in these states. That would not be without complications, sources tell IAP, including taking a long time to get off the ground and potential legal challenges. In any case, Congress seems serious about pressing the issue and doing through a federal law what states have refused to do on their own.

The state still has an opportunity to put forward an expansion plan of its own, but sources tell IAP that’s not likely to be discussed further until after this election season is over.

 

Who’s Running, Who’s Not

By TODD STACY, CAROLINE BECK and MARY SELL, Alabama Daily News

For the last two months, Alabama Daily News has endeavored to keep readers up to date with which Alabama lawmakers plan to seek reelection in 2022 and which ones plan to hang up their political boots. Starting with those rumored to be not running again, we’ve asked all the House and Senate members who would answer the phone about their reelection plans. Below is our list of who’s running, who’s not and who might replace them in 2022.

(Note: this is an evolving list, so please let us know if the political winds are shifting.)

House

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Senate

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Who will be House Education Budget Chair?

By CAROLINE BECK and TODD STACY, Alabama Daily News

News that Gov. Kay Ivey named State Rep. Bill Poole as the next State Finance Director was big in its own right, that position being among the top jobs in state government. You’d be hard pressed to find Alabama government types that have a negative impression of Poole as he is one of the most widely respected members of the Alabama Legislature. But as good of a hire as it was for Ivey and the Executive Branch, Poole’s departure leaves big shoes to fill on South Union Street.

For one thing, there’s the State House seat, which few expected to be in play this cycle. Because he will vacate the seat before October 1 (IAP is told to expect Aug. 1), a special election will be called to fill his seat, allowing his Tuscaloosa district to have representation for at least some of the 2022 regular session. Word is Cynthia Almond is the odds on favorite to claim the House District 63 seat.

For the bigger picture, the question becomes who fills Poole’s shoes as Chairman of the House Ways and Means Education Committee. By all accounts it is among the most powerful positions in all of the Legislature, responsible for handling the more than $7 billion Education Trust Fund. In recent years, the House and Senate have traded that responsibility each year. One year, the ETF starts in the House while the Senate handles the General Fund and the next year it’s vice versa. While that may seem like less work every other year, Poole has quipped before that it’s often just as much trouble dealing with budget requests when you’re the second body. In any case, it’s a key position and one that is always highly coveted among top ranking lawmakers.

The two names emerging as top candidates for the role are State Rep. Terri Collins, R-Decatur, who currently chairs the Education Policy Committee, and State Rep. Danny Garrett, who is the current vice chairman of the Ways and Means Education Committee (incidentally, Garrett is vice chair of the Education Policy Committee as well, so he’s likely to get a promotion either way). If it were based purely on seniority, Collins would get the nod, as she has one more term on Garrett, elected in 2010. Collins has also been deeply involved in education issues throughout her time in the House and has the political scars to show from it, oftentimes taking on the Alabama Education Association and School Superintendents of Alabama on issues like literacy and school choice.

Garrett has been among the standout lawmakers from the 2014 class, especially on economic development and education issues. He tells Alabama Daily News he is interested in the chairmanship since he is already the vice-chair of the committee but declined to say anything further.

One factor working against Collins is geography. She represents Decatur, which is also the home of Senate education budget chairman Arthur Orr. Some might object to two ETF chairs being from the same city. She also may not want the job, being content running Education Policy. She could not be reached for comment for this story.

Ultimately it will be up to House Speaker Mac McCutcheon, who is mum on the subject. While a replacement for Poole may not be necessary for redistricting, one will definitely be needed for the allocation of $2.1 billion in federal relief funds, the framework for which is being developed presently.

This Matrix lawsuit is a doozy

Last issue, Inside Alabama Politics reported a seemingly innocuous personnel announcement that Jeff Pitts, longtime partner and CEO at Matrix, LLC, was leaving the firm to start his own communications company. Not much was said or thought of it beyond the fact that it was significant Pitts was leaving Matrix after all these years.

For the unaware, Matrix is one of the top campaign, communications and opposition research firms in the state with a highly secretive history of delivering the “dark arts” of politics for its clients. Founder and principal Joe Perkins famously has (or had) a license plate that read “SENSEI,” the moniker for martial arts teachers. Matrix’s website is simply a landing page with a phone number. No client list, no examples of their work because they don’t need it. If you know, you know.

Then, last Friday night, AL.com columnist John Archibald revealed the existence of a lawsuit from Matrix against Pitts and a handful of other former employees. It was a big scoop, and yet, details were sparse. Alabama Daily News has now obtained a copy of the lawsuit and, hoo boy, it is a doozy.

Matrix alleges that Pitts for two years worked behind Perkins’ back operating a separate company, TMP Interactive, offering competing consulting business to Matrix clients, “effectively embezzling money from an unlawfully competing with Matrix.” The suit also alleges that former Matrix employees Greg Gilbert, Abigail MacIver and April Odom – all named defendants in the complaint –  worked with Pitts to steer business to TMP Interactive and later went with him to his new venture, Florida-based Canopy Partners.

The suit says that Perkins met with Pitts “to discuss Perkins’s eventual retirement and a continuity plan for Matrix. Dr. Perkins had intended to develop a plan with Pitts’ input through which Pitts would eventually take over leadership and an ownership interest in Matrix. During this meeting and to Dr. Perkins’s surprise, Pitts announced his desire to resign from Matrix and form his own competing communications company. This was the first time Pitts had mentioned breaking away from Matrix and going out on his own.”

Pitts referred questions to his attorney, Al Vreeland of Lehr, Middlebrooks, Vreeland & Thompson.

“This is all too common business dispute that unfortunately arises when former business associates divorce,” Vreeland said.  “Jeff and Canopy deny the allegations of the complaint and look forward to explaining the real reasons for Jeff’s departure.”

Though they initially parted on good terms, the suit says, the immediate departure of the other employees with Pitts made Matrix suspicious and led them to change the locks on the doors and do an inventory check. Matrix claims that check showed the computer systems in its Birmingham office had been compromised and, later, revealed the existence of Pitts’ outside company.

The complaint alleges breaches of fiduciary duties, fraud, unjust enrichment conversion, intentional interference with business relations, civil conspiracy and violation of the Alabama Trade Secrets Act.

From the lawsuit: “Following their resignations, these former employees improperly retained Matrix trade secrets and proprietary information in the form of client contacts and relationships, relationships with valuable media and thought leader contacts, and confidential information related to the pricing of specialized communications services. They also unlawfully retained Matrix proprietary research techniques. Pitts, Gilbert, MacIver, and Odom and their business entities, including Canopy Partners and TMP Interactive, have continuously and improperly used Matrix trade secrets and proprietary information for their own benefit through unlawful competition with Matrix.” 

 

Big Bud’s news

We have unintentionally been on the “Bud’s beat” of late. We reported on the post-lockdown reopening of the legendary politico bar with a new no smoking policy. Todd’s column on the Jan. 6 Capitol riot began and ended at Bud’s with Bubba’s wisdom and a chicken sandwich. And, sadly, we also mourned with many at the passing of Bud Skinner, the bar’s owner and namesake, whose loss will long be felt around Cloverdale.

Today we are happy to report some happy news for all those who may darken a barstool for some political banter from time to time. Bud’s will be reopening soon. Well, that’s not exactly accurate. The bar formerly known as Bud’s will be opening soon under new ownership and a new name. Word to IAP is the place could be open by the end of August.

A few months back we reported that Montgomery restaurateur Tyler Bell (El Ray, Leroy) was interested in acquiring the space after Skinner’s sudden death left the establishment in limbo. After weeks of negotiations with the landlords and the estate, those plans have come together and a deal has been reached. Part of the agreement with the family is that the Bud’s name not be used. Everything else, from the martinis made with love to the uniquely delicious pub fare, will be the same, Bell said. Sources tell IAP new names being tossed around include “Dot and Jerry’s,” as play on the old Kat & Harri’s down the street. Meh. We can probably do better than that. Perhaps we can have a naming contest and appeal to Tyler. Of course, it will be difficult for many of us to call it anything other than Bud’s.

The important thing is that one of Alabama’s best political watering holes will be open soon. And just as important is that Bubba Burch, Montgomery’s most beloved bartender, is involved in the deal and will be back behind his bar.

Cheers to some good news!

Potpourri

Molly Cagle continues to be one of the most upwardly mobile politicos in Alabama. She will soon make the move from SHIPT, where she started earlier this year, to parent company Target. Of course, Cagle had been Vice President for Governmental Affairs and Executive Director of ProgressPAC at the Business Council of Alabama before making the move to SHIPT. Before that she did stints at Manufacture Alabama and the office of then-Senate President Pro Tem Del Marsh. Cagle will be Target’s Director Government Affairs – Southeast Region & REACH Project Manager.

Speaking of moving up quickly, Jason Isbell is making the move to corporate having been snagged up by Regions Bank. Isbell, who for years was the Vice President of Legal and Governmental Affairs for the Alabama Bankers Association, had less than a year ago taken a job with Maynard Cooper in its Montgomery lobbying shop. But the Maynard folks can’t be upset given that Regions is one of their biggest clients and the move is an unquestionable step up for Isbell. He’ll be Senior Vice President of State Government Affairs and Economic Development, covering the entire 15-state footprint for the state’s only Fortune 500 company when he begins his tenure in mid-August.

Laura Beth Joseph has been hired on as an Account Specialist at the Prosper Group. She is a long serving Alabama Republican on the state executive committee, Shelby County GOP, and then a twice elected city council member in Helena. She previously was Director of Marketing for Central State Bank. Alabama politicos will remember the Prosper Group for its co-owner, Jeff Vreeland, and their successful work in recent election cycles.

Congrats to all!

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