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Pace of 2008 Session Remains Measured

With one day left before the 2008 filing deadline, the pace of the 2008 Regular Session remains measured, as expected. The filing period ends at midnight on Saturday, January 26. Look for the pace of the Session to accelerate next week.

The Legislative Leadership and Governor Joe Manchin are in active dialogue and debate over a number of items in the Governor’s budget. The Governor has budgeted several accounts in a very detailed fashion, and captured monies and positions in the budget that historically have been left to the discretion of the Legislature. Negotiations over these issues are likely to continue throughout the Session, as the budget will not be finally adopted until the week after the Session ends.

Senate Bill 749

Governor Manchin and his Tax Department leadership and senior staff met this week with representatives of the Business and Industry Council to review the Governor’s plans for a comprehensive tax reduction bill to amend last year’s SB 749. The Governor hopes to introduce the bill next week.

The bill includes reductions in the corporate net income tax and other reductions in tax burdens faced by certain manufacturers; and provisions that restore all key, substantive provisions of the banking tax laws that were eliminated last year by SB 749, and which banks had requested be restored.

Taken together with the tax reductions included in last year’s SB 749, the Governor’s bill will reduce business taxes in the aggregate by an estimated $175 million annually when the tax reductions specified by the bill are fully implemented (the corporate net income tax reductions are phased in over a period of years, and full implementation of these tax reductions is not contemplated under the bill until 2015).

Tax receipts from the combined reporting provisions of the bill, as modified from last year’s SB 749, are estimated to increase $32 million annually. According to Tax Department officials, the bill, taken together with the reductions contained in last year’s SB 749, represents a collective reduction of business tax burden of roughly $143 million annually.

Most businesses and groups like the bill. Several individual taxpayers, including some large, multinational manufacturers, have concluded that they face tax increases (at least in the early years of implementation of the changes), as a result of the combined reporting provisions of the Governor’s proposed bill. The tax burden of the bill falls largely on national and multinational companies with substantial assets outside the state. Businesses with a substantial percentage of assets and activity within West Virginia generally fare well under the revised combined reporting provisions.

One technical amendment to the Code requested by banks regarding filing of returns was not accepted by the Administration. We do not believe that the absence of clear guidance on the technical issue in question is a material issue.

We believe that the Governor’s proposed tax reduction bill represents a fulfillment of the commitment last year by Governor Manchin and the Legislative Leadership to restore the provisions of the Code regarding taxation of banks to those existing before the passage of SB 749 last year. The bill includes a significant reduction in business tax burden, and continues the forward progress of the Governor and Legislature in terms of achieving a business-competitive tax structure.

The Governor has exhorted the business community to be and remain fully united behind this bill. Most businesses and business groups are in strong support of the bill, with a few businesses assessing how to proceed under the circumstances. At this time, the situation looks very positive for banks, and we remain hopeful that there will be extremely strong consensus to move the bill forward in substantially the form presented by the Governor to the Business and Industry Council on Wednesday.

Next week will be a critical week in this ongoing dialogue among many interested constituents. Once the Governor’s tax reduction bill is introduced, it will become much more difficult for any interested party to achieve material changes to the bill. We will continue to monitor this bill very closely, and will keep you posted on all material developments.

Your Association is working to address the several drafting and operational concerns that have been expressed by banks with regard to HB 4032, the paycard bill, and we anticipate being able to amend this bill so that it is advanced in a form that is acceptable to banks.

Security Breach Legislation

SB 241, the notice of security breach bill being advanced by the AARP, was reintroduced on Thursday of this week as SB 340. We are working with staff of the Judiciary Committee to fashion a bill that does not impose new or additional duties on the banking industry.

House Committee Action

HB 4007, has been referred by House Banking Chairman Clif Moore to a subcommittee chaired by Del. Bill Hartman. The subcommittee is aware of and very sensitive to the issues and concerns expressed by banks, and we have established a good working relationship with the subcommittee on these issues. As with the other key legislation referenced in this update, we will keep bankers actively advised of all material developments with regard to this bill.

HB 4112, requiring notification of law enforcement officials prior to or “immediately after” a lender repossesses an automobile, is on the House Judiciary Committee agenda for Monday, January 28 . Your Association has reviewed this bill closely, and based on feedback from several bankers, we believe that this bill is in a form acceptable to banks.

Following is a listing of bills introduced thus far, or carried over from the 2007 Session, that are of interest to bankers.

 

New Bills of Interest to Bankers - Week 3