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Filing Deadline Passes; Legislative Committee Work Underway

The filing period for candidates for office in 2008 ended on Saturday, January 26. Notable surprises in candidate filings included the late decision of Senator John Unger not to run for the U.S. House of Representatives from West Virginia’s 2nd Congressional District, and Anne Barth’s decision to run for this seat (Anne is a highly respected former aide to Senator Robert C. Byrd); and the technically deficient filing of House Banking Chairman Clif Moore (Chairman Moore’s filing papers apparently lacked the required acknowledgement by a notary public, and were therefore rejected upon filing).

Senate Bill 749 Fix Hits Snag

Your representatives at the State Capitol have spent much of the past week working with the Manchin Administration regarding the Governor’s comprehensive tax reduction bill, which amends last year’s SB 749. Despite expectations that the bill would be introduced this week, two or three issues, including an important issue for several banks, remain unresolved, and have delayed introduction of the bill. At this time, bill introduction is not expected until next week.

The special rules for taxation of banks have four components: (1) a nexus definition; (2) special apportionment rules; (3) sourcing rules for income of banks; and (4) provisions that establish the mechanics as to how tax is computed for multi-bank companies that do business in more than one jurisdiction. Last fall and again on January 3rd of this year, banks delivered a draft bill to the Administration with suggested language that addresses all four components of the special rules regarding bank taxation.

The first three of the rules have been restored with the draft bill that has been prepared by the Manchin Administration. The fourth provision, relating to how tax is computed, has not been restored. These four components, taken as a whole, represent the methodology by which banks compute and pay tax. The failure to restore the fourth provision results in material, unintended consequences for some banks. Our discussions with Administration officials over the past week have focused on this fourth provision.

The Governor’s Office provided assurances early in the week that the bill would not be introduced until this issue is resolved, and indicated that these issues should and would be resolved in a satisfactory fashion. As the week wore on, Tax Department officials continued to express concern over restoration of the fourth component noted above.

At this time, we remain hopeful of a positive resolution of this issue. On behalf of banks, we continue to emphasize that in order to achieve a true return to the status quo ante with respect to bank taxation, it is imperative that all four elements of the bank taxing rules be restored. The Governor’s Office remains receptive to this argument, and is working with the Tax Department as the Department further examines various considerations associated with such full restoration.

This bill remains the #1 agenda item for banks. We are working very diligently to assure that the Governor’s bill, when introduced, includes a full restoration of the provisions regarding bank taxation that have been in place since 1991. We will keep you posted on all material developments in this effort.

Paycard Legislation Advances

Your Association continues to work to address several drafting and operational concerns that have been expressed by banks with regard to HB 4032, the paycard bill. Based on discussions with legislators and others supportive of our contemplated amendments of this bill, we have decided to allow the bill to advance in the House in its introduced form, and to seek appropriate amendments in the Senate. The bill was reported out of the House Industry and Labor Committee on Wednesday, and will be passed by the House and sent to the Senate early next week.

An amendment to HB 4032 reflecting the suggestions of bankers from around the state is being prepared, and will be circulated to bankers for information and review upon completion. Next week we will be working with interested legislators and the proponents of the bill to amend the bill with the improved language suggested by several banks. Thanks to the many of you who have provided helpful assistance and guidance as we correct and improve the language of this bill.

Notice of Security Breach

SB 340, the notice of security breach bill being advanced by the AARP, faces opposition by many, many groups. At this time, it appears highly likely that the bill will be amended to fully exempt banks from the operation of the bill. Given the depth and breadth of opposition and concern regarding the bill, it appears that the bill will continue to face challenges as it moves forward.

Predatory Lending

HB 4007 (dealing with predatory lending abuses) is presently in a House Banking Subcommittee chaired by Del. Bill Hartman. The subcommittee will be meeting twice next week to receive information about HB 4007, and to learn more about its companion bill (not yet introduced in the House) dealing with foreclosures. Given the number of issues and problems that have been identified with the bill by a number of interested parties, sentiment appears to be building to consider the issues presented in greater detail in a Study Committee following the 2008 Regular Session. We remain hopeful about and vigilant regarding both bills.

Following is a list of bills introduced since last week’s Legislative Bulletin. For a complete listing, please visit our website. (www.wvbankers.org)

 

New Bills of Interest to Bankers - Week 4