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Session Reaches Midpoint; Bill Deadlines on the Horizon

Your representatives at the State Capitol have continued to work hard on the Governor’s comprehensive tax reduction bill, which amends last year’s SB 749. Despite expectations that the bill would be introduced this week, an important issue for several banks remains unresolved, and this has continued to delay introduction of the bill. The bill will not be introduced 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.

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 two weeks have focused on this fourth provision.

The Tax Department continues to oppose restoration of the fourth provision on policy grounds. The Governor and House Finance Chairman Harry Keith White have also expressed concerns over restoration of the provision, and they have been working actively with your Association to explore alternatives to the restoration of the fourth provision. As yet, no mutually satisfactory alternative has been found.

The Administration, the legislative leadership and your Association intend to identify and craft a mutually acceptable resolution of this important issue, and to include such resolution in a bill or bills to be introduced by the Administration. With approaching bill deadlines, there is pressure to introduce a bill by no later than the end of next week.

As we enter the new week, we will continue to work diligently on this important issue.

Pay Card Legislation

Your Association continues to work on several drafting and operational concerns that have been expressed by banks with regard to HB 4032, the paycard bill. The bill was passed by the House of Delegates on Tuesday, and has been referred to the Finance Committee in the Senate. Based on the input and suggestions of many banks from around the state, we have provided amendatory language to the proponents of the bill. We anticipate that revisions in substantially the form we have presented will be acceptable to the bill’s supporters, and will be incorporated into the bill as it is worked in the Senate.

Thanks to the many of you who have provided helpful assistance and guidance as we correct and improve the language of this bill. We will continue to keep you posted as this bill advances.

Security Breach

SB 340, the notice of security breach bill being advanced by the AARP, has been comprehensively amended. The so-called “ALEC” version of the bill, strongly favored by many constituencies, including bankers, has been amended into SB 340. The bill as amended fully exempts banks from its operation, and we find the bill acceptable to banks in its present form.

A representative of the Attorney General’s Office continues to seek a further amendment to the bill, which amendment is opposed by many groups. At this time, we expect the bill to advance to passage in its present form. We, and others, will continue to monitor the progress of this legislation.

Predatory Lending

There were two meetings of the House Banking Subcommittee this week on HB 4007 dealing with predatory lending abuses. Based on information received at those Subcommittee meetings, Subcommittee Chairman Bill Hartman and other members of the Subcommittee are strongly opposed to the bill. House Judiciary Chairwoman Carrie Webster has expressed her displeasure at the opposition of the Subcommittee to the bill, and has indicated an intent to advance a bill in some form in the House.

We will continue to actively participate in all meetings and legislative efforts involving this bill (and its companion bill dealing with deed of trust foreclosures). Significant consensus continues to build in both houses to consider the issues presented in greater detail in a Study Committee following the 2008 Regular Session.

Division of Banking

Banking Commissioner Stark’s two bills, SB 275 (requiring notice to the Division of Banking in respect of state banks’ and holding companies’ applications for out-of-state bank acquisitions) and SB 292 (allowing the Commissioner of Banking to collect certain unpaid penalties and invoices on bond claims) are both advancing nicely. SB 292 passed the Senate on Monday, and SB 275 is on second reading in the Senate (with a reference back to the Senate Banking & Insurance Committee). At this time we expect both bills to advance to passage.

CDARS

Thanks to the input of several bankers from around the state, we now have a solid working draft of a CDARs bill. This bill modernizes provisions of the West Virginia Code regarding public deposits and the operation of the CDARs program. We are finalizing the bill, and plan to seek introduction of the bill next week.

Finally, SB 415 and its House counterpart, HB 4198 (permitting the sharing of insurance commissions), have both advanced out of committee in their respective houses, and appear well on their way to passage. Your Association supports these bills, and anticipates the continued advance of both bills.

Following is a list 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 5