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Legislative Activity Accelerates as Bill Deadlines Loom

Major legislation has begun to advance at the State Capitol.

A bill authorizing a merger of the two existing teachers’ retirement programs – the Defined Contribution Plan and the Defined Benefit Plan – has been introduced in the House. The House of Delegates amended the Governor’s bill, to provide a state contribution to support those moving from the defined contribution plan to the defined benefit plan. Look for this bill to remain a focus of activity in the Legislature over the next three weeks, as the two Houses and the Governor attempt to reach agreement on a fiscally responsible plan that will resolve the continuing controversy over the proposed plan merger.

Tax Reduction Legislation Introduced

The long awaited Governor’s comprehensive tax reduction bill (SB 680 and HB 4587) was introduced in both Houses today. This bill addresses most of the problems with last year’s SB 749.

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 in the Governor’s bill. The fourth provision, relating to how tax is computed, has not been restored.

Despite repeated efforts over the past week to obtain some relief with regard to fourth element, we have been unsuccessful. Various possibilities have been explored, including provisions which would trigger a future conversion to combined reporting when any surrounding state adopts combined reporting for financial organizations; and a provision which would trigger such conversion on a state by state basis when any state in which a bank does business adopts combined reporting for financial organizations.

Several bankers have participated in meetings at the Statehouse this week. We thank the many of you who have actively participated in these efforts.

In our most recent meeting with Governor Manchin and top Tax Department officials, the Governor expressed support for a phase-in of the combined reporting requirements for banks. We are awaiting draft text from the Tax Department along these lines.

At present, the Governor’s tax reduction bill will be worked first in the Senate. We have met with Senate Economic Development Committee Chairman Brooks McCabe, who will be responsible for running this bill in the Senate. Senator McCabe has indicated his willingness and intention to run a phase-in amendment. We are presently assembling information regarding the impact of combined reporting on banks, for use by Senator McCabe in his work in the Senate. At this time, we expect support in the Senate for an appropriate phase-in of combined reporting for banks.

We anticipate greater challenges in the House of Delegates in respect of such a phase-in provision. We have met with the House Finance Committee Chairman, who has expressed his willingness to work with banks on this important issue. In the days and weeks ahead, we expect this bill to remain our #1 focus.

Paycard Legislation

Your Association has reached an agreement with the proponents of the paycard bill, HB 4032, regarding amendments to the text of the bill. The bill is presently pending in the Senate Finance Committee, where a committee substitute will include language prepared by your Association and agreed to by representatives of VISA. At this time, we expect this bill to advance toward passage in a form acceptable to bankers.

Notice of 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, will be 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.

SB 340 is expected to advance in the Senate Judiciary Committee on Monday or Tuesday. Possible minor amendments from other business groups may find their way into the bill as it advances, and such amendments will not modify the provisions exempting banks.

Predatory Lending

Following the refusal of a House Banking Subcommittee to report out HB 4007 (dealing with predatory lending abuses), a new bill has been introduced in the House of Delegates, and single-referenced to the House Judiciary Committee. This bill, HB 4563, revamps state law regarding deed of trust foreclosures. HB 4563 is wholly unacceptable to banks and many other groups.

The bill likely has sufficient support in the House Judiciary Committee to advance in that Committee and thereafter in the House of Delegates. We are currently assessing our most effective strategic options regarding this bill. We believe that there is little support for the bill in the Senate, and believe that it is very unlikely the bill will successfully complete its legislative journey in the 2008 Regular Session. We will actively monitor and oppose this bill.

Division of Banking

HB 2517 (Commissioner Stark’s bill requiring notice to the Division of Banking in respect of state banks’ and holding companies’ applications for out-of-state bank acquisitions) has passed both Houses, and is on its way to Governor Manchin.

SB 292 (Commissioner Stark’s bill allowing the Commissioner of Banking to collect certain unpaid penalties and invoices on bond claims) is also advancing nicely. SB 292 passed the Senate last week, and is presently pending in House Banking & Insurance Committee, where it is expected to advance without opposition later in the Session.

Tax Refund Anticipation Loans

SB 332, dealing with tax refund anticipation loans, was reported out of Subcommittee A in the Senate on Thursday, and is expected to be reported out of the Senate Banking & Insurance Committee on Tuesday. H&R Block is very interested in this bill, and worked to move the bill out of subcommittee. The bill was reported out in the same form that it was sent to Subcommittee A.

We have prepared a couple of amendments to the bill, which should be acceptable to the bill advocates, and which will improve the bill from the standpoint of banks. One amendment exempts banks from the requirements and restrictions regarding advertisements of refund anticipation loans, and the other amendment addresses an ambiguity in the bill. Based on feedback from many banks, we find the bill to be acceptable in the form it is likely to advance.

Other Items of Interest

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.

A bill modernizing provisions of the West Virginia Code regarding collateral for public deposits and the operation of the CDARs program will be introduced in both Houses on Monday. Thanks go to the several bankers who assisted in the preparation of this bill. We will report on this bill’s progress in the days ahead.

We are monitoring a new bill that has been introduced in the House of Delegates regarding tow trucks, HB 4325. An effect of the bill as introduced is, by severely restricting tow truck drivers, likewise to severely limit their ability to repossess automobiles. We will oppose the bill in its present form, and seek amendments if and as the bill advances.

Monday, February 18 is the last day to introduce bills in both Houses. Wednesday, February 27, is the deadline for all bills to have passed one House or the other. The imminence of these deadlines has caused the pace of activity to pick up noticeably in both Houses. The next three weeks will likely be busy for legislators and lobbyists alike.

 

New Bills of Interest to Bankers - Week 6

Following is a list of bills introduced this week that are of interest to bankers. Please visit our website for a complete listing of all bills being monitored by the Association.