2008 Legislative Session Draws to a Close; SB 680 On Its Way to Passage
With one day to go, all major legislation in the 2008 Legislative Session remains on track. The final 24 hours will likely witness the reconciliation of the competing bills regarding the teachers’ retirement system and the passage of the bill of greatest interest to bankers this session – SB 680.
The big news of the week is the successful and steady advance of SB 680. SB 680 passed out of the House Finance Committee unanimously on Wednesday and is on third reading today in the House of Delegates. At this time we anticipate that upon passage by the House of Delegates today, the Senate will accept the bill in the form adopted by the House Finance Committee. Final passage of the bill will likely occur Saturday night, as SB 680 is centerpiece legislation of the 2008 session.
All provisions of interest to banks that we have been working on over many weeks are included in the agreed bill. Provisions negotiated and agreed to over the past few days regarding partial tax credits for goodwill in certain out-of-state bank acquisitions are included.
A global amendment to SB 680 was adopted by the House Finance Committee on Wednesday that did the following:
- Amended SB 465 (which provides for the elimination of Business Franchise Tax (“BFT”) over seven years) into SB 680, all as anticipated.
- Created a new tax credit for manufacturers, in a new article entitled the “West Virginia Manufacturing Property Tax Adjustment Act.” The Act gives a credit for the amount of ad valorem property taxes paid by manufacturers on inventory against the BFT and Corporate Net Income Tax (“CNIT”).
- Created a goodwill tax credit for certain bank acquisitions in the form agreed to between banks and the Tax Department early in the week; and
- Restored the CNIT tax reduction schedule included in SB 680 as introduced by Governor Manchin, with provisos that in 2012, 2013 and 2014, the CNIT tax reductions will be suspended if the Rainy Day Fund falls below 10% of the state budget for that year.
When SB 680 was passed in the Senate last week, it was amended on the Senate floor to accelerate the reduction in CNIT. This acceleration upset the carefully crafted fiscal balance of the bill and was actively opposed by the Administration, the Senate leadership, business, labor, manufacturers and others. Labor had threatened to oppose the bill in the House unless the bill was corrected.
In subsequent negotiations between labor and the Administration earlier this week, labor initially requested that the CNIT reduction stop with one 0.25% drop in 2009. Labor ultimately indicated that it could support the restoration of the further CNIT reductions in 2012, 2013 and 2014 included in the Administration bill, if the Administration would include a “trigger” for cessation of credits in the out years if the State’s Rainy Day Fund (“RDF”) falls below 10% of the state budget. (Currently the RDF is funded at approximately 15% of budget, and the RDF has been growing significantly in recent years.) The Administration agreed with the proposal, and the stage was set for the bill to run on Wednesday in House Finance.
A final amendment made in the House Finance Committee on Wednesday requires disclosure of the amount of credits taken against the BFT and CNIT, all subject to existing taxpayer confidentiality provisions regarding individual taxpayer specific information.
Significantly, SB 680 passed unanimously out of the House Finance Committee. It is hard to overstate the level of support and enthusiasm for the bill as passed by House Finance from business and labor, Republicans and Democrats, and the many interest groups following the bill.
Governor Manchin, Tax Secretary Helton, Tax Commissioner Morris and other members of the Tax Department staff, the House and Senate leadership and their staffs deserve enormous credit for crafting such a comprehensive package involving so many interested parties. Secretary Helton did an outstanding job fielding a question from Delegate Reynolds (D-Cabell) on the effect and operation of the goodwill amendment, and deserves recognition for a masterful job on all scores.
The week witnessed other successes on bills of interest to banks.
Pay Card Bill
The pay card bill, HB 4032, was amended on Thursday to include language requested by banks in the Senate Finance Committee, and is on track for passage by the full Legislature on Saturday.
As anticipated, consumer advocate groups sought three amendments to HB 4032 in the Senate Finance Committee. All three amendments were rejected. Forcefully articulating the position of banks in opposition to the amendments was Senator McCabe (D-Kanawha), who was also the architect of the tax bill package (SB 680 and SB 465) in the Senate.
Senator McCabe has been a great leader and a true friend of banks in the Senate throughout the 2008 Regular Session, and deserves recognition and appreciation by all West Virginians for his continuing leadership and hard work.
Security Breach
SB 340 (the notice of security breach bill) passed the House of Delegates on Wednesday in the same form as passed by the Senate last week and is on its way to the Governor for signature. The amendments to the “agreed to” bill that were inserted by the House Judiciary Committee late last week were subsequently stripped out of the bill by the committee, restoring the bill to its “agreed to” form, setting the stage for smooth sailing for the bill thereafter.
Other Items of Interest
SB 292 (Commissioner Stark’s bill allowing the Commissioner of Banking to collect certain unpaid penalties and invoices on bond claims) passed the House of Delegates on Thursday and is on its way to Governor Manchin for signature.
SB 417 (the bundled rules bill that includes rules permitting the sharing of insurance commissions) is on third reading today in the House of Delegates, where it is expected to pass. The House has passed an amendment to an unrelated section of the bill and, accordingly, the bill will return to the Senate, where it is expected to pass.
The CDAR’s bill (HB 4692) is advancing nicely in the Senate. The bill is on third reading today and is expected to pass in the form passed by the House of Delegates.
SB 332, dealing with tax refund anticipation loans, appears to have met its demise this week in the House of Delegates. This bill was advocated by H&R Block. Early in the session we were able to amend the bill to put it in a form acceptable to banks. The bill is on second reading in the House of Delegates, but has been put on the House Calendar, which is the inactive calendar in the House of Delegates.
The tow truck bill, SB 556, is stuck in a ditch in the House of Delegates, and it does not appear that it will pass this session. Prior to passage of the bill in the Senate last week, your Association was successful in obtaining an amendment that exempted repossessions of collateral by financial institutions from the consent requirements of the bill. As with SB 332, opposition to SB 556 in the House of Delegates was strong enough to stop the bill in its tracks.
Following is a list of active bills introduced thus far, or carried over from the 2008 Session, that are of interest to bankers.
2008 Senate Bills - Title - Status
SB 193 - Allowing lenders' sale of home and automobile membership plans - Committee substitute passed Senate Banking & Insurance 2/13/2008; passed Senate 2/18/2008; to House Judiciary
SB 292 - Allowing Commissioner of Banking issue bond claims to collect certain unpaid penalties and invoices - Senate Banking & Insurance Committee substitute passed 1/30/2008; passed Senate 2/04/2008; passed House Banking & Insurance Committee with title amendment 2/21/2008; passed House Judiciary 3/03/2008; passed House 3/06/2008
SB 332 - Providing regulations and disclosure requirements for anticipatory tax refund loans - Passed Senate Banking & Insurance with amendment 2/20/2008; Committee substitute passed Senate Judiciary 2/25/2008; passed Senate with amendment 2/27/2008; passed House Finance with amendment 3/05/2008; on second reading House
SB 340 - Requiring consumers' notification of information security breach - Committee substitute passed Senate Judiciary 2/21/2008; passed Senate 2/25/2008; passed House Judiciary 3/03/2008; passed House with title amendment 3/05/2008
SB 417 - Authorizing Department of Revenue promulgate legislative rules - Passed Senate Banking and Insurance Committee 2/01/2008; Committee substitute passed Judiciary 2/22/2008; passed Senate, with amendment 2/27/2008, effective from passage; passed House Judiciary with amendment 3/05/2008; on third reading House
SB 465 - Eliminating Business Franchise Tax - Passed Senate Finance, with amendments and title amendment 2/14/2008; passed Senate with amendments 2/25/2008; to House Finance
SB 556 - Requiring owner's or operator's prior written authorization to tow vehicle - Passed Senate Transportation and Infrastructure 2/22/2008; Committee substitute passed Senate Judiciary 2/25/2008; passed Senate 2/27/2008; passed House Judiciary with amendment 3/05/2008; on second reading House
SB 680 - Relating to corporate net income tax and business franchise tax; combined reporting - Passed Senate Finance with amendment 2/21/2008; passed Senate with amendment and title amendment 2/27/2008, made effective from passage; passed House Finance with amendment 3/05/2008; on third reading House special calendar
2008 House Bills - Title - Status
HB 4018 - Renewing the West Virginia Small Business Linked Deposit Program - Passed, with amendment House Industry, Labor, Economic Development & Small Business 2/07/2007; Committee substitute passed Finance 2/19/2008; passed House 2/22/2008, made effective from passage; passed Senate Government Organization 3/03/2008; passed Finance 3/06/2008; on second reading House
HB 4032 - Relating to payment of wages through a direct deposit system - House Industry, Labor, Economic Development & Small Business passed Committee substitute 1/31/2008; second reading dispensed; passed House 2/05/2008; passed Senate Finance with amendment 3/06/2008; on second reading House
HB 4156 - Permitting a governing body of a municipality to place a lien on property in an amount equal to the demolition and removal of a hazardous structure. - Passed House Political Subdivisions with amendment 1/31/2008; Committee substitute passed Government Organization 2/20/2008; passed House 2/25/2008; passed Senate Government Organization with amendment and title amendment 3/05/2008; on third reading House
HB 4290 - Expanding the electronic commerce activities of the Treasurer and Auditor - Committee substitute passed Government Organization 2/24/ 2008; dispensed with second reference; passed House 2/26/2008; passed Senate Finance 3/06/2008; on second reading House
HB 4420 - Imposing corporate net income tax on certain regulated investment companies and real estate investment trusts used as tax sheltering vehicles (FN) - Committee substitute passed House Finance 2/20/2008; passed House 2/25/2008 with title amendment; passed Senate Finance 3/04/2008; on third reading
HB 4421 - Repealing the corporate license tax and creating corporate license tax replacement fees - Committee substitute passed House Finance 2/22/2008; passed House 2/26/2008; passed Senate Finance 3/04/2008; passed Senate 3/05/2008, effective July 1, 2008; request Senate concur
HB 4692 - Permitting depositories of state, county, municipal and other public moneys to pool securities - Committee substitute passed House Finance 2/24/2008; passed House 2/27/2008; passed Senate Government Organization 3/05/2008; second reference dispensed; on third reading House
House Carry Over Bills - Title - Status
HB 2517 - Providing that the Board of Banking and Financial Institutions have the authority to approve acquisitions of out-of-state banks by WV state banks - Passed House Banking & Insurance with amendment 1/24/08; second reading dispensed; passed House with amendment and title amendment 1/29/2008; passed Senate Banking & Insurance 2/01/2008; second reference dispensed; passed Senate 2/06/2008; approved by Governor 2/14/2008. - ACTION COMPLETED