Washington Legislative Week in Review

State Budget. House Bill 1087 passed the House on Saturday, April 9 by a mostly party-line vote of 53-43 with one excused. (Only Rep. Marko Liias, a Democrat from Mukilteo, crossed party lines to join the minority Republicans who voted as a block against the bill.) H.B. 1087 represents the House budget proposal for 2011-13. The bill reduces state spending by $4.4 billion and privatizes wholesale liquor distribution in exchange for a $300 million upfront payment. It also cuts nearly $500 million from higher education and stops automatic increases to state employee retirement plans. The bill now heads to the Senate, which is expected to release its own budget on Tuesday.

Tax Exemption Repeal. Over the past week (and ever since the House released its budget that cuts $4.4 billion in state programs) thousands of protesters have come to Olympia with one message: end tax breaks. Protests at the state capitol grew throughout the week culminating with about 7,000 protestors on site on Friday. Unions, immigrants, home-care workers and others called on legislators to find new revenue sources before they cut services. That strong message could lead to a shift of legislative opinion in favor of repealing some tax exemptions.

Much of the challenge with raising revenue comes from Initiative 1053, which requires a two-thirds majority of the legislature or a vote of the people to raise taxes in Washington. Legislators say they do not have the votes to meet this threshold. Protestors are challenging the legislature to try. Those protesting would rather see legislators try to pass a bill that would end tax exemptions and fail, than do nothing at all.

This message is starting to resonate with legislators. At least 11 freshmen lawmakers now say they plan to introduce a bill early this week to close tax exemptions. (Details are not yet available as to which tax exemptions are being targeted, but the banks expect their first mortgage deduction to be included.) In the Senate, Senator Ed Murray (D), the Chair of the Ways & Means Committee said he plans to have a hearing in his committee on some of the bills to end tax preferences, including Senate Bill 5857 (Senator Kohl-Welles’s (D) bill, which already received one hearing and would repeal all retail sales tax exemptions, use tax exemptions, tax deferrals, and B&O tax exemptions—including the credit union B&O tax exemption).

Association staff will continue to monitor these bills. Please stay tuned on this issue. If any proposal that repeals the credit union tax exemption gains traction, we will be calling on you for a strong and unified grassroots response.

Public Funds for Credit Unions. S.B. 5913 was introduced by Senator Steve Hobbs (D) on Tuesday, April 5 and referred to the Senate Financial Institutions, Housing & Insurance Committee. This bill mirrors the Association’s bill expanding public funds permissibility to federal charters and increasing public deposit limits to the amount of insurance, but also includes a technical amendment from the Treasurer’s Office (which the Association does not oppose.) Although the bill was introduced far too late in the session for passage, it reflects the Chair of the committee’s good faith interest in passing the bill during the second half of the 62nd state legislative session (2012).

State Bank (& Son of State Bank). H.B. 2040 received a hearing before the House Capital Budget Committee on Tuesday, April 5. The bill creates a 20-member task force, responsible for developing a means to use the state’s money to finance public works infrastructure, student loans, and economic development; and find alternate approaches that the state can use to assist in the financing of local infrastructure, and the cash management and banking needs of the state. The bill is scheduled for executive session on April 12.

Short Sales. S.B. 5590 passed the House on Tuesday, April 5 by a vote of 96-0 with one legislator excused. The bill generally requires a lender on owner-occupied residential real property to respond to a short sale offer within 120 days of receiving the offer. The bill includes an exemption for any financial institution that conducts fewer than 250 trustee sales per year, thereby making the bill inapplicable to most, if not all, Washington credit unions (although it is difficult to imagine the need for more than 120 days to respond to a short sale offer).

UCC Art. 9. H.B. 1492 passed the Senate on Tuesday, April 5 by a vote of 49-0. The bill makes modest changes to Washington’s Uniform Commercial Code relating to secured transactions (loans secured by personal property). The Association has some concerns about various provisions of the bill, and the bill’s sponsor has agreed to work with financial institution representatives over the legislative interim to address those concerns before the bill goes into effect in July, 2013.

Questions? Contact a member of the Association’s Legislative Affairs team:

Mark Minickiello, Vice President, Legislative Affairs
Stacy Augustine, Senior Vice President & General Counsel

Posted in Advocacy News.