Washington Legislature Looks to Bridge $1.5 Billion Budget Shortfall During Regular Session
January 17, 2012
January 17, 2012
The Washington State Legislature returned to Olympia on Monday, Jan. 9, for the start of its regular 60-day session, with the main task at hand being to close a roughly $1.5 billion budget shortfall. As was the case in their recent special session, taxes and tax exemptions remain a large part of the discussion.
Governor Christine Gregoire is proposing a temporary half-penny sales tax hike while also asking for a court ruling on the constitutionality of Initiative 1053 (passed by voters in 2010), which requires a two-thirds vote of the legislature to raise taxes or remove tax exemptions. In addition, she is pushing for an oil barrel tax to help fund transportation projects in the state.
The Northwest Credit Union Association’s (NWCUA’s) effort to modernize Washington state’s public depositary laws received early action in the Senate, with a hearing on Senate Bill 5913 before the Senate Financial Institutions, Housing & Insurance Committee on Wednesday, Jan. 11. The bill would allow federal credit unions to become public depositaries and raise the amount that state public units could deposit at a credit union to the current level of federal share insurance. The current limit for state chartered credit unions is $100,000.
Spokane FCU President and CEO Debie Keesee and NWCUA Senior Vice President Stacy Augustine testified on behalf of the bill along with Assistant State Treasurer Wolfgang Opitz. The City of Seattle also signed in to support the bill.
At the hearing, Chairman Steve Hobbs announced additional testimony on the bill would be taken at the committee’s next hearing today, and that the bill would likely receive a committee vote at that time—if it has the necessary votes.
The public funds companion bill in the House, House Bill 1327, is currently in House Rules Committee, having passed the House but failed to pass the Senate during the last session. House Business & Financial Services Committee Chairman Steve Kirby has indicated his preference for pulling the bill directly to the House floor rather than holding additional hearings on the bill in the House.
Additional bills worth noting from last week:
- Garnishment: House Bill 1552 relating to garnishment is scheduled for a hearing before the House Judiciary Committee on Thursday, Jan. 19. The bill would increase exemption levels. Consumer advocates argue that Washington should be toward the middle or upper end of garnishment levels nationally. A new draft of the bill is expected to be released before the hearing. Association staff will remain vigilant in watching for any significant impact the bill may have on credit unions.
- Financial Institution Taxes: HB 2157 relating to increasing tax revenue was reintroduced on Monday, Jan. 9, and referred to the House Ways & Means Committee. The bill would limit the B&O tax deduction for first mortgage interest to banks that operate in fewer than 10 states (effectively repealing the tax deduction for large banks). The bill would also impose an additional B&O surtax on specified financial businesses that generate substantial profits. The bill would apply to a financial business (which includes credit unions) that reported annual net income before taxes of at least $1 billion.
- Financial Literacy: House Bill 2268 was introduced on Tuesday, Jan. 10, and referred to the House Education Committee. The bill would establish financial literacy as a high school graduation requirement.
- Foreclosures: House Bill 2421 relating to modifying the Foreclosure Fairness Act was introduced on Friday, Jan. 13, and referred to the House Judiciary Committee. The bill is currently a work in progress, with additional substantive amendments to be offered later in the legislative process. Association staff has been involved in working on the negotiated changes to last year’s bill.
- State Bank: House Bill 2434 relating to establishing the Washington Investment Trust was introduced on Friday, Jan. 13, and referred to the House Business & Financial Services Committee. The bill would create the Washington Investment Trust as a legacy institution that would amass sufficient capital reserves to address opportunities now and in the future. The bill creates the Washington Investment Trust Commission as the primary governing authority, creates the Trust Transition Board and the Investment Trust Advisory Board, and exempts the trust from payment of all fees and taxes levied by the state or any of its subdivisions.
- Document Recording Fees: Senate Bill 5952 relating to low-income and homeless housing assistance surcharges is scheduled to receive executive action before the Senate Financial Institutions, Housing & Insurance Committee on Wednesday, Jan. 18. The bill increases county recording fees from the current $30 surcharge for local homeless housing and assistance to $40.
- Real Property Recording: Senate Bill 6070 relating to recording residential real property was introduced on Wednesday, Jan. 11, and referred to the Senate Financial Institutions, Housing & Insurance Committee. The bill would require that every assignment or transfer of a deed of trust be recorded in every county in which all or part of the land is situated. The proposal is potentially expensive and burdensome to all real property lenders.
- Drivers Licenses: Senate Bill 6150 relating to a facial recognition matching system for drivers licenses, permits, and Identicards was introduced on Thursday, Jan. 12, and referred to the Senate Transportation Committee, where it is scheduled for a hearing on Thursday, Jan. 19. The bill changes legislation passed in 2006 that required the Department of Licensing to adopt a facial recognition matching system for driver licensing and certain other types of identification. The Association was in favor of developing the facial recognition system, as it was anticipated to increase the reliability of Washington State drivers licenses, and may, therefore, oppose the bill.
- Income Taxes: House Bill 2486 establishes a 1-percent personal and corporate income tax in the state of Washington. The bill also makes other significant changes to Washington’s tax structure. According to the Association’s current analysis of the bill, the tax should not be applicable to credit unions as federally-exempt entities, but staff will continue to monitor the bill closely for its impact on credit unions.
Questions? Contact a member of the Association’s Legislative Advocacy team:
Posted in Advocacy News.