Washington Legislative Week in Review: Revenue Forecast Predicts Unexpected Surplus
March 26, 2013
March 26, 2013
The March revenue forecast released last week by the Washington Legislature’s non-partisan Economic & Revenue Forecast Council shows a net gain to the state’s bottom line, projecting $40 million more in state revenue over the coming fiscal years than originally predicted.
Because Washington State is required by law to maintain a balanced budget, the forecast guides the operating budget proposals by telling the Legislature exactly how much money it has to work with. The latest tax-revenue projections indicate the state will take in $59 million more than expected in the current fiscal year and $19 million less over the next two years. So the bottom line is, the legislature has an extra $40 million to work with.
While the situation is better than expected, the Legislature still faces an overall budget shortfall of up to $1.3 billion, in addition to a state Supreme Court mandate to increase education funding estimated to total between $500 million and $1.7 billion over the next two years.
The Majority Coalition Caucus in the Senate is expected to produce a budget proposal first—possibly as early as next week—followed by the House. Gov. Jay Inslee is also expected to release a proposal but has not set a date.
The Northwest Credit Union Association (NWCUA) is closely monitoring Governor Inslee’s revenue proposal, which is expected to include a list of tax exemptions to close that is reportedly worth hundreds of millions. He is expected to make some use of recommendations made by the Joint Legislative Audit & Review Committee (JLARC)—the group that assesses tax exemptions—over the past several years. Following its most recent review in 2011, JLARC recommended the continuation of the Washington state-chartered credit union B&O tax exemption.
The NWCUA will continue to monitor the budget proposals for impact on credit unions.
Last week, the House Business & Financial Services Committee held hearings on the consumer loan act, debt adjusters, Department of Financial Institution (DFI) request legislation, real estate agencies, and insurance. The Senate Financial Institutions, Housing & Insurance Committee also held hearings on escrow agents, title insurance, impounded vehicles, landlords, deeds of trust, DFI request legislation, homeowner’s associations, insurance, and appraisers.
Other bills of interest to credit unions have seen activity recently as well, including:
Washington Credit Union Act – Senate Bill 5302 was passed to the House Rules Committee for a second reading on March 19. The bill now awaits a “pull” to the House floor for a vote. The House passed House Bill 1582, a companion mesure to SB 5302, on March 5 by a vote of 96-0.
Credit Card Surcharging – Engrossed Substitute House Bill 1870 is scheduled for a hearing before the Senate Commerce & Labor Committee on March 27. The bill requires clear and conspicuous disclosure when a surcharge will be imposed on a cardholder who elects to use a credit card in lieu of payment by other means. The Association has concerns with this bill as amended, since it now codifies a right to surcharge which should be left to federal law.
Small Consumer Installment Loans – Substitute Senate Bill 5312 is scheduled for a hearing before the House Business & Financial Services Committee on March 27. The bill creates the Small Consumer Installment Act and requires businesses offering the small consumer installment loan to be licensed and regulated by DFI. It is being reported that Representative Steve Kirby, Chair of the committee will be proposing significant changes to SB 5312 to make it more consumer-friendly. While the changes are not official yet, Chairman Kirby is said to be proposing:
- Shorter loans – cap the loans at 12 months, instead of 6-18 months.
- Partial origination fee rebate – lenders rebate up to half of the loan’s 15% origination fee if the loan is paid off early.
- Caped monthly maintenance fee – cap the fee at $90, instead of a monthly service fee of $7.50 per $100 borrowed (which on a $1,500 loan would be $112.50).
- No maintenance fee charged if the loan is paid in less than 30 days.
- Capped delinquent payment penalty – penalty capped at $25, and only one penalty could be charged per loan, instead of a penalty of up to 10 percent of the missed payment.
- Loan limits – borrowers would be limited to 12 loans per year, and could only have one outstanding loan at a time (using the same database the state now uses to track payday loans).
- Repayment plan – lenders to offer a repayment plan if a borrower defaults on a loan.
- Restrictions on military – restricts military members from taking out the new loan.
Financial literacy fee – lenders to pay a $1 fee for each loan they make, directed to a financial literacy program run by DFI.
- Early payment disclosure – lenders to disclose to borrowers the option of paying off the loan early.
Questions? Contact a member of the Association’s Legislative Affairs team: