Washington Legislative Week in Review, January 12-16

The Washington State Legislature began its 2015 session last week under a contempt order from the Washington Supreme Court.

The order was issued last year for the legislature’s failure to comply with the 2012 McCleary decision, in which the justices ruled that lawmakers were underfunding Washington’s public schools—the first time the state’s Supreme Court has held its Legislature in contempt.

During odd numbered years like 2015—budget years—the legislature meets for 105 days, compared to 60 days in even years. Because of the contempt order and the other issues facing the legislature this year—taxes, transportation, and other education issues—many expect that lawmakers will need to extend the session even further, possibly up to the June 30 deadline.

NWCUA Legislative Priorities for Washington State

Priority #1: Protect the Credit Union Tax Exemption. With continued discussion around closing tax ‘loopholes’ as an alternative to raising taxes, tax exemptions will continue to be under scrutiny this year.

Priority #2: Improve the Washington Credit Union Charter. The Association is supporting DFI agency request legislation as well as pursuing additional legislation to fully implement the list of recommended changes to the Washington Credit Union Act created and approved by Association’s Governmental Affairs Committee and Board in 2014.

Priority #3: Protect Credit Unions from New & Burdensome Requirements.

Priority #4: Protect the DFI’s Reserves. The Association will continue to protect dedicated, non-appropriated accounts such as those maintained by the Department of Financial Institutions from being swept. Sweeps from DFI reserves could affect the operations of the Division, or result in fee increases for credit unions.

Bills We Are Tracking:

Credit Union Act

House Bill 1062 and its companion measure Senate Bill 5300 are the Association supported agency request legislation from DFI. The Association amended the draft legislation early to include several of our priorities. The bills would amend the Washington Credit Union Act by updating the regulatory enforcement powers of DFI over stated chartered credit unions and CUSOs. The bills would extend certain regulatory enforcement powers to DFI in regard to out-of-state credit unions, foreign credit unions, and persons holding themselves out as a credit union while seeking to do business in Washington State. The bills would also modernize certain corporate governance practices and remedies of involuntary liquidation or receivership. House Bill 1062 was referred to the House Business & Financial Services Committee where it received a hearing on Tuesday, January 13 and then received a do-pass recommendation and was passed out to the House Rules Committee on Wednesday, January 14. Association staff testified in support of the bill. Senate Bill 5300 is expected to be referred to the Senate Financial Institutions & Insurance Committee and receive a hearing on Wednesday, January 21.

Association staff continues to pursue additional changes to the Credit Union Act through a second bill. We expect that bill to be introduced soon and scheduled for a hearing next month.

Public Funds

House Bill 1304 and its companion measure Senate Bill 5265 are related to public funds and are being supported by the Community Bankers of Washington. The bills allow a public depository to arrange for reciprocal deposits of public funds and authorize public funds to be deposited in institutions located outside of the state if certain conditions are met. House Bill 1304 was referred to the House Business & Financial Services Committee where it is scheduled for a hearing on Tuesday, January 20. 

Patent Trolling

House Bill 1092 and its companion measure Senate Bill 5059 are AG request legislation. The bills create the Patent Troll Prevention Act prohibiting a person from making assertions of patent infringement in bad faith and authorize the Attorney General to bring an action to enforce provisions of the Act. House Bill 1092 was referred to the House Judiciary Committee where it received a hearing on Wednesday, January 14. Association staff signed in, in support of the bill. Senate Bill 5059 was referred to the Senate Law & Justice Committee where it is scheduled for a hearing on Tuesday, January 20.

Financial Fraud

Senate Bill 5069 creates the crime of possession of instruments of financial fraud and makes the unlawful possession of instruments of financial fraud a class C felony. A person commits this crime if they possess a device to receive financial information from an access device with the intent to commit financial fraud. An access device means any card, code, account number, or other means of account access that can be used to obtain money, goods, services, or that can be used to initiate a transfer of funds, other than solely by paper instrument. A device for receiving financial information may include, but is not limited to, wireless devices, magnetic card readers, video recorders, and automated teller machine overlays. The bill was referred to the Senate Law & Justice Committee where it is scheduled for a hearing on Tuesday, January 20.

House Bill 1090 and its companion measure Senate Bill 5058 reauthorize and expand the Financial Fraud and Identity Theft Crimes Investigation and Prosecution Program. House Bill 1090 was referred to the House Judiciary Committee where it is scheduled for a hearing on Tuesday, January 20.

Financial Literacy

House Bill 1121 changes the composition and duties of the Financial Education Public-Private Partnership (FEPPP), authorizes teachers appointed as members to be paid travel expenses from funds available, requires the Office of the Superintendent of Public Instruction (OSPI) to make financial education curriculum available to school districts with sufficient content to be equivalent to one-half of one high school credit and to select the courses with input from FEPPP. The bill also requires school districts to provide students in grades nine through twelve the opportunity to complete a financial education course. The bill has been referred to the House Education Committee where it is scheduled for a hearing on Thursday, January 22. 

Senate Bill 5202 contains all of the same provisions of House Bill 1121 with the addition of adopting the Jumpstart Coalition national standards in K-12 personal finance education as the Essential Academic Learning Requirements (EALRs) for financial education. The bill was referred to the Senate Early Learning & K-12 Education Committee where it is scheduled for a hearing on Tuesday, January 20.

Data Breach Notification

House Bill 1078 and its companion measure Senate Bill 5047 are AG request legislation. The bills strengthen data breach notification requirements and make violations subject to the Consumer Protection Act which gives consumers the right to recover damages and attorney fees. House Bill 1078 was referred to the House Technology & Economic Development Committee where it is scheduled for a hearing on Wednesday, January 21.

Credit Union Day at the Capitol

Join us! On Thursday, February 19 we will be holding our annual Credit Union Day at the Capitol in Olympia. Our goal is to have every legislator receive a visit from a credit union constituent on that day. The conference is free and the short program makes sending branch staff easier.

10:00 am – 4:00 pm
Free registration
Free parking (space limited)
No tie required (dress as you would for work – logo-wear encouraged)

If our state legislators don’t know anything about credit unions, or the great things we do for our members and our communities, then they assume we are just like banks.

Come help us share the credit union difference in Olympia. Register today!

Washington Legislative Priorities

Taxes

Even as state revenues are expected to grow by nearly $3 billion over the next two years, Democrats and Governor Jay Inslee have said that is not enough to address the court order on education while also paying for teacher and state worker raises, which have gone unfunded for years.

Inslee has already unveiled a budget proposal that includes some tax increases and elimination of tax breaks; the House and Senate will each present budget proposals in the coming months.

Inslee’s budget calls for $1.5 billion in new revenue for the 2015-17 budget, including $798 million from a proposed capital-gains tax, $379 million from a proposed cap-and-trade system for the state’s largest producers of carbon dioxide and other greenhouse gases, and $56 million from a 50-cent per pack cigarette tax as well as a tax on e-cigarettes and vapor products. Inslee’s plan also calls for the repeal of tax exemptions for oil refineries, the sale of bottled water, and limiting the sales tax exemption to $10,000 on trade-in value of used cars. 

Inslee’s capital-gains tax would place a 7 percent capital gains tax on earnings from the sale of stocks, bonds and other assets above $25,000 for individuals and $50,000 for joint filers. 

Republicans meanwhile believe the improving economy and current revenues are enough, and call on the legislature to prioritize their spending. 

Already, these differing opinions have come to the forefront. On the first day of session, the Republican controlled Senate approved a procedural rule that requires a two-thirds vote of the Senate to bring any new tax to the floor for a final vote. The rule would apply to any new tax, like the proposed capital gains or carbon tax proposals, or an income tax, but would not apply for raising existing taxing taxes like the sales or gas tax. Senate Democrats are saying they will challenge the rule as soon as they have an opportunity, claiming a Senate rule can never supersede or nullify the state constitution which clearly states that only a simple majority of lawmakers is necessary to pass regular legislation, including tax bills.

Education 

Lawmakers have been working to respond to a 2012 state Supreme Court ruling that said the Legislature isn’t adequately funding education, which is its paramount duty under the state constitution. The decision, known as the McCleary case for the family named in the suit, requires the state to find money to pay for all-day kindergarten across the state, smaller classes in the early grades, as well as student transportation and classroom materials and supplies. It also requires lawmakers to stop relying on local school levies to pay for these basic education costs.

In September, the court held the Legislature in contempt for its lack of progress, but withheld possible punishment until after the 2015 legislative session. Possible sanctions include fines for the Legislature or individual lawmakers, having the court rewrite the state budget, and revoking tax exemptions.

Lawmakers must also decide how to respond to the citizen initiative demanding smaller class sizes in every grade. State officials have estimated the initiative approved in November could add $2 billion to the upcoming two-year state budget.

Transportation

Lawmakers have been unable to reach agreement for two years over a revenue package to fund transportation improvements. House Democrats passed a $10 billion plan in 2013 that included a 10.5 cent increase in the gas tax which failed to pass the Senate. In 2014, Senate Republicans proposed a $12.3 billion transportation revenue package that included an 11.5 cent increase in the gas tax which also failed. The only agreement at this point is that any transportation package will need to start in the Senate, where Republicans are saying a gas tax increase will be on the table as long as reforms are. 

As a result of the 2014 elections, Republicans now hold a majority in the Senate, and Democrats, who have long controlled the House, saw their margin tighten after the last election. In the House, Democrats hold a 51-47 majority over the Republicans. Representative Frank Chopp (D-43) serves as Speaker of the House and Representative Dan Kristiansen (R-39) serves as Republican Minority Leader. In the Senate, Republicans hold a 25-24 majority over the Democrats. However, a Majority Coalition Caucus comprised of all Senate Republicans along with Democratic Senator Tim Sheldon (D-34) lead the Senate with a 26-23 majority. Senator Mark Schoesler (R-9) serves as the Majority Coalition Leader and Senator Sharon Nelson (D-34) serves as the Democratic Leader.

Here is the Makeup of Our Key Committees for 2015:

The House Business & Financial Services Committee has been reduced from 15 members down to 11 (6 Democrats, 5 Republicans). Republicans no longer on the committee are Reps. Susan Fagan, Brad Hawkins and Drew MacEwen. Democrats no longer on the committee are Reps. Cyrus Habib and Zack Hudgins. There was also a change in the Ranking Minority Member from Rep. Kevin Parker to Rep. Brandon Vick. New to the committee are Reps. Graham Hunt (R-2) and Gina McCabe (R-14).

  • Representative Steve Kirby (D-29), Chair
  • Representative Cindy Ryu (D-32), Vice Chair
  • Representative Brandon Vick (R-18), Ranking Minority Member
  • Representative Kevin Parker (R-6), Assistant Ranking Minority Member
  • Representative Brian Blake (D-19)
  • Representative Gina McCabe (R-14)
  • Representative Graham Hunt (R-2)
  • Representative Christopher Hurst (D-31)
  • Representative Linda Kochmar (R-30)
  • Representative Sharon Tomiko Santos (D-37)
  • Representative Derek Stanford (D-1)

The Senate Financial Institutions & Insurance Committee has been increased from 7 members up to 9 (5 Republicans, 4 Democrats), given a new name and a Chair. Republican Senator Don Benton (R-17) is now Chair of the Financial Institutions & Insurance Committee (housing issues will go before another committee). Sen. Jan Angel (R-26) serves as Vice Chair and Sen. Mark Mullet (D-5) serves as Ranking Member. Democrats no longer on the committee are Sens. Brian Hatfield and Sharon Nelson. New to the committee are Sens. Jeannie Darneille (D-27), Steve Litzow (R-41) and Jamie Pederson (D-43).

  • Senator Don Benton (R-17), Chair
  • Senator Jan Angel (R-26), Vice Chair
  • Senator Mark Mullet (D-5), Ranking Member
  • Senator Jeannie Darneille (D-27)
  • Senator Joe Fain (R-47)
  • Senator Steve Hobbs (D-44)
  • Senator Steve Litzow (R-41)
  • Senator Jamie Pedersen (D-43)
  • Senator Pam Roach (R-31) 

Look for the Washington Legislative Week in Review each week during session in Anthem. If you have questions or comments, please contact Mark Minickiello, mminickiello@nwcua.org, 206.340.4812.

Questions about this story? Contact James Pearson: 206.340.4790, jpearson@nwcua.org.

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