Legislative Update: February 1, 2015

The legislature just completed its first month of the session.   It has been a relatively quiet legislative session thus far.  However, the partisanship will likely heat up when the budget and appropriations work begins in earnest in mid-March.

This past week saw the Governor give his State of the State address.  As expected, the Governor called on the Legislature to pass the Governor’s Medicaid expansion proposal, and his Pre-Kindergarten initiative.

Other Legislation of Interest to the Industry

House Bill 5: As you know, the Governor has come forward with a ‘bonding’ proposal to pay for state-related construction projects.  And, as  you have likely read or heard, the Republican-led legislature has balked at paying for state construction projects using bonds, preferring to pay for such projects on a cash basis.

The Governor’s construction proposal was contained in House Bill 5.  The Bill was being carried by Republican Jeff Welborn of Dillon.  However, the Republican Legislature this week broke that larger bill into separate legislative proposals, thereby reducing the chances of an omnibus type package.

About two thirds of Bullock’s $391 million proposal uses bonding to pay for projects, including sewer systems and school facilities maintenance throughout the state.

Rep. Mike Cuffe of Eureka was quoted in the state’s papers as saying the Republicans are dividing House Bill 5 into seven separate bills. Cuffee didn’t say which of Bullock’s 280 proposed projects would be eliminated, but he said one measure would address funding for projects in parts of eastern Montana affected by the oil boom.

Tax Relief:

  1. Income Tax Relief: The House passed House Bill 166, sponsored by Rep. Keith Regier (HD 4 – Kalispell).  This bill, if enacted, will reduce each of Montana’s seven marginal tax rates on personal income by 0.1%.
  2. Business Equipment Tax Relief: House Bill 213 sponsored by Rep. Mike Miller (HD 80 – Helmville), was heard in the House Taxation Committee on Wednesday morning.  If passed, HD 80 would cut the business equipment tax by raising the amount of equipment valuation exempt from taxation from $100,000 to $500,000. More than 20 different business groups as well as several business owners supported the proposal.  The Governor’s office opposed this bill in Committee.
  3. Corporate Income Tax Relief: Sen. Tutvedt has reintroduced a corporate and other tax relief bill from last session that was vetoed by Governor Bullock.   The proposal was heard in front of the Senate Taxation Committee on Thursday.  Here are major provisions in the bill as described by he Montana Society of CPAs:

– The filing status would be the same as federal.

– Montana returns would start with federal taxable income and would reduce substantially the additions to and subtractions from Federal taxable income. This constitutes the most substantial aspect of simplification.

– By starting with federal taxable income, much of the effect of the repeal of subtractions and credits would be offset by the higher personal exemption and standard deduction allowed on a federal return for many taxpayers – especially those in the lower tax brackets.

– Tax rates would be 4.8% and 6% with separate rate tables for taxpayers who file a joint return, head of household, single, or married separate.

– The capital gains credit (2%) would be repealed. A 1.5% rate reduction would be adopted for capital gains. Taxpayers in the 4.8% tax bracket would have a 3.3% capital gains rate. Taxpayers in the 6% bracket would see a 4.5% rate.

– The corporate income tax rate would be reduced from 6.75% to 6.5% for most corporations. For corporations that make the water’s edge election, the rate would decrease from 7% to 6.75%.

CSKT Water Compact: In a major development, the Montana Stockgrowers Association, the Montana Water Resources Association and the Montana Farm Bureau Federation announced their support for passage of the CSKT water compact last week.

The Banking Commissioner’s Bills

Commissioner Hall’s clean up/compliance bills for the Division of Banking continue to make their way through the legislative process.  These bills and their status are as follows:

SB 75 – This bill seeks to better regulate nondepository lenders; namely out-of-state lenders.  The bill passed the Senate unanimously.  The bill has moved over to the House of Representatives for its consideration.  The bill will be before House Business and Labor on Tuesday.  MIB supports this legislation.  A copy of the bill is linked here: http://leg.mt.gov/bills/2015/billpdf/SB0075.pdf

SB 98 – This bill revises the Montana mortgage act by revising the criteria for who meets the mortgage licensing requirements, the amount of experience needed to be responsible for a mortgage, and by allowing the department to use national licensing forms approved by the NMLS, as opposed to state based forms.  During the hearing on this bill in the Senate, State Farm came in and again attempted to get an exemption from Montana for its contractors.  That state farm request was turned down by the Committee, but with an admonition from the Committee to Melanie Hall to engage in active discussions with State Farm about State’s Farm’s request.  This bill easily passed the Senate and has been sent to the House for its consideration.  The hearing is Tuesday.  A copy of the bill is linked here: http://leg.mt.gov/bills/2015/billpdf/SB0098.pdf

HB 66 – This bill provides that the call reports you electronically transmit to the FDIC or other federal banking regulatory agency satisfies the Department’s requirement for transmitting the same to Melanie; the bill also eliminates the Department’s legal obligation to requisition those reports.  MIB supported this bill during the house hearing.  The bill easily passed the House.  The Senate hearing is Tuesday.  The bill should easily be signed into law.  A copy of that bill is linked here: http://leg.mt.gov/bills/2015/billpdf/HB0066.pdf.

Other Bills of Interest to Banking

SB 39 – The Senate business and labor committee held a hearing on the Attorney General’s bill to authorize the AG to tackle and redress the problem of patent and copyright trolling.  Specifically, the bill authorizes a civil claim and civil penalty for instances of bad faith assertions of patent rights.  The bill received a favorable hearing, with only the trial lawyers raising objection.  MIB spoke in favor of this bill, and noted the instances where Montana banks are receiving abusive patent infringement letters related to ATM machines.  Several patent attorneys asked that the bill be amended to better protect the ability of true patent holders to send cease and desist letters.  The bill passed out of the Senate last week.  It will now go to the House for its consideration.  A copy of that bill is linked here: http://leg.mt.gov/bills/2015/billpdf/SB0039.pdf

SB 54 – This bill would authorize public disclosure of real estate sales prices for tax appraisals.  In effect, it would make reality transfer certificates filed on real estate sales a matter of public record.  Those certificates are not a matter of public record at present.  MIB did not take a public position on this bill.  There was strong testimony both for and against this legislation during the hearing, with the opposition coming mostly from realtors and title companies.  Last week, the Senate Tax Committee passed the bill unanimously.  A copy of that bill is linked here: http://leg.mt.gov/bills/2015/billpdf/SB0054.pdf

HB 29 – This bill revises the regulation of real estate appraisers, namely by making it easier to become a licensed real estate appraiser. This Bill would give the board of appraisers greater flexibility to train new appraisers.  At present, most, if not all of the out of state appraisal companies will not allow a state licensed trainee to participate in the completion of an appraisal assignment, nor will they allow an appraisal firm to assign an appraisal assignment to another appraiser in the firm. These two items have had a very negative effect on the appraisal and lending business.  The appraisers claims that there are 21,000 less appraisers as a result of Dodd-Frank. This bill is intended to give more authority to the state licensing entity to qualify new appraisers.  The bill passed out of committee unanimously last week.   It also passed the House with some no votes.  The bill moves to the Senate.  MIB supported this bill so long as it was amended.  The bill was amended in committee as requested.  A copy of that bill is linked here: http://leg.mt.gov/bills/2015/billpdf/HB0029.pdf

Other Bills Considered During the Week of January 26, 2015

HB 225 – The House business committee considered a bill on Friday proposed by the funeral directors association to allow them to deposit pre-paid funeral expenses in any banking institution that maintains an office in this state, as opposed to the current law that requires that the principal place of business for that institution be located within the state of Montana, and to give them 10 days to deposit such funds instead of 3.   Aside from the obvious problem of extending the depository time as it relates to possible theft of such funds, I don’t see a concern with this bill from the MIB perspective. A copy of that bill is linked here: http://leg.mt.gov/bills/2015/billpdf/HB0225.pdf

SB 53 – This bill would impose stricter fiduciary requirements and competency standards on those who serve as directors for credit unions.  MIB has taken no position on this bill, but the bill is, on its face, good public policy.  The bill passed out of Senate business committee unanimously.  It will be heard on the Senate floor on Monday.  A copy of that bill is linked here: http://leg.mt.gov/bills/2015/billpdf/SB0053.pdf

Bills to be Considered During the Week of February 2, 2015

TUESDAY
HB 41 Revise tax appeal laws – Rep. Chuck Hunter. Status: Passed in House.
HB 166 Lower state individual income tax rates – Rep. Kieth Regier. Status: passed in House; referred to Appropriations.

WEDNESDAY
HB 74 Require data breach notice to attorney general – Rep. Ryan Lynch. Status: Passed in House;
HB 306 Revise UI benefits for victims of domestic violence – Rep. Jennifer Eck
SB 4 Authorize temporary appointment in vacancy of workers’ comp judge – Sen. Tom Facey. Status: Passed in Senate;
SB 6 Clarify department of revenue’s uniform dispute review procedures – Sen. Fred Thomas. Status: Passed in Senate;

THURSDAY
HB 266 Referendum to lower individual income tax rates – Rep. Nicholas Schwaderer
HB 276 Constitutional amendment prohibiting income tax if there is a sales tax – Rep. Greg Hertz
SB 145 Revise allocation of oil and gas revenue for oil and natural gas impacts – Sen. Brad Hamlett
SB 228 Increase daytime speed limit – Sen. Jonathan Windy Boy
SB 231 Revise admissibility in evidence of seat belt use laws – Sen. Nels Swandel

FRIDAY
SB 136 Generally revise hazardous waste fees – Sen. Brad Hamlett
SB 205 Provide for the Hire Montana First Act – Sen. Robyn Driscoll

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