Legislative Update: February 17, 2015

The legislature is now into its seventh week – and things are starting to move fast with the transmittal deadline being only two weeks away.

For those of you know familiar with the legislative process, the transmittal deadline means that a bill that has been introduced in the House has to have been passed by the house by that date and moved over to the Senate for its consideration.

This week’s interesting legislation includes:
  • Repeal of the death penalty;
  • A proposal to transfer management of federal public lands to the State of Montana for management purposes;
  • A bill to require persons to pass a drug test before they can receive public assistance;
  • Campaign finance reform proposals;
  • The CSKT water compact.
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 is contained in House Bill 5.  The Bill is being carried by Republican Jeff Welborn of Dillon.  That bill passed out of the appropriations committee on Tuesday, with the Republicans cutting surprisingly little from the proposal.  The only large appropriation that was stripped was a proposal that authorized FWP to buy more property.

The Republicans have indicated that they are going to break that larger bill into separate legislative proposals, thereby reducing the chances of an omnibus type package. However, that action has not taken place at this time.  You can review what is in HB 5 by clicking on this link: http://leg.mt.gov/bills/2015/FNPDF/HB0005_1.pdf.

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%.  The Senate hearing was held this past week.  There is an excellent article on that hearing linked here: http://flatheadbeacon.com/2015/02/13/senate-hears-tax-cut-plan-gop-representatives/.
  1. Business equipment tax relief: House Bill 213 sponsored by Rep. Mike Miller (HD 80 – Helmville) has passed the House Tax Committee. It is awaiting house floor action. 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.
  1. Corporate income tax relief: Tutvedt has reintroduced a corporate and other tax relief bill, SB 157 from last session that was vetoed by Governor Bullock. The proposal was heard in front of the Senate Taxation Committee on Thursday the 4th of February.  Here are major provisions in the bill as described by the 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

The water compact bill has been introduced by Senator Vincent of Libby.  It had its first hearing in Senate Judiciary on Monday.  The halls of the Legislature are filled with rumors of trading of votes on the water compact.

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 has now passed both the Senate and the House of Representatives.  The bill has been sent to Governor Bullock for his signature.  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 the House.  The bill has been sent to the Governor for his signature.  MIB supports this legislation.  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 and the Senate.  The bill has been transmitted to the Governor, and 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 Montana’s Community Banks

SB 39 – This is 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 House hearing has yet to be scheduled.  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.  The Senate passed this bill this week, with 21 votes against.  The bill now moves to the House for consideration.  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 claim that there are 1,000 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 the House with some small opposition last week, 10 votes against.  The bill moves to the Senate.  A Senate committee hearing is slated for February 18th.  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

HB 225 – The House passed 100-0 the bill 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.  The bill now moves to the Senate.  A hearing will be held on the 19th.  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 32-17 late last week.  It now moves to the House for committee consideration.  A copy of that bill is linked here: http://leg.mt.gov/bills/2015/billpdf/SB0053.pdf.

MBA Bills

As you will recall, MBA notified us that it would be bringing forth legislation to redress the Morrow decision.  Further, MBA was pushing a bill to authorize statutorily credit unions and banks to charge a fee to those persons, entities, seeking to execute a writ of execution.  This fee would have been in addition to fees already charged to customers for such collections work.

The MBA has indicated they will not introduce that legislation this session due to concerns from their members, and ours frankly, that banks already have the authority to charge such a fee and the authorized amount of $50.00 was too low.  MBA and MIB will work with the debt collectors association after the session to determine if this legislation is needed/necessary.

As to the Morrow decision, as we discussed on Friday, the two MBA proposals were heard last Friday in Senate business and labor committee.   The bills are being carried by Senator Moore – who is majority whip in the Senate.  He is a credible bill sponsor.  The hearings went about as expected.  The bills were opposed by the trial attorneys’ association, and by various consumer groups.  The punitive damages bill was opposed by the Montana Attorney General’s office, which is problematic for prospects of passing the Legislation.

The Montana family that was impacted by Bank of American in the Morrow decision testified in opposition to the bills.  The bills are slated to be voted upon as soon as this Thursday.  The MBA has agreed to strike the prohibition contained in the damages bill that would have prohibited courts from awarding punitive damages for consumer protection act violations.  This was done with the hope of getting the bill out of committee.

Bills of some relevancy to be considered during the remainder of the week of February 17th, 2015.

Friday, Senate Taxation – Room 405, 8am
SB156 – Revise tax protest laws (Bruce Tutvedt)
HB166 – Lower state individual income tax rates (Keith Regier)
SR4 – Confirm Governor’s appointees to the state tax appeal board (Bruce Tutvedt)

Friday House Business and Labor – Room 172, 8:30am
SB41– Revise secretary of state business services laws (Tom Facey)
SB52 – Revise captive insurance laws (Jill Cohenour)
Tuesday – Senate Judiciary provide for uniform act regarding fiduciary access to digital asses.