Since mid-January when the first LD was printed, there are now more than 1,020 LDs out – in less than 4 weeks! More than 100 of them impact banking in some way. Your MBA staff is attending Public Hearings, Work Sessions or both on a daily basis. Additionally, as you read in this Update, MBA participates as part of several groups that are involved with specific policy issues. These groups review and comment on legislation that affects that specific subject matter, and also proposes its own legislation.

* Maine Bankers Association hosts Lewiston/Auburn Legislative Breakfast

On February 1^st, MBA Board member Jim Delamater, Chairman and CEO of Northeast Bank chaired a breakfast at the Lewiston Ramada Inn for Lewiston/Auburn area legislators. The breakfast was very well attended, and included both MBA and MACB member bankers, Senators, Representatives and staff.

MBA President Mike McNamara reported on the Report of the Governor’s Financial Services Taxation Study Group, which concluded that with evolutionary changes occurring in the financial services industry, Maine should not legislate changes to how it taxes financial services providers at this time. Maine Revenue Services will monitor revenue flow from the various providers of financial services to determine if future tax changes are necessary.

Bankers expressed opposition to a proposal by the Independent Insurance Agents, LD 458, which would amend certain sections of the Bank Franchise Tax. Their proposal conflicts with the recommendations of the Study Groups. (See report on LD 458 below).

Brief presentations were also made by MBA Executive Director Joe Pietroski, MACB President Chris Pinkham, and by the breakfast Chairman, Jim Delamater. One subject that was of great interest to legislators was the need to make Maine more attractive for retirees, which would require changes to Maine’s tax policy.

• 100 Banking-Related LDs printed!

As stated above, there have been more than 100 banking related LDs printed that are being monitored by MBA. We have identified twenty-one of these as major bills, the others are relatively minor, but still require MBA involvement, so that they do not develop into a major issue. Brief descriptions of the major bills follow, including current status of the proposal. Titles of the Minor bills are enclosed. At any time during the Session, if you read about proposed legislation or see a title here, and would like a copy of that LD, please call the MBA office at 622-6131 and we will send you a copy!

LD 17, AN ACT to Require a Mortgagee to Notify Annually the Muncipality in Which Mortgaged Property is Located, would add costs to servicing mortgages. At Work Session, the State and Local Government Committee accepted Maine Bankers Association’s offer to work with interested parties to find a non-legislative solution. The Committee will hold this bill while the group meets.

LDs 20, 146, 297, 671 and 707 are proposals that affect tax treatment of retiree pension or other retiree income. Attracting and retaining retirees in Maine is a priority issue of MBA’s Board of Directors and we are working with a Retirement Industry Study Group that was appointed by the Governor. These proposals will be heard by the Taxation Committee, and are being held until other similar proposals are printed.

LDs 63 and 841 both impact sales tax treatment on leased equipment. MBA has supported changing Maine’s sales treatment on leased equipment used in the manufacturing process, as Maine is the only state in the nation that does not pass on a sales tax exemption to equipment that is leased. Other LDs are expected on this issue and the Public Hearings will be held at the same time. MBA will strongly support this effort.

LD 97, AN ACT to Require Mortgage Holders Who Escrow Property Taxes to account for the tax reduction resulting from the Homestead Exemption had its Public Hearing and Work Session, and will be reported out Ought Not to Pass.

LD 116, AN ACT to Protect Consumers in Real Estate Mortgage Transactions was heard at Public Hearing Jan. 25^th, and will be re-written to accommodate industry comments.

LD 161, AN ACT to Establish a Lead Abatement Revolving Loan Fund… had its public hearing Feb. 3^rd, and would create a tax credit for day care facilities who make improvements in order to comply with Maine’s lead paint abatement laws. Also the bill establishes a fund administered by the Maine State Housing Authority to assist property owners with clean up. MBA monitors this and all lead paint legislation, and other lead paint proposals are expected.

LD 208, AN ACT to Prohibit Intrastate Telemarketers from Blocking Caller ID was voted unanimously Ought Not to Pass by the Utilities Committee. MBA led the opposition to this bill, which would have created administrative difficulties for any bank with telephone banking.

LD 240, AN ACT to Amend the Maine Banking Code as it Pertains to ATM Surcharges was unanimously passed by the Banking and Insurance Committee. It will now go to the full House and Senate. MBA supported this proposal, which clarified that Maine banks or credit unions could form agreements not to surcharge each other’s customers. The debate did not include a bank’s ability to surcharge.

LD 303, AN ACT to Amend the Uniform Unclaimed Property Act, was originally thought to have been a proposal introduced for the Maine Association of Community Banks. However, this proposal, introduced by the same legislator and with the exact same title as MACB’s bill, is NOT the proposal that MBA will support. LD 303 needs some amendments and clarifications, and was introduced with support of the merchants and retailers.

LD 318, AN ACT to Allow Counties to Retain A Larger Share of the Real Estate Transfer Tax impacts the amount of the transfer tax retained by counties. Other proposals, including the Governor’s budget, impact the transfer tax and the amount of that tax that goes to MSHA’s HOME fund. These issues are currently controversial because the Governor seeks to use funds from the HOME fund to replace HUD funds recently lost to support homeless shelters. These proposals are among hundreds currently debated before the Appropriation’s Committee in its review of the Governor’s budget.

LD 458, AN ACT to Ensure Fair Taxation of Insurance and Securities Sales has been introduced for the Independent Insurance Agents and would not allow an insurance or security subsidiary of a bank to qualify for the bank franchise tax. This proposal may evolve into MBA’s top priority this session, as it places before the Taxation Committee issues concerning the bank franchise tax.

This proposal flies in the face of the Governor’s Select Committee studying the taxation of Financial Services, and also the Study performed by Legislators on the same subject. These groups both have issued Final Reports that do not call for changes to the taxation of bank subs selling insurance or securities. Among other problems with this LD, As drafted it may create problems for bank trust departments that conduct security sales and investments. MBA will vigorously oppose this LD. MBA President McNamara will testify in opposition to this proposal, which should be scheduled for Public Hearing in March.

LD 496, AN ACT to Abrogate the Rule Against Perpetuities is MBA’s bill that would allow so-called Dynasty Trusts. 27 states now allow these, and Maine needs this change to be competitive. The Public Hearing was held February 3^rd before the Judiciary Committee and there was no opposition to the bill. The Work Session is scheduled for Feb. 10^th. This issue evolved from the Retirement Industry Study Group and MBA’s trust committee.

LD 579, AN ACT to Encourage Contributions to Family Development Accounts would offer a tax credit to anyone who contributes to a reserve fund that provides a match to savings in a family development account. MBA worked with a large group of organizations that passed legislation authorizing Family Development Accounts (FDAs) two years ago. This group includes many CAP organizations and FAME and will introduce these accounts this winter. One means to gain funds to match savings is to create a tax credit for contributions to a reserve. MBA will support this proposal. (See report below.)

LD 689, AN ACT Concerning Municipal Public Library Trust Funds raises questions about appropriate investments for municipal funds. This proposal creates a specific exemption that allows the municipal library trust funds to be invested in equities or through a trust department.

LD 784, AN ACT to Prohibit the Use of Social Security Numbers for Identification Purposes has been introduced many times in the past five years – and has been defeated each time. Many organizations including the Red Cross use S.S. numbers as identification. MBA will oppose this proposal.

LD 796, AN ACT to Require Employees to be Paid at least once every 2 weeks is the proposal that will be supported by the State Chamber and many state businesses to resolve the weekly pay issue. MBA strongly supports this effort and will work with a number of businesses and groups to pass this legislation. This LD is sponsored by Senator Jane Amero.

LD 831, AN ACT to Limit the Maximum Finance Charge to 10.5% would cap open end interest rates at 10.5%. This proposal would roll back de-regulation of credit cards that was overwhelmingly passed by two Legislatures, and has been successful attracting business into Maine. MBA will oppose this LD.

LD 869, AN ACT to Amend Maine’s Payroll Processing Laws is MBA’s bill that would require a payroll processing company to have proof of liability insurance or fidelity bond. Banking regulators have asked banks about requiring these in order for the bank to hold the payroll funds. MBA continues its investigation of this issue.

LD 913, AN ACT to Ensure that Persons Issuing Bad Checks are Solely Responsible for Overdraft Charges is another proposal to limit financial institution charges to $2.00 for returned checks deposited by a merchant or retailer with insufficient funds. This proposal has been before the Legislature virtually every year for the past decade. MBA will vigorously oppose this proposal.

LD 925, AN ACT to Create a Superlien for Condominium Association Assessments also has been introduced several times before, and will be opposed by MBA because it would place condo Association dues in a priority position to the bank’s first mortgage.

• Maine Bankers Association Participates in Policy-making Groups

In our effort to deal with the thousands of legislative issues before the First Regular Session of the 119^th Legislature, MBA works with other groups to follow and structure legislation that affects these groups alike. Currently, MBA is working with the following groups:

Telecommunications Policy Committee – organized through the Maine Chamber and Business Alliance, this Policy Committee reviews legislation that impacts the telecommunications industry. It also co-ordinated industry presentations before the Task Force to Study Telecommunications Taxation. Finally, this group has retained an independent consultant to develop an economic impact analysis for the telecommunications industry in Maine. The group consists of representatives from LL Bean, Bell Atlantic, the Telephone Association of Maine, various providers of telecommunication services from around the state and other large business users of telecommunication services.