LEGISLATIVE UPDATE # 1 – SECOND REGULAR SESSION – 2004
1) SECOND REGULAR SESSION RECONVENES JANUARY 7TH
2) MAJOR ISSUES DOMINATE AUGUSTA’S 2004 AGENDA:
A) TAX REFORM – PROPERTY TAX RELIEF EXPECTED FOLLOWING MAINE MUNICIPAL ASSOCIATION REFERENDUM
B) BALANCING THE STATE BUDGET
C) DIRIGO HEALTH AND RELATED HEALTH CARE ISSUES
D) RACINO/SLOT MACHINE ISSUES
3) MBA’S BANKING LEGISLATION FOR 2004
4) OTHER BANKING-RELATED LEGISLATION
5) CARRY-OVER LEGISLATION TO BE FINALIZED DURING 2004
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1) The Second Regular Session of the 121st Maine Legislature convened on Wednesday, January 7th. The first few weeks of the Session will focus on Reports from Study Committees, Public Hearings on the 200+ new LDs already released for 2004, and attention to the few major issues that will continue throughout the 2004 Session. Legislative leadership promises to be done with this year’s Session no later than the end of the first full week of April (the 9th or 10th), though that may be an unrealistic goal.
2) MAJOR ISSUES TO DOMINATE AUGUSTA IN 2004. The Maine Bankers Association will become involved in several of the dominant issues during the 2004 Session of the Legislature. Tax Reform, Balancing the State Budget, and Dirigo Health and related health care issues are expected to take much of the attention from legislators this year.
TAX REFORM: The Governor and the Legislature must address the public’s cry for property tax relief by crafting an alternative to the Referendum question proposed by the Maine Municipal Association. Many business organizations, including the Maine Chamber of Commerce, opposed the Maine Municipal proposal because it would shift tax burden from the local property tax to the state – requiring tax increases at the state level without guarantees of reductions to local property taxes. The Taxation Committee and many legislative leaders will join with the Governor to propose an alternative tax reform plan. Maine Bankers Association will participate with other business organizations in the review of various tax reform alternatives. The goal – Not to make Maine even more highly taxed, and attempt to improve Maine’s negative business climate.
BALANCING THE STATE BUDGET: With significant Medicare/Medicaid overruns, revenue shortfalls and some so-called “structural gap” between revenue and expenses, Maine will face at least a $115 million shortfall, requiring more spending cuts, increased taxes or some combination of both. This shortfall, when projected into the next 2-year budget cycle, may reach half a billion dollars, or more! Legislators and the Governor will proposal a number of means to balance the budget, and MBA will monitor this debate.
DIRIGO HEALTH & RELATED HEALTH CARE ISSUES: Dirigo Health is scheduled to begin operations in 2004, and before that happens there will be a number of proposed amendments to Dirigo Health during this Session of the Legislature. Some of the proposals were required by the original law in the form of reports to the Legislature from various entities affected by Dirigo Health. One open issue is the assessment on businesses providing health care to their employees to fund Dirigo Health in Year 2.
Additionally, some of the current budget shortfall arises from cost overruns of the state portion of Medicaid expenses as more Mainers become eligible. MaineCare, the Maine Medicaid program, will be under scrutiny by many Legislators.
Finally, the Legislature passed a law last year that impacts delivery of prescription drugs in Maine. Several PBMs have announced they will most likely discontinue doing business in Maine – leaving a number of prescription drug plans, including the state employee plan, without a pharmacy benefit manager. While this law is in being tested in Court, there is great uncertainty in the marketplace and there will be new legislative proposals to clarify the impact of the law for Maine.
Maine Bankers Association will participate in the review of the Dirigo Health issues and pharmacy benefit legislation this Session. The proposed 4% assessment on health insurance premiums and self-insured coverage could cost members of Maine Bankers Association more than $3 million annually!
Thankfully, Maine Bankers Association need not take a position on the Racino/slot machine issue!
3) MAINE BANKERS ASSOCIATION PROPOSALS FOR 2004
LD 1786, AN ACT Making Amendments to the Uniform Commercial Code Covering Provisions Dealing with Negotiable Instruments and Bank Deposits and Collections, is a relatively minor change to the UCC and is limited to telephonic checks. Current law is not clear as to priorities between banks for telephonic generated checks, and this proposal adopts warranties as proposed by the National Conference of Commissioners of Uniform Laws (NCCUSL), and are limited to consumer accounts and items that do not bear a manual signature.
LD 1802, AN ACT to Permit the Photocopying of Driver’s Licenses in Financial Transactions exempts from the current state law which prohibits copying of a driver’s license, when done for proof of identification during the consummation of a major financial transaction, as determined by the Secretary of State through Rulemaking.
4) OTHER BANKING RELATED PROPOSALS
LD 1638, AN ACT to Amend the Maine Consumer Credit Code Regarding Balloon Payments, was proposed for the Maine Auto Dealers, and clarifies that a motor vehicle lease or loan is not subject to the 48-month minimum rule for balloon payments. (MBA Position = Monitor)
LD 1717, AN ACT to Clarify Membership on Boards of Directors for Maine Financial Institutions, was introduced by the Maine Association of Community Banks, and is limited to residency issues and makes Maine’s Banking Code requirements consistent with requirements found in the Maine Model Business Corporation Act. (MBA Position = Monitor)
LD 1776, Amendments proposed by the Finance Authority of Maine to its enabling legislation would combine its various loan insurance programs into one program, making them easier to administer for both bankers and FAME Staff. (SEE HANDOUT)
LD 1781, AN ACT to Amend the Laws Governing Mechanic’s Liens, was introduced by the Associated General Contractors and desires to place sub-contractors in the same position for mechanics liens as full general contractors. They claim they have problems when the General Contractor defaults or enters bankruptcy on a project, and the sub’s work is not protected by the mechanics lien filed by the General. Historically Maine Bankers Association opposes expansion to mechanic lien provisions, at this time we are monitoring this LD.
5) CARRYOVER LEGISLATION
There are four carry over LDs that MBA has worked on during the summer and fall.
LD 286, AN ACT to Title Mobile Homes, Boats, ATVs and Snowmobiles was studied by the Secretary of State’s office to determine the volume of titles their office would manage if a new filing requirement were created. MBA supported titling mobile homes, but the Study has been Non-conclusive that there is a problem requiring a fix. The Study Committee will report back to the Legislature’s Judiciary Committee in mid-January.
LD 692, AN ACT to Protect Consumer Privacy Rights, effects use of social security numbers for identification purposes. The Legislators are willing to exempt financial institutions, their subsidiaries and any business transaction involving access of a credit report, and a majority of the Study Committee will report out a bill that would limit other businesses from requesting a social security number.
LD 921, AN ACT to Enable the Uniform Trust Code, resulted in a major re-write of Maine’s Probate Code and prepare for adoption of the Uniform Trust Code. A number of Maine Bankers trust officers represented the industry in this 8-month task. The Study Committee will report to the Legislature’s Judiciary Committee later in January.
LD 969, AN ACT to Ensure Equity in Mortgage Volume Fees, resulted in a study to determine if the revenue received by the Office of Consumer Credit Regulation were equitably among the entities it regulates. The original proposal called for shifting some of the revenue generated from mortgage companies to banks. While that proposal was defeated, there will be revisions to Maine’s mortgage volume fees resulting in less revenue to the OCCR from those fees.
