~LEGISLATIVE UPDATE~
LEGISLATIVE UPDATE # 3 FEBRUARY 4 SECOND REGULAR SESSION – 2004
1) HEARINGS/WORK SESSIONS ON MBA LEGISLATIVE INITIATIVES
2) UPDATE ON OTHER BANKING-RELATED LEGISLATION
3) UPDATE ON CARRY OVER LEGISLATION FROM 2003
4) MAJOR ISSUES – DIRIGO HEALTH, TAX REFORM & BALANCING BUDGET
5) BANKERS’ DAY AT THE LEGISLATURE – MARCH 25TH
The Maine Bankers Association initiated two legislative proposals for 2004. Both are working their way through the process at this time. As happens every Session, other proposals become very high priorities, and this year one of our highest priorities is amending Maine’s automobile titling statutes so that lenders and auto dealers are not assessed unreasonably high fines – see LD 1700 below. Also, this year as in most Sessions, there are many “business climate” proposals that we become involved with – such as LD 575 dealing with Workers’ Compensation, and several pieces of legislation amending Maine’s unemployment tax laws.
I. HEARINGS & WORK SESSIONS ON MBA LEGISLATIVE INITIATIVES
LD 1786, AN ACT Amending the UCC Regarding Telephonic Checks, had its public hearing Tuesday, February 3rd before the Judiciary Committee. This proposal makes important changes to Articles 3 and 4 of the UCC regarding liability for telephonic checks. Current law for traditional written checks places warranty liability on the payor bank. The rationale for this is that the payor bank would be in the best position to identify the signature of their customer and if false, prevent fraud. Obviously this rationale does not hold for telephonic checks, which have no signatures. This proposal reverses the traditional liability, and places it on the depository bank, or the bank serving the business offering a good or service that receives the telephonic check. There was no opposition to this LD, and the Bureau of Financial Institutions offered strong support. STATUS: Work Session Thurs. February 12th MBA POSITION: Strong Support
LD 1802, AN ACT to Permit the Photocopying of Driver’s Licenses in Financial Transactions had its Public Hearing and three Work Sessions. All Insurance and Financial Services Committee members want to solve the problem identified by Maine Bankers Association so as to allow taking a photo of a driver’s license, which currently is a Class E crime. However, the Committee split on how to resolve this matter, and has voted 10 – 3. The majority report was language reached in consensus with the Sec. of State, legislators and lenders. The minority report goes further, and allows the owner of the license to give permission to have it photographed. STATUS: will go to House floor next week MBA POSITION: Support (Both reports have added an Emergency Preamble, so that it will go into effect immediately upon signature by the Governor. MBA can support either report, but must not allow controversy between the two reports to prevent either from passing)
II. UPDATE ON BANKING-RELATED LEGISLATION
LD 1638, AN ACT to Amend the Maine Consumer Credit Code Regarding Balloon Payments, has been reported out by the Insurance and Financial Services Committee unanimously Ought – to – Pass as amended. The Amendment was offered with support from MBA so as to allow these balloon payments for traditional lenders. STATUS: Before Full House MBA POSITION: Support as Amended
LD 1662, AN ACT to Strengthen the Prohibition Against Night Hunting, has been reported out unanimously Ought – to – Pass by the Inland Fisheries and Wildlife Committee. The original proposal allowed Game Wardens to seize and sell property used in night hunting. The Amendment clarifies and protects any lien holder should property be sold that has been used as collateral for a loan. STATUS: Before Full House MBA POSITION: Support as Amended
LD 1700, AN ACT to Amend the Motor Vehicle Laws, is the Bureau of Motor Vehicles Omnibus bill for 2004, and will include several amendments to the automobile titling laws. Maine Bankers Association will lead efforts to amend legislation passed in 2003 that increased the penalties for failing to file title applications to the Sec. of State’s office within 20 days. The old penalty was $25, and as of 2004 the penalty is $125. Lenders, Maine’s auto dealers, and the Bureau of Motor Vehicles agree that there is a significant problem in that the current 20 day time period to complete the title application creates a huge burden, one that now costs $125 per violation. Auto dealers claim that banks are slow to get them required paperwork, so that the auto dealer cannot comply with the 20-day requirement. As a result, the dealer is fined the $125. Another section of Maine law allows the dealer to assess penalties of up to $1,000 under certain circumstances if they cannot obtain the title in a timely manner, and this penalty could be against the lender. All interested parties are expected to meet in the next few days in order to craft an Amendment to LD 1700 that resolves this issue. STATUS: LD 1700 had its Public Hearing Tuesday, February 3rd before the Transportation Committee. Work Session will be held in several weeks, after the effort to draft the needed amendment (As the BMV’s Omnibus bill, this LD is often held until the final hours of the Session). MBA POSITION: Gain favorable Amendment
LD 1717, AN ACT to Clarify Membership on Boards of Directors for Maine Financial Institutions, unanimously was passed as amended by the Insurance and Financial Services Committee. STATUS: Before Full Senate MBA POSITION: Monitor
LD 1775, AN ACT to Require Written Notice of Revocation of Durable Powers of Attorney, was unanimously voted Ought–NOT–to-Pass by the Judiciary Committee.
MBA POSITION: Oppose
LD 1781, AN ACT to Amend the Laws Governing Mechanics’ Liens, was voted unanimously Ought-Not-to-Pass by the Judiciary Committee. MBA POSITION: Oppose
III. UPDATE ON CARRY OVER LEGISLATION FROM 2003
LD 286, AN ACT to Title Mobile Homes, Snowmobiles, ATVs and Boats, had a summer study including participation by Maine Bankers Association. The Study Committee issued a final report to the Judiciary Committee last week, and as a result, the Judiciary Committee voted Ought NOT to Pass. MBA POSITION: Monitor
LD 575, Amending the Workers Comp System, would authorize a penalty of $1,000 if a worker appealed a Comp award and ultimately received a larger benefit than originally offered by the employer. Clearly this would increase the costs of the System, and the business community has opposed this LD. STATUS: Labor Committee voted out 7 – 6 Ought to Pass. MBA POSITION: Joined businesses listed as opposed to this LD
LD 692, AN ACT to Protect Consumer Privacy Rights, was passed as Public Law 512 in late January, and prohibits a business from providing a good or service from denying a consumer from buying that good or service for failure to provide their social security number. Any financial transaction or extension of credit has been exempted from the application of this new law. There are many other exemptions in addition to the one for financial services. We understand that state government believes this new law is a significant problem, and there may be efforts to repeal it. The effective date will be around April 28 of 2004.
LD 921, AN ACT to Enable the Uniform Trust Code, had an extensive summer and fall study that included many members of the Maine Bankers Association Trust Committee, in addition to lawyers from the Trust and Estate section of the Maine Bar Association. Maine Bankers Association has voted to support enacting the Uniform Trust Code in Maine, and also worked to update and amend the Maine Probate Code. STATUS: The Study Committee Report and final language of the proposed legislation should be presented to the Judiciary Committee next week. MBA POSITION: Support
LD 969, Amending Maine Law Regarding Mortgage Volume Fees, also had a summer study that researched the source of revenue for the Office of Consumer Credit Regulation. This LD originally proposed to amend how the OCCR was funded, and would have included certain loans from banks. MBA Opposed the original proposal. Status: The Study resulted in some recommendations that MBA will take no position on – the language of the Committee bill resulting from the Study has not been finalized at this time.
LD 1360, AN ACT to Create a No Contact List and Prohibit Unsolicited E-mail, has been held in the Senate, pending guidance from the Attorney General’s office to determine if he needs this LD as a vehicle to update Maine law after federal legislation on telemarketing, do not call, and e-mail solicitation go into effect. MBA POSITION: Monitor (the actual LD 1360 is not needed – as its generally pre-empted by federal law) Status: Tabled in Senate
Various Unemployment Tax proposals – The Labor Committee will deal with several unemployment tax proposals, including expanding coverage further for part time employees. Maine Bankers Association joins with other business groups, including the state Chamber, opposing increasing the Unemployment tax. Even without expanding coverage’s, this tax is likely to increase later this year as the Fund has dropped below the amount, which is required by federal law, triggering an increase of up to 20% in the tax rate!
IV. MAJOR ISSUES – DIRIGO HEALTH, TAX REFORM, BALANCING BUDGET
First, as most of you know, the Legislature has passed a Supplemental Budget that balances revenues with expenditures. It was very controversial – the Republicans in both House and Senate did not support the budget proposal, which included a new “tax and match” scheme on hospitals that may gain some federal funds. So the Democrats passed a simple majority budget, and then adjourned the Session in order to have it go into effect in 90 days from adjournment. They then called the Legislature into Special Session. One proposal that was debated was to expand the sales tax to include advertising – but this was ultimately taken out of the budget.
The acrimony over this budget debate may last until they adjourn for good and gear up for November elections.
Tax Reform continues as a hot topic – many parties agree that there needs to be some reform plan to replace the Maine Municipal proposal that requires the state to pay more of the basic cost of education. As you might guess – there is NO consensus on how to go forward.
Finally, Dirigo Health has had a number of developments.
In late January, the Dirigo team proposed to assess self-insured groups 4 % based on their claims paid, plus 12.5%, assuming there are savings of that amount. If you remember, Dirigo Health will be funded in year 2, beginning July 1, 2005 by assessments on employers of up to 4% of the cost of health care, assuming there are savings of that amount. There is debate about how to calculate this cost for self-insured employers. The proposal in add 12.5% to the cost of claims paid brought loud and vigorous opposition by all employers, and two weeks later they withdrew this suggestion, returning them to square one. They did petition the Legislature for more time, beyond February 2nd, to report about their assessment mechanism.
Second, the Governor’s office has released public information about the quality of health care and some cost information about various health care providers. For the first time, cost and quality information is available to the public for comparisons prior to obtaining medical care.
Third, there are more and more business groups that worry the costs of Dirigo Health will far exceed its benefits. Many House and Senate Republicans proposed to use the $53 million funding year one of Dirigo Health to balance this years’ budget. As Maine adds more and more recipients to Medicaid, it adds state spending, and because Maine does not fully reimburse providers for Medicaid recipients, more and more costs are shifted to the rest of the recipients – private pay and insured patients. Maine added nearly 35,000 new Medicaid patients last year alone!
Maine Bankers continues to monitor the impact of Dirigo Health, and participates in many of the meetings, including ones hosted by the State Chamber and Maine Health Care Purchasing Collaborative.
IV. BANKERS’ DAY SCHEDULED MARCH 25 – SIGN UP NOW!
