LEGISLATIVE UPDATE #7 MARCH 31 SECOND REGULAR SESSION – 2004
1) TAX & BUDGET PROPOSALS TAKE CENTER STAGE – MAINE BANKERS ASSOCIATION LEADS FIGHT AGAINST “NON-RESIDENT INCOME TAX”
2) LD 1802 – AN ACT TO PERMIT THE PHOTOCOPYING OF DRIVER’S LICENSES IN FINANCIAL TRANSACTIONS – GOVERNOR SIGNS INTO LAW
3) OTHER BANKING BILLS ENACTED AS NEW LAWS
4) UPDATE ON OTHER BANKING-RELATED LEGISLATION
5) BANKERS DAY AT THE STATE HOUSE A TREMENDOUS SUCCESS
1) MAINE BANKERS ASSOCIATION LEADS FIGHT AGAINST “NON-RESIDENT INCOME TAX” PROPOSAL IN GOVERNOR’S BUDGET
The Governor’s Supplemental budget proposal, LD 1919, includes a provision repealing the current 20-day threshold triggering the requirement that a non-resident individual pay the Maine personal income tax. As proposed, any non-resident working one-day in Maine would have to pay the personal income tax. Worse still, the proposal is retroactive to January 1, 2004 – so it applies for this calendar year! Maine Revenue Services has stated publicly that this proposed change will apply to out of state CPA firms, law firms, insurance agencies or consultants doing business in Maine, as well as out-of-state corporate executives who routinely visit Maine-based operations.
Maine Bankers Association vigorously opposes this provision because it negatively impacts many MBA members; the proposal would hinder efforts to attract new business from out of state firms; and it would result in a loss of business to hotels, restaurants and any business catering to the meeting industry – all negatives to Maine’s business climate.
After considerable negotiations Administration representatives have said they may counter-propose triggering the tax at 10 days, plus make allowances for business training/meetings. Business training is key as many out-of-state businesses do their corporate training in Maine for all or many of the employees from all over the country (Hannaford’s has said they do this, as well as MBNA.)
The Appropriations Committee will meet tonight, tomorrow and throughout the next few days, as the Legislature seeks to adjourn in April. We will keep you informed about this and other tax issues.
2) LD 1802, Photocopying Driver’s Licenses, has been signed into Law by the Governor as Public Law 568. With its Emergency Preamble this law went into effect on Wednesday, March 24th. It is now permissible to take and retain a photocopy of a customer’s driver’s license for your file in order to verify identity.
3) The following have been signed into law by the Governor:
LD 1638, AN ACT to Amend the Maine Consumer Credit Code Regarding Balloon Payments, was signed by the Governor and with its Emergency Preamble went into effect March 10th. This new law expands lenders’ ability to utilize balloon financing for auto loans.
LD 1717, AN ACT to Clarify Membership on Boards of Directors for Maine Financial Institutions, was signed as Public Law 528. With its Emergency Preamble it went into effect March 3rd. As amended, this proposal is very limited and only amends one requirement for Board members of mutual savings banks.
LD 1766, AN ACT to Simplify the Finance Authority of Maine Act, was signed as Public Law 537 and takes effect January 1, 2005. The primary changes in this 21 page law is to consolidate FAME’s loan insurance programs so as to be easier to administer, and easier for lenders to utilize.
LD 1838, AN ACT to Provide for the 2004 and 2005 Allocations of the State Ceiling on Private Activity Bonds, was signed as Public & Special Law 38. Several years ago this was one of the most controversial matters before the legislature, as there was a fight about quasi-public entities should receive the benefit of private activity bonds. This fight was the result of more agencies wanting funds so as to exceed the state’s cap on these bonds. Today in 2004, after the student-lending piece was changed, the allocation was split as follows:
FAME gets $30,000,000 for both 2004 and 2005;
Maine Municipal Bond Bank gets $10,000,000 for both 2004 and 2005;
MELA gets $10,000,000 for 2005, awarded no funds for 2004;
Maine State Housing Authority is allocated $40,000,000 in both 2004 and 2005
UNALLOCATED: $143,795,000
You can see that the unallocated amount is now very large, and may not be used at all by eligible agencies.
4) OTHER BANKING –RELATED LEGISLATION
Several other major banking LDs have had the following legislative action:
LD 1786, AN ACT Making Amendments to the Uniform Commercial Code was introduced for the Maine Bankers Association and has been voted out unanimously Ought-to-Pass by the Judiciary Committee, and passed by the House and Senate – it should be signed by the Governor in a few days.
LD 921, AN ACT to Enable the Uniform Trust Code has passed twice in each the House and Senate, and awaits final votes later this week. The effective date for the UTC is July 1, 2005.
LD 1854, AN ACT to Delay the Implementation of Restrictions on Information on Electronically Printed Receipts was passed as amended unanimously by the Insurance and Financial Services Committee, and passed in the House and Senate. In its amended form the law makes minor changes so Maine law is the same as Federal law, and grants amnesty to any violations between January 1, 2004 and January 1, 2005.
LD 1898, AN ACT to Prohibit Financial Institutions from Using Thumbprints or Fingerprints has been defeated in both the House and Senate. It should be dead for the Session.
5) BANKERS DAY A RESOUNDING SUCCESS!
More than 170 bankers shadowed legislators on Thursday, March 25. Both the bankers and legislators learned a lot from their respective shadows. Volunteer bankers were recognized at a Noontime ceremony in the Hall of Flags.
