General Assembly Passes 11 Measures Supported By MBA

The Missouri General Assembly regular session adjourned at 6 p.m. Friday, May 18. Lawmakers passed and sent to the governor 124 of the 2,046 policy bills filed. MBA worked successfully in support of a number of measures throughout the legislative process, including the modernization of Missouri’s public funds statute, updates to trust law and tax reform.

Legislation MBA opposed that did not pass included a cap on interest rates for small-dollar loans, no-contest clause revisions in trusts, noncompete clause reforms and 30-day notification on data breaches, among others.
Reforms to property assessed clean energy programs also failed after a compromise could not be reached.

“It was a remarkable session for MBA and the banking industry,” said Craig Overfelt, MBA senior vice president. “When the session ended, we had 11 bills passed by the General Assembly. We thank all the bankers who visited the Capitol and contacted their state representatives and senators to support these measures.”

A summary of MBA-supported legislation passed by the General Assembly and bills with MBA-supported compromise language follows. MBA will keep members apprised of the governor’s action on these measures. The governor has until Saturday, July 14, to sign or veto bills, or the governor can allow legislation to go into effect without a signature. New laws take effect Tuesday, Aug. 28, except in the case of bills with an emergency clause or delayed effective date.

MBA-Supported Measures Passed by the State Legislature

Public Funds Modernization Bills (House Bill 1879/Senate Bill 769)

Based on recommendations put forward by MBA’s Public Funds Task Force, this legislation updates and modernizes Missouri’s public funds statute. The bill is intended to provide a better regulatory environment for banks to serve their local governments and public entities.
The legislation:
  • expands the list of acceptable collateral used by the treasurer’s office, including:
    • out-of-state municipal bonds in the “four highest ratings categories” rather than “highest category”
    • fully-insured brokered and negotiable certificates of deposits
  • repeals reciprocal deposit requirement when using the inter-bank deposit program (CDARS)
  • repeals good-faith deposit check requirements submitted by banks when bidding on public deposits

Both bills also contain compromise language on inactive accounts. After 12 months of inactivity on a consumer account and if inactivity fees apply, the financial institution will send a notification to the account holder through first class mail postage prepaid marked “Address Correction Requested” or alternatively through electronic notice. The original provision from Sen. Jason Holsman, D-Kansas City, required notification by certified letter only and applied to institutions that did not charge an inactive account fee.

Tax Reform/Bank Tax Proportional Reduction (Senate Bill 884/Senate Bill 769)

Banks’ tax burdens will be dramatically reduced starting Jan. 1, 2020. Senate Bill 884 cuts the corporate tax rate from 6.25 percent to 4 percent.

In addition, MBA successfully amended Senate Bill 769 — the public funds task force bill — to include a proportional reduction to the financial institutions tax. The proportional reduction to the financial institutions tax will ensure banks receive the benefit of lowering the corporate tax rate because of the way banks are taxed in Missouri.

Updates to Missouri’s Trust Law (House Bill 1250)

This legislation has several provisions pertaining to trust law, including:
  • increasing the floor for determining when a trust is uneconomical from $100,000 to $250,000
  • allowing health savings accounts to become effective without funding the account upfront
  • providing a trustee immunity from liability for the investment decisions of persons appointed as a trust director/protector

Surplus from Tax Collector Sales (Senate Bill 623)

This measure ensures the lienholder of record receives priority to the surplus of funds after a property tax foreclosure sale. Current law permits surplus after a property tax sale is to go to the recorded property owner rather than the lienholder. There have been instances of borrowers receiving the funds when they also are delinquent on their mortgages.

First-time Homebuyer Savings Account (House Bill 1796)

This legislation authorizes a tax deduction for contributions to a savings account dedicated to buying a first home. Banks are not required to offer this type of savings account, nor are banks responsible for reporting or monitoring the account on behalf of the Missouri Department of Revenue. The annual contribution deduction limit is $1,600 for an individual or $3,200 for a couple filing a joint tax return. The maximum contribution limit for all tax years is $20,000, and the maximum total amount in the savings account is $30,000.

Filing False Liens with Intent to Defraud (House Bill 1769)

This bill creates a felony offense to file a false document (e.g. lien on the property), with the intent to financially deceive or defraud an individual. The filing of false liens has been used as a tool of harassment in “paper terrorism,” often against government officials. This tactic is increasingly common among people who call themselves “sovereign citizens.”

Business Premises Safety Act (Senate Bill 608)

This measure protects businesses against liability for criminal acts committed by third parties. Under this act, a business only has the duty to guard against criminal or harmful acts occurring on the business’s premises when the business knows or has reason to know that such acts are being committed or are reasonably likely to be committed in a particular area of the premises, and there is sufficient time to prevent such injury.

Card Skimmer Penalties (House Bill 1832)

The penalty for someone who uses or is in possession of a card skimming device increases from a misdemeanor to a felony offense. The bill also gives additional powers for the attorney general to prosecute suspected crime syndicates involved in sophisticated card-skimming operations.

Rural Broadband Expansion (House Bill 1880)

This legislation clarifies that electric co-operatives may use their existing right-of-way for fiber-optic cable. This is intended to help open up broadband expansion to rural areas. The bill also will help protect the electric co-operatives from exposure to excessive damages in lawsuits by landowners.

Fiduciary Access to Digital Access Act (House Bill 1250)

Under this bill, a fiduciary can access electronic records or “digital assets” of an account holder, such as an online bank account. Users may allow or prohibit the disclosure of their digital assets to a fiduciary in a will, trust or other record. This act is modeled after legislation that has passed in at least 38 other states.

Foster Child Bank Accounts (Senate Bill 819)

This provision changes the laws on contracts to allow a minor who is 16 years or older and in the legal custody of the Missouri Department of Social Services Children’s Division to open a checking or savings account. The language stipulates the minor is responsible for all costs and penalties associated with the account.

Bills Passed with Compromise Language

Historic Preservation Tax Credit Program (Senate Bill 590)

This bill makes several changes to Missouri’s Historic Preservation Tax Credit Program. MBA successfully removed language that would have required unconditional financing before project approval. Alternative language offered by MBA to require “evidence of the capacity” to finance the cost of the project was accepted and approved in the final version of the bill. Other provisions include:
  • increasing the floor for determining when a trust is uneconomical from $100,000 to $250,000
  • allowing health savings accounts to become effective without funding the account upfront
  • providing a trustee immunity from liability for the investment decisions of persons appointed as a trust director/protector

Other Bills of Interest That Passed

Landlord Tenant Actions – Security Deposits (Senate Bill 581)

This act repeals provisions of law that required a landlord to keep all security deposits in a trust account and prohibited commingling of the security deposit with other funds of the landlord. The act also authorizes the right to a trial de novo in rent and possession actions.