Legislative Updates

 

 

On Friday, May 16, 2008, Regular Session of the Missouri General Assembly came to a close in a year of continual chaos and misdirection. Twenty-one State Representatives and four State Senators ended their legislative careers due to term-limits and their lame duck status helped to guide the direction of the session. Of the term-limited legislators, the Speaker of the House and President of the Senate were among the ranks. In addition, Missouri Governor Matt Blunt (R) decided to not seek a 2^nd term of office and essentially became irrelevant to the legislative process as the session wore on. Over the final weeks of the legislative session, it became apparent to many Capitol insiders that no plan of attack was crafted and that both legislative chambers were going in their own directions. This lack of guidance led to confusion and disorganization in the final week of the legislative session.

 

One hundred and thirty-nine bills passed this year, many of which were not controversial in nature and moved through the process on the Consent Bill Calendar. The Missouri fiscal year 2009 state budget passed with ease and totaled $22.5 billion. The big ticket proposals of the Republican Leadership that reached the Governor’s desk include illegal immigration reform, property tax reform, increased penalties for scrap metal theft, mortgage fraud legislation, new cyber bullying statutes, and a large transportation package. At this point we do not expect a Special Session in 2008 as this is an election year for all State Representatives, half of the Missouri Senate and the State Governor, Lieutenant Governor, Treasurer and Secretary of State. The General Assembly will return to Jefferson City on September 10, 2008 for a constitutionally mandated Veto Session.

 

Remember the name Eckersley? Most recent visitors to Missouri’s Capitol now know the name. Certainly Matt Blunt, current Republican Governor, knows well the name, as in Eckersley v. Blunt, et al litigation, filed by the former employee. Scott Eckersley was terminated by the Governor’s office, with much attendant publicity, in late 2007. Many Capitol denizens believe the litigation is, and will be damaging to Blunt’s career. Perhaps the major concern for GOP legislators, arising from the Governor’s troubles, is continuing their control over both houses of the legislative branch. In every early poll, the likely Democrat in the 2008 Governor’s race, Attorney General Jay Nixon shows landslide level numbers over the two GOP candidates, State Treasurer Sarah Steelman and Ninth District Congressman Kenny Hulshof. The Republican nominee will be determined in the August Primary Election. The length of Nixon’s coattails may determine which party takes the Senate and House Majority after the November General Election.

 

On the last day of the 2008 Legislative Session, House Bill 1384 and 2157 was “Truly Agreed To and Finally Passed” by a vote of 143 to 0 in the Missouri House of Representatives. HB 1384 and 2157 specifies the procedures for a person to place a security freeze on his or her consumer report. A consumer reporting agency will remove or temporarily lift a freeze upon the consumer's request or if the consumer report was frozen due to a material misrepresentation of fact by the consumer. A consumer credit reporting agency must disclose in writing to the consumer a summary of his or her rights under Missouri law. Any person violating these requirements may be liable for any actual damages sustained by the consumer as a result of his or her negligence and the costs and attorney fees associated with any lawsuit. 

 

Language was added to the bill that allows exemptions for use in setting or adjusting a rate, underwriting, adjusting a claim, or servicing a policy for insurance purposes, and to any person, or the subsidiary, affiliate, agent, or assignee of such person, and for those with whom the consumer has a debtor-creditor relationship for the purpose of account review or collecting the financial obligation owing for the account contract or debt. The bill allows for a credit reporting agency to collect a fee of $5 for initial placement of a freeze by a consumer and $10 for any subsequent requests. No fees may be charged for the permanent removal of a credit freeze or any credit freeze associated with an incident report been filed by a consumer for identity theft. In addition, credit reporting agencies are allowed to charge $5 for a temporary credit report lifts.

 

In regard to identity protection, any person who has learned or reasonably suspects that he or she has been the victim of identity theft will be allowed to file and receive a copy of a police report with the local law enforcement agency with jurisdiction over his or her residence. If the jurisdiction for the investigation and prosecution of the crime lies elsewhere, the local law enforcement agency may refer the complaint to an enforcement agency in that jurisdiction.

 

The bill also specifies that any person who manufactures or possesses five or more fictitious or forged means of identification with the intent to distribute to others for the purpose of committing a crime will be guilty of a class C felony.

 

This bill is now on the Governor’s desk awaiting his signature.

 

Several bills were filed in 2008 in the House and Senate that would have increased the fee collected by each recorder of deeds from $3 to $10. In most of the bills, the increased fee was to be deposited into the Missouri Housing Trust Fund. The bills generally allowed one dollar of the fee to be earmarked for deposit into the county treasury for use by the recorder's office to administer the plan. The Missouri House of Representatives did not provide public hearings on these bills; however several members of the Democratic Caucus had drafted the fee increase as an amendment to several bills, including Senate Bill 1059 relating to mortgage fraud. Real estate industry groups worked against this measure that was widely touted by the Salvation Army and other social justice organizations.

 

Numerous bills were filed in 2008 in the Missouri General Assembly restricting unsecured loans and payday lending, enacting predatory lending statutes and establishing a 36% usury rate. The Missouri House of Representatives leadership was not willing to allow these bills to gain momentum and thus referred them to the House Financial Institutions Committee, where they failed to gain a public hearing. Missouri Attorney General Jay Nixon (D) has been a strong advocate for predatory lending reform and was pushing hard for legislation this year. Several amendments were drafted by House Democrat members, but no legislation was available to amend and thus the issue failed to reach the House floor for debate. No movement on unsecured loans took place in the Missouri Senate this session either.

 

Representative John Burnett (D-Kansas City) has been an outspoken advocate for reforms to the payday loan industry and filed House Bill 1462 this year. HB 1462 changes the laws regarding unsecured loans of $500 or less, sometimes referred to as payday loans. In its main provisions, the bill:

 

 

Representative Burnett filed HB 1462 on behalf of the Attorney General’s office in 2008. The bill did not pass. We expect this language to return again next year. During the Gubernatorial debates leading up to the November General Election, we will likely see significant commentary on this issue since Attorney General Jay Nixon is the likely Democrat Candidate for Governor and he has made this issue part of his campaign platform. We are unaware where the Republican candidates stand on the issue.

 

We must continue to monitor and be proactive on all payday and predatory lending proposals as we are aware of amendments in the past that would have limited the usury rate to a level that would effectively stymie the lending and credit industry. In the past, we have seen amendments that set a statutory usury rate as low as 12%. 

 

Pending the Governor’s approval, which should be almost certain, the ability of the Attorney General to go after those parties wrongfully using the name of another financial institution will be allowed. The current statute only allows the institution whose name is wrongfully used to sue the offender. Since many of the organizations using this deceptive practice are from outside the state of Missouri, we believe that giving this new power to the state Attorney General will help to halt this clearly improper and illegal practice. Awaiting approval by the Governor is Senate Bill 999.

 

Legislation was filed in 2008 by Senator Wes Shoemyer (D-Clarence) as Senate Bill 1253, which creates the County Taxpayer Protection Act. County collectors or collector treasurers must be custodians of all individual property tax records. Requests for individual property tax records must be made in writing and disclose vested interests in such records. The act prohibits the use of individual property tax records for commercial purposes. Any person, organization or entity which uses individual property tax records for commercial purposes will be subject to a two thousand dollar penalty for each individual county tax record transferred, given or used for commercial purposes. This legislation was strongly opposed by several groups, business and organizations such as the Missouri Press Association, Missouri Realtors Association, Mortgage Bankers Association of Missouri, Missouri Bankers Association, Missouri Financial Services Association, Missouri Land Title Association and others. This bill was filed on behalf of the Missouri County Collectors Association. The bill received a public hearing in the Senate Committee on Commerce, Energy and the Environment. The Committee took no further action and the bill died in Committee. The bill has very strong opposition by numerous organizations and we are hopefully the County Collectors Association will drop their pursuit of this legislation in 2009.

 

Several bills were filed during the 2008 legislative session in regard to the Missouri Housing Development Commission; however, no legislation reached final passage. A majority of the bills were filed in regard to news media stories over the past year regarding the potential conflicts occurring between the Commissioners and developers. In addition, State Auditor Susan Montee (D) released an audit in April of the Low Income Housing Tax Credit that was very critical of the program’s cost and effectiveness. These factors led to legislation that was filed.

CONDUIT BONDS – Legislation was filed during the 2008 Regular Session on behalf of the Missouri Housing Development Executive Director Pete Ramsel that lifts the cap on conduit bonds. Currently, the Missouri Housing Development Commission cannot have outstanding bonds or notes in an aggregate principle amount exceeding $200 million at any one time. The legislation specified that any conduit revenue bonds or notes of the commission on which the payment of all debt service is the responsibility of an approved mortgagor will not be included in the indebtedness limitation. This legislation was filed as Senate Bill 1175 and House Bill 1904. The only group testifying in support was Jim Moody on behalf of George K. Baum Investments. These bills both passed their originating chamber and died on the floor calendar due to lack of action by the House and Senate Majority Floor Leaders.

 

MHDC REFORM – Several bills were filed this session that would have reformed the Missouri Housing Development Commission by removing elected officials and requiring a standard of conduct rule to be promulgated and enforced. The House sponsored bills did not receive public hearings as they were not referred to Committee by Speaker Rod Jetton (R). In the Senate, Senate Bill 1183 sponsored by Senator Joan Bray (D-St. Louis County) passed out of the Senate Government Accountability Committee, but was amended to only remove elected officials as officers, create a revolving door policy on staff and the executive director, and to require disclosure of staff interest in any development or entity before the MHDC. This legislation died on the Senate Calendar due to no action.

 

MHDC RELOCATION – House Bill 2496 sponsored by Representative Steven Tilley (R-Perryville) would have required the MHDC offices to be located in Cole County and the Executive Director to live within 40 miles of Jefferson City. This bill passed out of the House General Laws Committee and was placed on the House Calendar. The bill died on the House Calendar due to no action. In addition, the MHDC relocation language was added to SB 1175 as an amendment in the House Government Affairs Committee by Representative Ryan Silvey (R-Kansas City), but SB 1175 died on the House Calendar as well.

 

Senate Committee Substitute for Senate Bill 788 sponsored by Senator Delbert Scott (R-Lowry City) passed this session that provides further clarity on who must hold a real estate license to sell real estate. This legislation was filed by the Missouri Association of Realtors and Home Builders Association of Greater St. Louis to resolve an issue between both groups. Under current law, persons, partnerships, associations, and corporations may perform acts of real estate brokers with reference to their own property without being licensed as brokers, provided they are not in the real estate business. A provision in SCS/SB 788 removes the condition that they not be in the real estate business. SCS/SB 788 further states “real estate brokers may employ real estate brokers from outside the state for commercial real estate transactions when they have executed a brokerage agreement with the Missouri broker, consented to jurisdiction of Missouri and the commission, consented to certain disciplinary procedures, and appointed the Missouri real estate commission as his or her agent for service of process.” SCS/SB 788 has been sent to the Governor’s desk for his approval.

 

Senate Bill 907 passed this session and included language that states “any transfer fee, declaration, or covenant that requires the payment of a fee to a specified person upon a transfer of interest in real property shall not be binding or enforceable against any subsequent owner, purchaser, or mortgagee of an interest in the real property.” This language was pushed by the Missouri Association of Realtors after they became aware of a company soliciting realtors to participate in a transaction scheme that seeks to encumber an owner’s property with the obligation for all future buyers of the property to pay a 1% real estate transfer fee for the next 99 years, with the fee revenue being split between the current property owner, realtor and transfer fee solicitor. No housing related industry was opposed to this legislation.

 

Senate Bill 1009, which will allow a $2,500 exemption to the Good Funds law, has passed and is awaiting action by the Governor. This bill was in response to the inconvenience caused by the 2007 Title Insurance Reform law, which removed the $10,000 exemption, where a real estate transaction is conducted by a Title Insurance Agent. It was determined that frequently closing estimates are off by a small amount and a borrower, or other party cannot write a check that is not considered “certified funds”. No other exemptions to the Good Funds provisions of the Title Insurance statute (Ch. 381, RSMo.), were changed by SB 1009.

 

The most significant initiative proposed by Governor Blunt for the 2008 legislative session was Senate Bill 1283, entitled the “Health Transformation Act of 2008”. SB 1283, by Senator Tom Dempsey (R-St. Charles), failed passage in the Missouri House of Representatives, after time ran out for compromise between officials from the Missouri Hospital Association and the Speaker of the House, in regard to repealing the existing certificate of need law for hospitals and costly medical equipment. In addition, House leaders were calling for increased customer billing transparency, which was opposed by healthcare providers and hospitals. Few provider groups supported the legislation throughout, and the legislation faced an uphill battle before the addition of several controversial proposals in a House Committee Substitute. The House version was authored by Representative Rob Schaaf (R-St. Joseph), who is also a family physician. The underlying bill that passed the Senate aimed at reducing the number of uninsured Missourians by providing a government subsidized supplemental insurance policy. 

 

In surprise to the business lobby in Jefferson City, the Missouri House of Representative passed SS/HB 1883 on the last day of session that includes a provision often referred to as a "fix" to the Schoemehl case, which is a 2007 Missouri Supreme Court decision that resulted in Second Injury Fund benefits being paid to the surviving spouse of a disabled worker who had died of causes unrelated to his work injury. SS/HB 1883 specifies that in applying the provisions of the Workers' Compensation Law it is the intent of the legislature to reject and abrogate Schoemehl v. Treasurer of the State of Missouri, 217 S.W.3d 900 (Mo. banc 2007) and all cases interpreting, applying, or following this case and reaffirms that the right for compensation for the permanent total disability of an injured employee terminates on the date of the injured employee's death. This bill is now on the Governor’s desk awaiting his signature.

 

Included in this report, you will find a listing of all legislation of interest to your organization that passed and failed this session. If you would like a hard copy of any of the bills referenced, go to