BILL REQ. #:  H-2073.1 

Read first time 02/20/2007.   Referred to Committee on Insurance, Financial Services & Consumer Protection.

     AN ACT Relating to short-term loans by credit unions; reenacting and amending RCW 43.79A.040; adding a new section to chapter 82.04 RCW; and adding new sections to chapter 31.12 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   A new section is added to chapter 82.04 RCW to read as follows:
     Every person engaging in the business of making small loans subject to chapter 31.45 RCW is subject to a tax in addition to the tax under RCW 82.04.290(2). The amount of the additional tax with respect to such a business is equal to the gross income of the business, multiplied by the rate of one percent. All revenue collected under this section must be deposited into the short-term cash advance loan program account under section 2 of this act.

NEW SECTION.  Sec. 2   A new section is added to chapter 31.12 RCW to read as follows:
     The short-term cash advance loan program account is created in the custody of the state treasurer. All receipts from the tax imposed under section 1 of this act must be deposited into the account. Expenditures from the account may be used for the purchase of certificates of deposit from participating credit unions under section 3 of this act. Only the state treasurer or the treasurer's designee may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.

NEW SECTION.  Sec. 3   A new section is added to chapter 31.12 RCW to read as follows:
     (1)(a) The short-term cash advance loan program is created. The state treasurer shall use the moneys collected under section 1 of this act and deposited under section 2 of this act to purchase certificates of deposit from participating credit unions. Subject to subsection (2) of this section, the participating credit unions must use the funds made available under this subsection to make loans under this section.
     (b) To participate under this section, credit unions must apply for approval to the director of financial institutions on forms provided by the director. The director shall maintain a list of participating credit unions and make the list available to the state treasurer. A participating credit union must provide the department with compliance reports to remain a participating credit union. The director shall adopt rules for granting approval and compliance reporting under this section.
     (2) Loans made under this section must comply with the following:
     (a) No fees;
     (b) Maximum ninety-day term;
     (c) No credit check;
     (d) Maximum amount of five hundred dollars;
     (e) Maximum annual percentage rate of eighteen percent; and
     (f) Refinancing is subject to an additional ten percent of the requested amount in mandatory savings under subsection (3) of this section.
     (3) A participating credit union must deposit ten percent of the requested loan amount in a savings account in the member's name. The amount deposited is in addition to the loan amount and is available for withdrawal when the loan is paid in full. Any interest on the savings deposit is credited to the member, if the loan is paid in full by the agreed date. When a member is allowed to refinance a loan made under this section, an additional ten percent of the loan amount must be deposited into the member's savings account.
     (4) A participating credit union must provide financial counseling services to its members through internal expertise or contracts with financial counselors.

Sec. 4   RCW 43.79A.040 and 2006 c 311 s 21 and 2006 c 120 s 2 are each reenacted and amended to read as follows:
     (1) Money in the treasurer's trust fund may be deposited, invested, and reinvested by the state treasurer in accordance with RCW 43.84.080 in the same manner and to the same extent as if the money were in the state treasury.
     (2) All income received from investment of the treasurer's trust fund shall be set aside in an account in the treasury trust fund to be known as the investment income account.
     (3) The investment income account may be utilized for the payment of purchased banking services on behalf of treasurer's trust funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasurer or affected state agencies. The investment income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.
     (4)(a) Monthly, the state treasurer shall distribute the earnings credited to the investment income account to the state general fund except under (b) and (c) of this subsection.
     (b) The following accounts and funds shall receive their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The Washington promise scholarship account, the college savings program account, the Washington advanced college tuition payment program account, the agricultural local fund, the American Indian scholarship endowment fund, the foster care scholarship endowment fund, the foster care endowed scholarship trust fund, the students with dependents grant account, the basic health plan self-insurance reserve account, the contract harvesting revolving account, the Washington state combined fund drive account, the commemorative works account, the Washington international exchange scholarship endowment fund, the developmental disabilities endowment trust fund, the energy account, the fair fund, the fruit and vegetable inspection account, the future teachers conditional scholarship account, the game farm alternative account, the grain inspection revolving fund, the juvenile accountability incentive account, the law enforcement officers' and fire fighters' plan 2 expense fund, the local tourism promotion account, the produce railcar pool account, the regional transportation investment district account, the rural rehabilitation account, the stadium and exhibition center account, the youth athletic facility account, the self-insurance revolving fund, the sulfur dioxide abatement account, the children's trust fund, the Washington horse racing commission Washington bred owners' bonus fund account, the Washington horse racing commission class C purse fund account, the individual development account program account, the Washington horse racing commission operating account (earnings from the Washington horse racing commission operating account must be credited to the Washington horse racing commission class C purse fund account), the life sciences discovery fund, the short-term cash advance loan program, and the reading achievement account. However, the earnings to be distributed shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.
     (c) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The advanced right of way revolving fund, the advanced environmental mitigation revolving account, the city and county advance right-of-way revolving fund, the federal narcotics asset forfeitures account, the high occupancy vehicle account, the local rail service assistance account, and the miscellaneous transportation programs account.
     (5) In conformance with Article II, section 37 of the state Constitution, no trust accounts or funds shall be allocated earnings without the specific affirmative directive of this section.