BILL REQ. #:  H-1884.2 

Read first time 02/14/2007.   Referred to Committee on Community & Economic Development & Trade.

     AN ACT Relating to establishing the family prosperity act; amending RCW 19.182.020 and 19.182.010; adding new sections to chapter 43.63A RCW; adding a new section to chapter 74.08A RCW; adding a new section to chapter 82.04 RCW; creating a new section; repealing RCW 43.63A.765 and 43.63A.767; providing an effective date; and declaring an emergency.

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

NEW SECTION.  Sec. 1   INTENT. The legislature finds that low-income working families often encounter significant barriers as they strive to achieve financial self-sufficiency. Their challenges include acquiring employment that pays enough to cover the costs of daily living, accumulating funds for the down payment on a home, and setting aside money for the children's education or for the parents' retirement. The legislature also finds that the United States has a negative savings rate, one in five American households owes more than it owns, and in the event of a job loss, one in four households cannot support itself at the poverty line for three months. Asset-poor families do not have enough cash reserves or equity in their homes or businesses to meet basic needs through a period of joblessness, health emergency, divorce, or other unexpected financial hardship. Compounding these problems, credit reports about low-income working families tend to contain negative information, so that when used by prospective employers, the reports can prevent the job seeker from obtaining employment. Research shows that savings and ownership of assets is possible for low-income wage earners and that they would benefit from a variety of tools that allow them to better control and increase their financial resources. The legislature therefore finds that the state, together with local communities, must adopt policies and provide services to help low-income working families achieve prosperity.

NEW SECTION.  Sec. 2   DEFINITIONS. The definitions in this section apply throughout sections 1 through 6 of this act unless the context clearly requires otherwise.
     (1) "Asset" or "asset building" means investment or savings for an investment in a family home, higher education, small business, or other long-term asset that will assist low-income families to attain greater self-sufficiency.
     (2) "Department" means the department of community, trade, and economic development.
     (3) "Director" means the director of the department of community, trade, and economic development.

NEW SECTION.  Sec. 3   WASHINGTON ASSET BUILDING COALITION. (1) There is created the Washington asset building coalition, whose mission is to provide statewide leadership on initiatives that foster financial self-sufficiency and economic security for low-income working families. The Washington asset building coalition shall work with the department, local asset building coalitions, and other public and private sector partners to:
     (a) Create a range of private and public prosperity products;
     (b) Develop and promote public and private lending policies that encourage asset building;
     (c) Market savings, smart borrowing, and federal tax credit programs;
     (d) Expand financial literacy opportunities and outcomes;
     (e) Enhance protections from predatory lending, fraud, and consumer scams; and
     (f) Identify and promote other approaches that will help low-income working families reach self-sufficiency by building and managing their assets.
     (2) For the 2007-2009 biennium, the department shall work with the
Washington asset building coalition and other partners to design, implement, and fund a statewide public education and outreach campaign. The department shall use state funds to attract matching investments by other public and private sector organizations. The campaign shall feature marketing, self-help tools, and local services, including activities such as:
     (a) Creation of a web site with financial information, savings and investment calculators, credit repair links, and other self-help tools;
     (b) Call-in assistance and referrals through a universal telephone number that provides a directory to local services;
     (c) Public service announcements and other educational outreach through media outlets, WorkFirst agencies, mailing inserts, and print and electronic materials designed to reach target groups such as seniors, the military, foster youth, former offenders, WorkFirst participants, limited English speakers, and other high need groups.

NEW SECTION.  Sec. 4   COMMUNITY ASSET BUILDING COALITIONS. (1) Community-based asset building coalitions involve collaboration among local social service, faith-based, governmental, job training, and health care agencies and the private sector, including financial institutions. They are important partners to the department and the statewide coalition because they deliver direct services to low-income working families.
     (2) The department shall expand and strengthen community-based asset building coalitions by providing them with technical assistance and grants. The department shall establish a process to offer technical assistance and grants to local communities interested in initiating or expanding asset building coalitions and services. The department shall conduct an application process and select at least twelve sites by October 31, 2007. The application must:
     (a) Identify the local lead agency;
     (b) Describe how the lead agency will work with community partners, including local government and the private sector, to implement program activities. The application must specifically identify the community partners with whom the lead agency will collaborate, the role of each partner, and their experience and accomplishments to date, if any, with asset building and financial literacy programs;
     (c) Identify areas of potential need based upon input from the community partners, including: Financial literacy; assistance with federal income tax preparation and the use of tax credits; the use of individual development accounts; homeownership and micro-enterprise promotion and services; and other asset-building strategies;
     (d) Identify the community resources that might support training for the implementation of the selected best practices chosen to address the needs identified by the community; and
     (e) Identify any local funds and in-kind resources that will be contributed to complement the state's funding.

NEW SECTION.  Sec. 5   TAX CREDIT MARKETING. To the extent funding is appropriated, the department shall establish a program to create an outreach campaign to increase the number of eligible low-income working families who claim the federal earned income tax credit and the federal child and dependent care tax credit. The department may work collaboratively with other state agencies, private and nonprofit agencies, local communities, and others with expertise that might assist the department in implementing the program.

NEW SECTION.  Sec. 6   ACCOUNTABILITY. The department shall report to the appropriate committees of the legislature by December 1, 2008, and annually thereafter, on the status of the asset building and financial self-sufficiency programs created under this act. The report shall include the status of program implementation, the outcomes achieved to date, any barriers that have arisen to carrying out the programs, and recommendations for additional services, tools, and practices that would increase the effectiveness of state and local asset building and financial literacy programs.

Sec. 7   RCW 19.182.020 and 1993 c 476 s 4 are each amended to read as follows:
     LIMITING CREDIT REPORT USAGE FOR EMPLOYMENT. (1) A consumer reporting agency may furnish a consumer report only under the following circumstances:
     (a) In response to the order of a court having jurisdiction to issue the order;
     (b) In accordance with the written instructions of the consumer to whom it relates; or
     (c) To a person that the agency has reason to believe:
     (i) Intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer;
     (ii) Intends to use the information for employment purposes as permitted under subsection (2)(a) of this section;
     (iii) Intends to use the information in connection with the underwriting of insurance involving the consumer;
     (iv) Intends to use the information in connection with a determination of the consumer's eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant's financial responsibility or status; or
     (v) Otherwise has a legitimate business need for the information in connection with a business transaction involving the consumer.
     (2)(a) A person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer who is not an employee at the time the report is procured or caused to be procured unless:
     (i) The person procuring the consumer report, or causing the consumer report to be procured, is either (A) a financial institution, as defined under RCW 30.22.040, where the consumer is seeking employment; or (B) a public safety entity where the consumer is seeking employment; and
     (ii) A clear and conspicuous disclosure has been made in writing to the consumer before the report is procured or caused to be procured that a consumer report may be obtained for purposes of considering the consumer for employment. The disclosure may be contained in a written statement contained in employment application materials; or
     (((ii))) (iii) The consumer authorizes the procurement of the report.
     (b) A person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any employee unless the employee has received, at any time after the person became an employee, written notice that consumer reports may be used for employment purposes. A written statement that consumer reports may be used for employment purposes that is contained in employee guidelines or manuals available to employees or included in written materials provided to employees constitutes written notice for purposes of this subsection. This subsection does not apply with respect to a consumer report of an employee who the employer has reasonable cause to believe has engaged in specific activity that constitutes a violation of law.
     (c) In using a consumer report for employment purposes, before taking any adverse action based in whole or part on the report, a person shall provide to the consumer to whom the report relates: (i) The name, address, and telephone number of the consumer reporting agency providing the report; (ii) a description of the consumer's rights under this chapter pertaining to consumer reports obtained for employment purposes; and (iii) a reasonable opportunity to respond to any information in the report that is disputed by the consumer.

Sec. 8   RCW 19.182.010 and 1993 c 476 s 3 are each amended to read as follows:
     FAIR CREDIT REPORTING ACT DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1)(a) "Adverse action" includes:
     (i) Denial of, increase in any charge for, or reduction in the amount of insurance for personal, family, or household purposes;
     (ii) Denial of employment or any other decision for employment purposes that adversely affects a current or prospective employee;
     (iii) Action or determination with respect to a consumer's application for credit that is adverse to the interests of the consumer; and
     (iv) Action or determination with respect to a consumer's application for the rental or leasing of residential real estate that is adverse to the interests of the consumer.
     (b) "Adverse action" does not include:
     (i) A refusal to extend additional credit under an existing credit arrangement if:
     (A) The applicant is delinquent or otherwise in default with respect to the arrangement; or
     (B) The additional credit would exceed a previously established credit limit; or
     (ii) A refusal or failure to authorize an account transaction at a point of sale.
     (2) "Attorney general" means the office of the attorney general.
     (3) "Consumer" means an individual.
     (4)(a) "Consumer report" means a written, oral, or other communication of information by a consumer reporting agency bearing on a consumer's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living that is used or expected to be used or collected in whole or in part for:
     (i) The purpose of serving as a factor in establishing the consumer's eligibility for credit or insurance to be used primarily for personal, family, or household purposes;
     (ii) Employment purposes; or
     (iii) Other purposes authorized under RCW 19.182.020.
     (b) "Consumer report" does not include:
     (i) A report containing information solely as to transactions or experiences between the consumer and the person making the report;
     (ii) An authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device;
     (iii) A report in which a person who has been requested by a third party to make a specific extension of credit directly or indirectly to a consumer conveys his or her decision with respect to the request, if the third party advises the consumer of the name and address of the person to whom the request was made and the person makes the disclosures to the consumer required under RCW 19.182.070;
     (iv) A list compiled by a consumer reporting agency to be used by its client for direct marketing of goods or services not involving an offer of credit;
     (v) A report solely conveying a decision whether to guarantee a check in response to a request by a third party; or
     (vi) A report furnished for use in connection with a transaction that consists of an extension of credit to be used for a commercial purpose.
     (5) "Consumer reporting agency" means a person who, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the business of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and who uses any means or facility of commerce for the purpose of preparing or furnishing consumer reports. "Consumer reporting agency" does not include a person solely by reason of conveying a decision whether to guarantee a check in response to a request by a third party or a person who obtains a consumer report and provides the report or information contained in it to a subsidiary or affiliate of the person.
     (6) "Credit transaction that is not initiated by the consumer" does not include the use of a consumer report by an assignee for collection or by a person with which the consumer has an account, for purposes of (a) reviewing the account, or (b) collecting the account. For purposes of this subsection "reviewing the account" includes activities related to account maintenance and monitoring, credit line increases, and account upgrades and enhancements.
     (7) "Direct solicitation" means the process in which the consumer reporting agency compiles or edits for a client a list of consumers who meet specific criteria and provides this list to the client or a third party on behalf of the client for use in soliciting those consumers for an offer of a product or service.
     (8) "Employment purposes," when used in connection with a consumer report, means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment, or retention as an employee.
     (9) "File," when used in connection with information on any consumer, means all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.
     (10) "Investigative consumer report" means a consumer report or portion of it in which information on a consumer's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom the consumer is acquainted or who may have knowledge concerning any items of information. However, the information does not include specific factual information on a consumer's credit record obtained directly from a creditor of the consumer or from a consumer reporting agency when the information was obtained directly from a creditor of the consumer or from the consumer.
     (11) "Medical information" means information or records obtained, with the consent of the individual to whom it relates, from a licensed physician or medical practitioner, hospital, clinic, or other medical or medically related facility.
     (12) "Person" includes an individual, corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal or commercial entity.
     (13) "Prescreening" means the process in which the consumer reporting agency compiles or edits for a client a list of consumers who meet specific credit criteria and provides this list to the client or a third party on behalf of the client for use in soliciting those consumers for an offer of credit.
     (14) "Public safety entity" means: (a) All state, municipal, and county agencies charged with policing or patrolling the community, or investigating criminal activity; (b) all state militia governed by Title 38 RCW; and (c) all state, municipal, and county agencies that are charged with responding to, preventing, or investigating public emergencies including fires, acts of terrorism or war, and natural disasters.

NEW SECTION.  Sec. 9   A new section is added to chapter 74.08A RCW to read as follows:
     DEPARTMENT OF SOCIAL AND HEALTH SERVICES TO ENCOURAGE ASSET BUILDING. The department of social and health services shall encourage recipients of temporary assistance for needy families to learn about asset building and participate in programs to assist low-income persons in developing personal assets. The department of social and health services shall provide its regional offices, recipients of temporary assistance for needy families, and any contractors providing job search, training, or placement services notification of programs available in the state for financial literacy, individual development accounts, assistance with federal income tax information and the availability of tax credits, and other resources to assist with asset building.

NEW SECTION.  Sec. 10   A new section is added to chapter 82.04 RCW to read as follows:
     (1) 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 business is equal to the gross income of the business, multiplied by the rate of one percent.
     (2) Thirty-five percent of the proceeds of the tax under subsection (1) of this section shall be deposited in the family prosperity account created in section 11 of this act. The remainder shall be deposited in the individual development account program account created in RCW 43.31.470.

NEW SECTION.  Sec. 11   The family prosperity account is created in the state treasury. All receipts from section 10 of this act and any federal, state, and private funds must be deposited in the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for supporting initiatives that foster financial self-sufficiency and economic security for low-income working families.

NEW SECTION.  Sec. 12   REPEALERS. The following acts or parts of acts are each repealed:
     (1) RCW 43.63A.765 (Pilot programs for asset accumulation) and 2006 c 91 s 2; and
     (2) RCW 43.63A.767 (Outreach campaign -- Eligibility for federal earned income tax credit) and 2006 c 91 s 3.

NEW SECTION.  Sec. 13   CAPTIONS NOT LAW. Captions used in this act are not any part of the law.

NEW SECTION.  Sec. 14   Sections 1 through 6 and 13 of this act are each added to chapter 43.63A RCW.

NEW SECTION.  Sec. 15   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 2007.