In Sacramento: 4 Bills & Governor’s Bad-Debt Deduction Proposal

The California Credit Union League recently provided an important update on bills in the California State Legislature that the League is not only monitoring on behalf of credit unions, but advocating either for-or-against — including:

• Assembly Bill 2067 (Assemblymember Diane Dixon): As introduced, this bill would have required financial institutions with nine or more branches to assign four locations to accept legal service of process. Under current law, financial institutions are only required to assign one central location. The League was able to secure amendments that would require a financial institution that uses a third party for legal service of process to assign another location. There should be no impact to credit unions.
• Assembly Bill 2930 (Assemblymember Rebecca Bauer-Kahan): This bill deals with regulation on automated-decision tools (ADT). The bill would have required an impact assessment from deployers, credit unions, and developers of ADT technology. The League secured amendments to remove this requirement on deployers. While the bill contains an opt-out of ADTs, the League is in discussions with the author’s office regarding that provision.
• Senate Bill 278 (Senator Bill Dodd): This bill, originally from last year’s legislative session, is back and was amended this week. It would have held credit unions liable if they “should have known” elder financial abuse was occurring. The League has been working for the past year on this bill, and the recent amendments are a direct product of that work. The amendments provide a trusted contact system and a three-day hold for transactions over $5,000 when the credit union reasonably suspects elder financial abuse. The bill will be heard in the California Assembly Banking and Finance Committee on June 17.
• Senate Bill 1075 (Senators Steven Bradford and Monique Limon): The hearing for this bill has been moved to July 1. The League is in a good position to remove the waiting period, but it is far from finished. Credit union advocates should continue to Connect for the Cause! The League has sent more than 1,400 messages to assemblymembers so far. While the bill was in the Senate, messages that were sent totaled nearly 9,200 recently.
• The League’s advocacy team has not seen language drop into a trailer bill for Governor Gavin Newsom’s bad-debt deduction proposal, but it has no reason to suspect this proposal will not move forward. While the League has been working on this issue since January, the budget deficit remains large — and the governor’s administration is looking for any dollar it can find. This proposal would eliminate the sales-and-use tax deduction and refund for a lender or retailer’s affiliate for sales-and-use taxes previously paid by a retailer on accounts found worthless and charged-off for income tax purposes (subsequently referred to as bad debt) beginning on January 1, 2025.

The League looks forward to continuing to provide essential updates on bills in the California State Legislature that may impact credit unions going forward. Thank you for your support, membership, and continued advocacy!