Business bills to hit General Assembly

One would turn back the clock on electric utilities. Another would make it easier for pharmacies to compete with mail-order drug outfits.

One would charge shoppers for using plastic bags. Another would consider creating a state currency. (Maybe it could be denominated in Cardinals after the state bird.)

These and a number of other business-related bills have been introduced in the General Assembly, which resumed Wednesday.

Some don't have a snowball's chance in a Richmond summertime, but a few may march through the short Assembly session to become state law.

Here's a round up of some of those bills:

HEALTH INSURANCE

Sen. W. Roscoe Reynolds, D-Henry County, is proposing "pharmacy freedom of choice" legislation that requires health benefits plans to treat all pharmacies alike.

Among other elements, SB879 prohibits plans from requiring beneficiaries to exclusively use mail-order pharmacies or reducing reimbursement to beneficiaries because of the pharmacy they select.

It also gives pharmacies and individuals the right to sue insurers that violate the bill.

Reynolds said he modeled the bill after North Carolina's "pharmacy of choice" law, at the request of a constituent.

"What I've done in this case is respond to a constituent that is very upset and thinks Virginia law needs to be changed," he said.

Del. Chris Stolle, R-Virginia Beach, is asking for an amendment, HB2218, stating that physicians must not be required to participate in any third-party reimbursement program as a condition of licensure.

- Amy Jeter

BUSINESS TAXES

Retail industry groups in Virginia have long complained about the Business, Professional and Occupational License tax, known as BPOL. They argue that the tax is unfairly administered - with some categories of business taxed more than others, and some not subject to the tax at all.

Del. Sal Iaquinto, a Virginia Beach Republican, has sponsored HB 1587 to allow his city and Chesapeake to drop the BPOL tax for new businesses in their jurisdictions for their first two years of operation. The Virginia Beach and Chesapeake city councils have passed resolutions to do this but need permission from the General Assembly to change their administration of the tax.

"It does help small businesses that are trying to get started and don't have any profitability," said Margaret Ballard, who lobbies for Retail Alliance, Hampton Roads' merchants organization, of the proposed change. "It is a great economic driver."

Businesses generally pay the BPOL tax on "gross receipts," or total revenues, not on net income. That means they can lose money but still have to pay the tax, which retail groups believe is wrong.

HB 1437, sponsored by Del. Mark Cole, a Republican from Fredericksburg, would allow localities to shift the tax to businesses' income, rather than their gross receipts.

- Carolyn Shapiro

PAYDAY AND CAR-TITLE LENDING

The long-running battle over interest rates on payday loans, car-title loans and open-end credit isn't over.

The General Assembly imposed restrictions three years ago on the availability of payday loans, the short-term cash advances of a few hundred dollars. The cost of these loans, when measured by their annual percentage rates, still surpasses 500 percent for a two-week loan.

Last year, the General Assembly enacted regulations for car-title lending, which provides borrowers with open-end credit like the kind available from credit cards.

This year, legislators have introduced a handful of bills that would cap interest rates on payday loans, car-title loans and certain open-end credit at an annual percentage rate of 36 percent.

Payday lenders couldn't cover their payrolls, overhead and lending risks if that ceiling were in place, said Jamie Fulmer, a spokesman for Advance America Cash Advance Centers Inc., a major payday lender in Virginia.

"We don't want to be regulated out of business, and that's what a 36 percent rate would do," he said.

Del. Glenn Oder, a Newport News Republican, is one of the legislators calling for a 36 percent ceiling. His bill, HB 1441, also would bar lenders making payday loans, title loans and open-end credit programs from imposing membership fees, participation fees or transaction fees along with their loans.

The 36 percent ceiling is needed because the current cost complicates the financial difficulties of many borrowers who resort to short-term credit, Oder said. In response to the restrictions that the General Assembly imposed on payday loans, some payday lenders began offering open-end credit products. Trying to regulate these high-cost loans, he said, "is like squeezing on a balloon."

- Tom Shean

MORTGAGES AND FORECLOSURES

The surge in foreclosures has triggered greater scrutiny of the mortgage-lending process. It's also prompted legislative proposals for tighter regulation of the industry.

One bill, HB 1665, sponsored by Del. Kenny Alexander, a Norfolk Democrat, would provide borrowers in default with additional time to pay what they owe and reinstate their home loans. His bill also would require a mortgage holder to notify a delinquent borrower of programs available to avoid foreclosure.

Two bills sponsored by Sen. Donald McEachin, a Henrico County Democrat, call for changes in the foreclosure process and greater documentation by lenders and loan servicers. One, SB 798, would require that foreclosures in Virginia be approved by a judge. The other bill, SB 795, would require more detailed information proving that a mortgage holder has the right to request a foreclosure.

McEachin said he had constituents facing foreclosure who didn't know who held their mortgages. "My rationale is to make sure that someone didn't make a mistake along the way," he said.

Bruce Whitehurst, president and CEO of the Virginia Bankers Association, expressed concern that some of these proposals, if enacted, would drag out the foreclosure process. In Virginia, the average borrower facing foreclosure is already 360 days past due on the loan, he said. "Do you want to extend that further," exacerbating an already-weak housing market, Whitehurst asked.

- Tom Shean

EMPLOYMENT

A few bills seek changes related to employment and how certain trades and professions go about their business.

n HB1509, sponsored by Del. Jim Scott, D- Fairfax County, and SB 747, proposed by Sen. Donald McEachin, D- Henrico County, would ban employment discrimination by state agencies based on sexual orientation.

In an e-mail seeking public support this month, McEachin wrote: "I believe that ending discrimination in state government is the right thing to do, not only for our identity as a Commonwealth, but also for our economy."

Scott and McEachin previously have introduced such bills, which have been defeated in every General Assembly session since at least 2005.

- HB1527, introduced by Del. James Edmunds II, R-South Boston, would permit firefighters, emergency medical technicians and rescue squad members to exempt themselves from jury service in civil and criminal cases.

- Scott's HB1510 would require pawnbrokers and dealers of precious metals to take a photo or digital image of every customer selling an object and every item being pawned. They also would have to submit daily reports of transactions to law enforcement officials.

- Philip Walzer

LIFE INSURANCE

Stories about the way some life insurers distributed death benefits triggered a burst of inquiries by regulators around the country last summer. For decades some insurers have provided beneficiaries with the ability to draw from checking accounts instead of making lump-sum payments immediately available.

Del. Bob Marshall, a Republican from Prince William County, proposed requiring insurers to get written consent from a beneficiary or policy owner before transferring any death benefits to a checking account or draft account. Marshall's bill, HB 1458, also would require an insurer to disclose to beneficiaries whether they have any options, such as receiving the settlement in a lump sum, whether any interest is paid under these options and, if so, how it is calculated.

An insurance industry trade group said it opposed Marshall's bill, in part, because it could delay the payment of death benefits to beneficiaries. "Under the legislation, if the beneficiary does not elect a payout option, then the insurer cannot pay the benefit," Whit Cornman, a spokesman for the American Council of Life Insurers, said in an e-mail.

Another delegate wants to limit life insurers' use of derivatives such as collars, swaps and futures contracts. Such financial instruments attracted attention during the 2008 collapse of American International Group and investment banks Bear Stearns and Lehman Brothers.

Del. Lee Ware, a Republican from Powhatan County, would impose restraints on the ways that life insurers based in Virginia could use these and other derivatives to hedge their risks. Ware's bill, HB 1504, would allow insurers to use derivatives but require that they have written guidelines and submit them to the State Corporation Commission for approval.

The Life Insurers council said it supported Ware's proposal because it would allow for more efficient management of derivatives for life insurers and the financial institutions they partner with on the transactions.

- Tom Shean

HEALTH CARE WORKERS

Del. Bob Purkey, R-Virginia Beach, is asking for a joint subcommittee to study the impact of the state's physician shortage and look for remedies in HJ574.

In HB1535, Del. Donald Merricks, R-Pittsylvania County, proposes that the Virginia Board of Medicine and Virginia Board of Nursing be permitted to consider military training and experience in determining whether an applicant meets education requirements for licensure or certification in certain health professions.

Emergency health care workers would receive more protection under HB1690, introduced by Del. Chris Stolle, R-Virginia Beach. He wants assault and battery of a physician, nurse or other caregiver who is rendering emergency care in an emergency-room environment to be classified as a Class 1 misdemeanor. The crime would be punishable by 15 days in jail, with a two-day mandatory minimum sentence.

- Amy Jeter

MEDICAL FACILITIES

Two bills call for exemptions to the state Certificate of Public Need program, which requires certain medical care facility projects to be approved by the state health commissioner.

In SB818, Sen. Donald McEachin, a Henrico County Democrat, proposes excluding the construction of outpatient radiation therapy facilities and their equipment upgrades from the COPN requirements.

Del. Clay Athey, R-Front Royal, suggests exempting any Department of Veterans Services facility in HB1697.

- Amy Jeter

PLASTIC BAGS

A group of bills would ban plastic bags or charge those who carry purchases home in them.

Del. Onzlee Ware, a Roanoke Democrat, has proposed banning retailers' distribution of plastic bags with HB 1498. The bill would allow bags that are durable and have handles, are at least 2.25 millimeters thick or are designed for reuse.

Shoppers would have to pay 5 cents for plastic or paper bags under HB 2047, sponsored by Del. Adam Ebbin, a Democrat from Arlington. Fellow Democrat Joseph Morrissey, a delegate from Richmond, has proposed in HB2341 a steeper fee of 20 cents, only on plastic bags.

Under both bills, consumers would not have to pay for reusable bags or those that carry ice cream, meat, fish, poultry, restaurant leftovers, newspapers, dry cleaning or medications. Both bills would impose fines of up to $1,000 for the third offense on retailers who fail to collect the fee.

Like the bill Ebbin proposed last year, retailers would keep 1 cent of the fee - or 2 cents if they have a program that gives customers a credit for bringing reusable bags. Morrissey's bill would grant retailers 5 of the

20 cents - or 7 cents if they have a reusable bag credit program.

"We do not support bans or fees," said Margaret Ballard, vice president of advocacy for the Virginia Retail Federation, which lobbies for Retail Alliance, Hampton Roads' merchants group.

The federation helped establish a statewide educational program called A Bag's Life last year to encourage recycling of plastic bags. As part of the program, 800 retail locations statewide agreed to accept plastic bags for recycling.

- Carolyn Shapiro

STATE CURRENCY

Should the commonwealth of Virginia have its own currency in case the Federal Reserve System ever imploded?

Del. Bob Marshall thinks so. The Republican legislator from Prince William County wants the General Assembly to study whether Virginia should create a precious-metal alternative to the nation's greenback.

"I don't see anybody in Washington stopping long-term inflation," Marshall said. "If there's a meltdown, what can the states do? I'm simply talking about having a backstop,"

His resolution, H J 557, may sound like a call for returning to the 19th century, when several states operated their own banks. Marshall insists that he's seeking "a serious answer to a serious problem."

His resolution would create an eight-member subcommittee to consider the matter with help from Virginia's Treasurer and the Bureau of Financial Institutions. "I don't have all of the answers," Marshall said. "The mechanics have to be worked out."

- Tom Shean

ELECTRICITY REGULATION

Del. Ward Armstrong wants to go back in time. Before 1999. Before the state revamped its regulation of the electricity industry.

Armstrong, a Democrat from Martinsville, has submitted a bill to reinstate the old way of regulating power companies. In 1999, the General Assembly passed legislation to deregulate the industry and encourage competition that would, in theory, keep rates low and improve service.

When competition failed to develop, legislators abandoned deregulation and put in place new rules in 2007. The new regulation gave the State Corporation Commission less control over power companies' rates than it had prior to 1999. Armstrong's bill, HB 2117, would repeal that law and give regulators more discretion over utilities' rates.

His companion bill, HB 2118, would return authority to the commission to determine how much profit a power company should earn. Among the provisions of the 2007 law that would be repealed are those that allow power companies to earn a profit on their investment in energy efficiency programs and to collect performance incentives.

"The current law has helped create thousands of new jobs and kept rates stable and below the national average," said David Botkins, a spokesman for Dominion Virginia Power, in an e-mail response to Armstrong's proposals. Dominion representatives helped legislators craft the 2007 law.

"This legislative change would be bad for Virginia's economy at a time when we should be focused on continued job creation," Botkins said.

Armstrong established a working group in May 2010 to look closely at the ramifications of the current rate-setting system. The group studied the state's regulatory history and changes in rates over the past three years for electricity utilities Dominion Virginia Power and Appalachian Power Co. Its report, released earlier this month, concluded that rates have increased more than they would have without the new law.

"The 2007 reregulation statutes reduce drastically the ability of the State Corporation Commission to set rates fairly and effectively, essentially guarantee recovery of all costs and returns and encourage and provide for excessive returns for Apco and Dominion Virginia Power," the report said. "The new law is just beginning to impact rates, and the results are startling and disturbing, especially compared to rates in other states."

Sen. W. Roscoe Reynolds, a member of Armstrong's working group and a Henry County Democrat, sponsored identical legislation - SB 882 and SB 883 - in the Senate.

- Carolyn Shapiro