Committee Meeting Information

November 18, 2008

Room 302 Capitol Building

Cheyenne, Wyoming

 

Committee Members Present

Senator Cale Case, Co-Chairman

Representative Pete Illoway, Co-Chairman

Senator Ken Decaria

Senator Stan Cooper

Representative Kermit Brown

Representative Mary Gilmore

Representative Marty Martin

Representative Saundra Meyer

Representative David Miller

Representative Lorraine Quarberg

Representative Tim Stubson

Representative Dan Zwonitzer

 

committee Members Absent

Senator Grant Larson

Senator Charles Scott

 

Legislative Service Office Staff

Lynda Cook, Staff Attorney

Alex Kean, Research Associate

 

Others Present at Meeting

Senator Curt Meier

Representative-elect Mike Gilmore

Please refer to Appendix 1 to review the Committee Sign-in Sheet
for a list of other individuals who attended the meeting.

 

Joint Corporations Interim Committee Meeting Summary (November 18, 2008)

 

The Joint Corporations, Elections and Political Subdivisions Interim Committee met in Cheyenne to consider legislation revising the state corporations statutes, legislation to allow for unification of city and county governments and legislation to regulate viatical settlements. 

 

Call To Order

Co-Chairman Pete Illoway called the meeting to order at 8:00 am.  The following sections summarize the Committee proceedings by topic.   Please see the Agenda for details. (Appendix 2).

 

approval of minutes

The committee approved the minutes of the September, 2008 meeting. 

 

Unification of city and county governments

 

09 LSO 0095.W1 – City and County Unification.

 

Bob McLaurin, Jackson Town Manager and Andy Schwartz, Teton County Commissioner testified in support of the bill.  (Appendix 3).  The bill is a constitutional amendment to allow the legislature to create a process to allow consolidation of towns and counties and explains how the unified government would be treated under the constitution.

 

George Parks, Wyoming Association of Municipalities, testified that his association has not had the opportunity to form an opinion, but the bill fits with their support of maximized local government.  He suggested that the language may be too restrictive and he would support language that would give the unified government the authority to levy both the city and county tax.  The language he suggests would give the unified government all the authority of both counties and towns. 

 

Brent Moline, Wyoming Farm Bureau Association, testified in support of leaving the county mil levy alone.  He testified that county residents would not support legislation that would allow up to 20 mils on rural properties.  Chairman Case noted that the legislation would hopefully allow for a process that is democratic which would therefore protect the rural residents from forced unification.

 

John Robitaille, Petroleum Association of Wyoming, testified about his association’s opposition to the bill.  He is concerned that if a town loses the municipal 8 mils through this unification, it is unclear how the funds will be made up.  His fear is that the mineral industry will be taxed in other ways to make up the difference. 

 

The committee discussed the use of joint powers boards to accomplish the goals of unification.  It was noted that use of a joint powers board requires the continued existence of both the county and city governments.

 

Margo Sabec a consultant for Devon Energy, testified in opposition to the bill.  She suggested that another potential unintended consequence would be the expansion of zoning allowed in cities to areas in the county.  She specifically noted the authority of cities to zone out mineral development.

 

Bob McLaurin, Jackson Town Manager, testified that the state has changed since the constitution was created and it should be updated to reflect those changes.  He also noted that this is a local option.  He noted that the process would entail determining a financial plan before the local electors voted on the plan. 

 

Rep. Brown questioned whether this could be written to limit the effect of the unified government on the current property rights of landowners in both the city and towns.  Chairman Illoway suggested that would be trying to do to much in the constitution rather than leaving it for the legislature to craft the general laws in a manner that would protect those interests.

 

The bill was moved and seconded.   The following amendments were adopted:

 

Page 3-lines 5 through 10   Delete entirely and insert:

 

The passage of this amendment would allow the legislature to create a method to combine county and municipal governments.  The combined governmental entity would be like a county for tax and revenue purposes and like a municipality for all other purposes.  No combination may occur without a vote of the people.

 

Page 2-line 23 

 

Any procedure adopted by the legislature shall include a requirement for a vote of the electors in the affected county and municipalities.

 

The bill passed as amended (Representatives Miller, Quarberg, Stubson and Zwonitzer opposed).

 

Corporations Act  

 

09 LSO 128.W1 – Corporations act – amendments. (Appendix 4)

 

Chairman Case explained how the bill has been reviewed by members of the bar association and how the committee has already reviewed all of the proposed changes to the statutes with the committee at earlier meetings.

 

Walter Eggers and Tom Long presented the synopsis of the bill.  Mr. Eggers testified that the Wyoming Bar published a notice of this activity in the Wyoming Lawyer magazine.  He stated that the driving theme of the process was to bring the state statutes into compliance with the model act, taking into account provisions that are important to Wyoming to keep separate. 

 

There was some discussion regarding Article 12 changes and how they can be affected by tax rulings. 

 

There was significant discussion about the change requested to 17-16-1630 which changes the taxation base to net assets.  It was also noted that while valuation of assets is statutorily defined as assessed valuation, there is no counterpart to valuation of debt and that can result in net asset valuation of less than zero.    It was also noted that this raises a revenue issue which may require the bill to be started in the House.  Pat Arp, Deputy Secretary of State, testified that the net fiscal affect would be a decrease in revenues of approximately  7 million dollars.

 

The bill was moved and seconded.

 

The bill was amended to remove 17-16-1630 and directed the working group to bring suggestions during the legislative session to address the issue.  The bill was also amended to remove page 205-lines 19 through page 206-line 7.

 

The bill passed as amended unanimously.

 

Insurance Department Issues

 

09 LSO 0096.W1 – Insurance-viatical settlements.

 

09 LSO 0252.W1 – Insurance–life settlements.

 

Ken Vines, Insurance Commissioner and Jim Mitchell, Insurance Department attorney, testified regarding the bills.  Mr. Mitchell explained the viatical settlement bill at the September meeting.  The bill provides for regulation of the sale of viatical settlement contracts.

 

There are two competing models and Mr. Vines provided a comparison.  (Appendix 5).   Mr. Vines explained that the bill is necessary because there are no other mechanisms for dealing with the issue under current law.   He noted that they do not have many formal complaints on file at this time because they currently have no authority to regulate them.  He noted that the viatical settlements bill is based on the framework of the NAIC model with the good provisions of the NCOIL model.

 

He pointed out three main differences in the models.  The viatical settlements bill has a five year waiting period between the issuance of a life insurance policy and its sale to a third party.  He pointed out the exceptions to this five year prohibition, including when the insured is terminally ill, divorces, retires, suffers disability and bankruptcy.  He also noted that there are exceptions for sale even after only two years if it is clear that the policy wasn’t purchased for the purpose of selling the policy.  There was discussion about how the five year period was developed.  Mr. Mitchell noted after five years there is a presumption that the policy was not issued in violation of stranger oriented life insurance prohibitions.

 

Mr. Vines testified that the viatical settlements model is better because it requires a great deal of disclosures by both the owner and the purchaser.  He also testified that the viatical settlements bill has detailed rules about how these products may be advertised.

 

Steve Freudenthal and Michael Freedman, Coventry, testified in opposition to the viatical settlements bill and in support of the life settlements bill.  They provided written testimony regarding their concerns about the bill (Appendix 6).  Mr. Freudenthal noted that he and his clients agree that stranger oriented life insurance should be regulated.  He stated that gambling on the life of another is wrong.  However, he also noted that consumers should have a choice to sell their policy for a greater value than the cash values offered by the insurance companies.  He testified regarding his own experience with accepting a cash value on life insurance policies.  He noted that limitations on a persons property rights in their own policy should not be made unless there is a real threat.

 

Michael Freedman, Coventry, testified that he does support regulation of the market.  Important in that regulation is protection of consumers.  He stated that inherent in that is the protection of the rights of their consumers.  Mr. Freedman testified that the process by which the NAIC created the model was not the usual NAIC process for model acts.  He quoted several people who rejected the NAIC model as a failed attempt to regulate STOLI and an attempt to limit the sale of life settlements.  He described multiple states that have adopted NCOIL based models instead of the NAIC.  He reminded the committee that the two year period is the only supportable  time limitation because it is the contestable period for insurance policy fraud.

 

David Uchner, Brenda Nation and Chris Chandler, American Council of Life Insurers, testified in support of the NAIC model law.  Mr. Chandler testified that they do not question the validity of the secondary market, just their practices.  He testified that the model is designed to regulate the manufacturing of life insurance and also to regulate the field to protect consumers. 

 

Brenda Nation testified in support of the NAIC model as well.

 

Michael Morris, Farmers Insurance, testified in support of the NAIC model as well.

 

Brent Kunz, State Farm Insurance, testified in support of regulation of the market.  He testified in support of the wisdom of the insurance commissioner and therefore supported the NAIC model.

 

Mr. Vines testified that one of the strengths of the bill is that it gives the department broader regulatory authority to handle abuses.  He provided a description of the provisions of the NCOIL model that are not in the California model that is the basis for 09 LSO 0252.W1.

 

09 LSO 0096.W1 was moved and seconded.

 

The committee discussed the differences between the two bills.  The committee expressed concern that they needed more time to consider the two approaches.  The committee failed to pass either bill.

 

The chairmen thanked all the members for all their hard work.  Rep. Martin thanked the chairmen.

 

Meeting Adjournment

There being no further business, Co-Chairman Pete Illoway adjourned the meeting at 4:00 pm.

 

Respectfully submitted,

 

 

 

Representative Pete Illoway, Co-Chairman                                 Senator Cale Case, Co-Chairman

 

 

 

 

 

 

 

 

Appendix		Appendix Topic		Appendix Description		Appendix Provider
1		Committee Sign-In Sheet		Lists meeting attendees		Legislative Service Office
2		Committee Meeting Agenda		Provides an outline of the topics the Committee planned to address at meeting		Legislative Service Office
3		Unification		09 LSO 0095.W1 – City and county unification.		Legislative Service Office
4		Corporations		09 LSO 0128.W1 – Corporation act-amendments.		Legislative Service Office
5		Insurance		Comparison of NCOIL and NAIC models		Ken Vines
6		Insurance		Written testimony		Steve Freudenthal