By Michael J. Arnold & Michael Belote, Esq.
Legislative Advocates

The legislature is currently in recess between the 2017 and 2018 legislative years. The second year of the two-year session will begin on January 3, 2018.

Sexual Harassment Allegations Impacting the Legislature

As all California Mortgage Association (CMA) members have read in the press, the issue of sexual harassment has become paramount in the State capital. Assembly Member Bocanegra has resigned and the Governor has called a special election to fill the unexpired term for his Assembly seat (AD 39, San Fernando). The special primary election will take place in April, with the General Election for the seat to be held concurrently with the statewide June primary election.

In addition, Assembly Member Matthew Dababneh and Senator Tony Mendoza have also been accused of serious sexual harassment activities. Both of these legislators have denied the allegations. We will hear more about these matters over the next several weeks. However, given the tenor of the times we may see the aforementioned legislators also lose their seats. (Update: Assembly Member Dababneh has announced that he will resign in December, 2017.)

Unfortunately, in addition the many other reasons why this mess is so horrible, both Assembly Member Dababneh and Senator Mendoza have been accessible to your CMA lobbyists in the past. More importantly, these two members have been stripped of their committees, including as the respective chairs of the Assembly Banking Committee and the Senate Banking Committee. The new chairs of these two committees of primary importance to the CMA are Assembly Member Monique Limon for Assembly Banking Committee and Senator Bill Dodd for Senate Banking.

New Legislation for 2018

We anticipate much new legislation for 2018. As always, your legislative advocates will be reviewing all newly introduced legislative proposals and will present these bills to the CMA Board of Directors. Any new bills concerning issues of interest to the CMA membership will be closely monitored. Where those bills would create difficulties for the members of CMA, your legislative advocates, pursuant to direction from the CMA board, will attempt to kill or amend the bad proposals so that they will no longer create difficulties for CMA members. In addition, we will be supporting measure which the Board believes to be in the best interests of the CMA membership.

CMA members I can obtain a list of the bills that we are tracking at any time during the legislative session. Simply contact the CMA office and request a printout of our most recent Legislative Status Report. This document will show all bills CMA is tracking and will include information on the status of the bills.

Senate Leadership to Change

Importantly, we anticipate significant changes in the Senate during 2018. Senator Kevin de Leon is the current President Pro Temp of the Senate. He will be termed out of the legislature in 2018 and is currently running for the US Senate against Senator Feinstein. In addition, the chair of the Assembly Appropriations Committee, Senator Ricardo Laro, is running for Insurance Commissioner. It has already been announced that Senator de Leon will be replaced as Pro temp by Senator Toni Atkins. Although the date for the transition has not been announced.

2018 Is an Election Year

The fact that 2018 is an election year makes things even more difficult to predict. Some legislators will be looking for issues to pursue during the year to give themselves higher visibility in the press. This situation has led to difficulties for the mortgage lending community in the past. Efforts by legislators wishing to gain more publicity have sometimes focused on the mortgage lending industry. We are hopeful that this development will not occur during 2018, but we have heard that there will be legislation to extend provision of the Home Owner’s Bill of Rights Act which are now set to sunset.

CMA PAC Needs More Funds

It will be important for CMA to fully participate in the electoral process during 2018. We need to support those legislators who are philosophically aligned with the policy positions of the CMA membership. To engage in this process it is necessary for the CMA PAC to be fully funded. Please make whatever contributions you can to the CMA PAC so that the voice of the CMA membership can be heard!

Federal Action On Taxation

There will be considerable activity in California in response to tax legislation adopted at the federal level. We may well see renewed interest in some type of tax reform which will extend the sales tax to certain services while reducing the state income tax. Reliability on the state income tax to fund a major portion of the state budget has resulted in serious budget shortfalls when there is a decline in the stock market. Senator Robert Hertzberg and others believe that expanding our tax base by covering services for purposes of the payment of sales tax will assist in smoothing tax revenues in the event of a downturn in the economy. This approach, of course, could be bad for mortgage lending-making your fees subject to the sales tax.

We look forward to representing the interests of the California Mortgage Association during to 2018 legislative year.