2019 -- S 0192

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LC000985

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE FEDERAL SHUTDOWN

AFFECTED EMPLOYEES LOAN PROGRAM

     Introduced By: Senator Stephen R. Archambault

     Date Introduced: January 31, 2019

     Referred To: Senate Commerce

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND

GOVERNMENT" is hereby amended by adding thereto the following chapter:

CHAPTER 128.3

THE FEDERAL SHUTDOWN AFFECTED EMPLOYEES LOAN PROGRAM

     42-128.3-1. Short title.

     This chapter shall be known and may be cited as the "The Federal Shutdown Affected

Employees Loan Program".

     42-128.3-2. Definitions.

     As used in this chapter, the following words and terms shall have the following meanings

unless the context shall clearly indicate another or different meaning or intent:

     (1) "Affected employee" means a federal employee who, during a federal government

shutdown, is:

     (i) A resident of this state; and

     (ii) Required to work as a federal employee without pay or furloughed as a federal

employee without pay;

     (2) "Bank" means a bank or an out-of-state bank, as defined in § 19-7-1;

     (3) "Commission" means the Rhode Island housing resources commission;

     (4) "Credit union" means a Rhode Island credit union as defined in § 19-5-1 or a federal

credit union;

     (5) "Department" means the department of business regulations;

     (6) "Eligible financial institution" means a bank or credit union that has a physical

presence in this state and is in good standing;

     (7) "Good standing", with respect to a bank or credit union, means that the bank or credit

union is not subject to:

     (i) A formal agreement with the federal Office of the Comptroller of the Currency;

     (ii) A consent order or cease and desist order issued by the Federal Deposit Insurance

Corporation;

     (iii) A consent order or cease and desist order with the department;

     (iv) A letter of understanding and agreement or consent order issued by the National

Credit Union Administration; or

     (v) A finding by the department that the bank or credit union has failed to comply with a

provision of this chapter;

     (8) "Grace period" means the ninety (90) day period after an affected employee's federal

agency is funded; and

     (9) "Shutdown" means that period of time where a partial government shutdown has been

declared during any federal fiscal year.

     42-128.3-3. Authority of the commission.

     (a) The commission shall administer a federal shutdown affected employee loan program

to guarantee the repayment of loans made by an eligible financial institution to an eligible

affected employee pursuant to this chapter. Subject to the cessation of new claim approvals under

§ 42-128.3-6(d), the commission shall submit all approved claims to the general treasurer, who

shall pay from the general fund any and all claims submitted by the commission.

     (b) Any bank or credit union may apply to the department to participate in the loan

guarantee program. Not later than one business day after receiving the application, the department

shall determine whether the financial institution is an eligible financial institution, and

immediately notify the bank or credit union and the commission of its determination. Any eligible

financial institution may make loans to affected employees in accordance with this chapter.

     (c) Each eligible financial institution that makes a loan pursuant to this chapter, shall

notify the commission in writing not later than one business day after making the loan, specifying

any and all information about the borrower as the commission may request.

     42-128.3-4. Loan eligibility.

     An eligible financial institution may make a loan to an affected employee, provided:

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     (1) The affected employee has provided to the financial institution:

     (i) Proof of the employee's status, income and residence in this state; and

     (ii) The amount of unemployment compensation benefits under chapter 44 of title 28, the

employee has received and has been deemed eligible to receive during the shutdown. Such proof

may include a paystub or bank statement, a federal employee identification card, the federal tax

identification number of the employee's employer and a sworn affidavit from such employee

indicating that such employee:

     (A) Is currently a federal employee residing in this state;

     (B) May be eligible to receive back-pay when the shutdown ends; and

     (C) Is not receiving a loan from any other financial institution pursuant to this section.

     (2) The amount of the loan shall not exceed the lesser of five thousand dollars ($5,0000),

or the amount of the affected employee's most recent monthly after-tax pay, minus four (4) times

the amount, if any, the affected employee has reported to the institution under subsection (1) of

this section, related to any weekly unemployment compensation benefits the employee has

received or has been deemed eligible to receive during the shutdown.

     (3) The loan is made in accordance with the eligible financial institution's underwriting

policy and standards; provided, further, that the affected employee's creditworthiness shall not be

a factor used for the purposes of determining eligibility.

     (4) The loan agreement shall not require repayment during the grace period, or charge

interest on the principal amount before or during the grace period or for one hundred eighty (180)

days after the grace period; provided, after the one hundred eighty (180) day period, the eligible

financial institution may charge interest or fees in accordance with the financial institution's

lending policy and the terms of the underlying loan agreement.

     (5) The loan agreement shall require that the affected employee repay the loan in full not

later than one hundred eighty (180) days after the end of the grace period. The loan agreement

shall not contain a fee or penalty for the prepayment or early payment of the loan.

     (6) The eligible financial institution shall:

     (i) Refer the affected employee to the United Way of Rhode Island 2-1-1 Infoline; and

     (ii) Offer credit counseling services or refer the employee to nonprofit credit counselors.

     42-128.3-5. Additional loans.

     An affected employee who has received a loan pursuant to §§ 42-128.3-3 or 42-128.3-4

may apply to the same eligible financial institution for an additional loan for each thirty (30) day

period the employee remains an affected employee; provided, no affected employee may receive

more than three (3) loans under the program, and each affected employee shall be required to

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update the institution as to the amount of unemployment compensation benefits under chapter 44

of title 28 the employee has received, and has been deemed eligible to receive during the

shutdown. Each additional loan shall be made in accordance with § 42-128.3-4.

     42-128.3-6. Collection.

     (a) On and after one hundred eighty (180) days from the end of the grace period, an

eligible financial institution that has made a good-faith effort to collect the outstanding principal

from a loan issued pursuant to this chapter may make a claim to the commission for recovery of

an amount equal to the outstanding principal for such loan. Prior to the commission's approving

and submitting a claim to the general treasurer, an eligible financial institution shall demonstrate

to the satisfaction of the commission that the eligible financial institution has made a good-faith

effort to collect the outstanding principal from the eligible employee in accordance with the

financial institution's loan servicing and collection policies. Upon payment of a claim, the loan

shall be assigned to the state, and the commission shall have the right to continue collection

efforts on the loan.

     (b) The commission shall maintain records in the regular course of administration of the

loan guarantee program, including a record of loans issued and of payments made to honor loan

guarantees issued under this chapter. The commission shall regularly review the records to

determine total loans issued and identify duplicative applications. The commission shall report to

the department of labor and training the names of the affected employees who have received a

loan under the program, and the department of labor and training shall provide to the commission

information concerning such employees' unemployment compensation benefits. If the

commission determines that an affected employee misrepresented unemployment compensation

benefits, the affected employee may be deemed ineligible for additional loans under § 42-128.3-4.

     (c) The commission may terminate any loan guarantee if the financial institution

misrepresents any information pertaining to the guarantee, or fails to comply with any

requirements of this section in connection with the guarantee of the underlying loan.

     (d) If the amounts expended to honor loan guarantees under the program exceed ten

percent (10%) of total loans issued, the commission shall immediately cease to approve claims,

and shall notify the general treasurer and each eligible financial institution of the total amount of

payments made, and that the commission has ceased honoring loan guarantees.

     (e) Any interest deferred or not charged related to a loan issued pursuant to this chapter

shall be exempt from all state taxes that may be applicable to such interest amounts as they relate

to an affected employee. Eligible financial institutions shall disclose to affected employee

borrowers in the signed affidavit or loan documents that there may be federal tax consequences to

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the program loans.

     (f) No new loan applications shall be submitted under the program after the shutdown

ends. The program shall expire upon the repayment of all loans made under the program and, for

all loans in default, the repayment of claims made under the program, or the cessation of new

claim approvals under subsection (d) of this section.

     42-128.3-7. Unemployment benefits.

     Upon the passage of federal legislation or the issuance of federal guidance from the

United States Department of Labor or another federal agency which allows an affected employee

to receive benefits under chapter 44 of title 28, an affected employee may be eligible for

unemployment benefits pursuant to said chapter, and any federal legislation or guidance during

the period of the shutdown. If the shutdown ends and an affected employee is paid by the federal

government for any period of time the affected employee worked without pay during the

shutdown, the affected employee shall reimburse the employment security fund in an amount

equal to the unemployment benefits the affected employee received for the period of the

shutdown.

     42-128.3-8. Tax deferment.

     (a) Notwithstanding any other provision of the general or public laws, or of any special

law, charter, special act charter, home-rule ordinance, local ordinance or other local law, any

municipality, or any subdivision of a municipality, may, by a vote of its council, establish a

deferment program to defer the due date of taxes on real property, personal property or motor

vehicles, or water or sewer rates, charges or assessments, owed by affected employees.

     (b) Upon establishment of a deferment program, a municipality or subdivision thereof

shall not charge or collect interest on any tax, rate, charge or assessment or part thereof that is

payable by an affected employee and which became due during the period when such individual

was an affected employee.

     (c) Eligibility shall be determined by the municipality. Evidence of eligibility for a

deferment may include the proof set forth in § 42-128.3-4(1). Individuals need not receive

unemployment benefits or participate in the federal shutdown affected employee loan program for

purposes of being an affected employee. Municipalities may require individuals to recertify

eligibility on a periodic basis of not less than thirty (30) days.

     (d) Each tax, rate, charge or assessment deferred under a program established pursuant to

this section shall be due and payable without interest or penalty not later than sixty (60) days after

the date on which an individual is no longer an affected employee. Thereafter, any portion of the

tax, rate, charge or assessment or installment or portion thereof which remains unpaid, and all

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interest and penalties otherwise provided by law shall apply retroactively to the original due date

for the tax, rate, charge or assessment or installment or portion thereof. All provisions of the

general or public laws relating to continuing, recording and releasing property tax liens and the

precedence and enforcement of taxes, rates, charges and assessments shall remain applicable to

any deferred tax, rate, charge or assessment or installment or portion thereof.

     (e) Nothing in this chapter shall affect interest or penalties on, or lien rights or collection

of, any tax, rate, charge or assessment due before the date in which a federal government shut

down has been declared, or after the date on which an individual is no longer an affected

employee.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE FEDERAL SHUTDOWN

AFFECTED EMPLOYEES LOAN PROGRAM

***

     This act would establish a new program which would assist federal employees who have

been affected by a federal government shutdown by making available state-backed loans in an

amount not to exceed five thousand dollars ($5,000).

     This act would take effect upon passage.

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