Texas Institutions Lobby Lawmakers For 2 Bills, Against a Franchise Tax

AUSTIN, Tex. - The Texas Credit Union League met at the right time and the right place last week.

Facing the state Legislature now are bills that would allow credit unions to work with automobile brokers and to offer home equity loans - things the industry wants. But there's also a proposal that would do the unthinkable: subject many state-chartered credit unions to a franchise tax.

The nearly 2,000 credit union officials who had gathered here for a conference took advantage of their proximity to visit lawmakers.

The House tax bill would limit the franchise-tax exemption to state- chartered credit unions with a single occupational sponsor. All credit unions with a broader membership base would be required to pay the tax, which is 0.25% of net taxable capital and 4.5% of net taxable earned surplus.

League lobbyist Jeff Huffman said the tax would drive state institutions to seek federal charters.

Before a recent ruling by the Department of Transportation, many credit unions had worked with auto brokers; since then, any broker that has such a relationship is fined.

Legalization of home equity loans would require a constitutional amendment. Credit unions are working in a coalition to push two bills that would put such an amendment to a vote.