A study conducted by the respected nonpartisan Florida Tax Watch but paid for by the Florida Bankers Association suggests that the state's credit union tax exemption has become "harder to justify" as CUs have grown and offer many of the same services their taxed counterparts provide. With approximately 10 working days left in this year's legislative session, it is unlikely that a bill to tax credit unions will evolve from the study, according to Florida Credit Union League's Mark Ivester, but he cautioned that until the legislature is officially closed for business "anything could happen."
"We've got every lobbyist we own walking the hallways, gauging the reaction to the study, and what we're hearing is that it's been less than enthusiastic," Ivester told The Credit Union Journal. "My sense is that the general feeling is that (the bankers) got what they paid for. This is a paid propaganda piece, as far as we're concerned."
Among the study's conclusions are that "large CUs that compete directly with other financial institutions was not envisioned when the tax exemption was written into law"; that the tax exemption allows credit unions to pay higher deposit rates, charge lower loan rates and allows CUs to build capital more quickly; and that the total value of tax exemptions granted Florida's CUs is $102.2 million (of which $30 million in state tax dollars could fund three new schools, pay 1,100 first-year teachers, fully serve the 170,000 Healthy Start clients or add 11,000 elderly to Community Care for the Elderly).
"Florida Tax Watch has enjoyed a stellar reputation through the years and has been perceived as a non-partisan group that has gathered a lot of good will," Ivester observed. "But this is a banker study, period. The last time they did a study on credit unions was in 1997, at the height of the campaign to pass the Credit Union Membership Access Act. And what happened? All 23 of Florida's congressional delegration voted in favor of HR 1151. They ignored that study, and we fully anticipate they will ignore it this time as well."
It also helps, Ivester pointed out, that the leadership in the House and the governor are extremely anti-tax, despite the budgetary debacle the state faces. "But anything's possible," Ivester concluded. "We're on orange alert."
The Florida Bankers Association, which commissioned the report, insist they are not considering a credit union tax initiative in the short-term but are begining to build a case for the long term "We're now in the educational stages," said Alex Sanchez, president of the group. "We want to educate our elected officials. Where it will lead us, time will tell." Like the bankers in other states raising the tax threat, Sanchez insisted they are targeting the large, diversified credit unions, not the smaller ones. "We're not talking about St. James AME Church Federal Credit Union ($500,000) or First Baptist Church Oakland ($100,000). We say, 'those are credit unions, that's what credit unions have historically been. Leave them alone,' We're really talking about those tax-exempt banks who masquerade as credit unions."
"The bottom line is the debate has to happen and that's what the TaxWatch study did," said Sanchez.
Over the past year the Florida Bankers have waded into the credit union battles, generating hundreds of cmment letters, as much as a fourth of the total comments, against NCUA's rceently passed field of membership rules.