CU Tax Bill Officially Dead In Iowa; Proposal Still Alive In Ore.

The credit union tax bill was officially laid to rest last week when legislative leaders decided they would not take the bill off the shelf for a vote this year.

The death of the tax bill here made credit unions four for four in this year's tax battles, following similar successes in Utah, New Mexico, and, to a lesser degree, California. But officials in all four states expect the tax threat to recur.

A tax initiative is still pending in Oregon.

Banks Can't Show The Votes

Stewart Iverson (R-Dows), the majority leader of the Iowa Senate who had decided to put the controversial bill aside three weeks ago at the behest of his Republican caucus, said last week he agreed to the bankers' request to put it to a vote if they could demonstrate they had enough support to pass it. But the banking lobby failed to do so, said Iverson.

"We're not taking it up at all," Iverson said last week. "I've talked to the caucus and the majority of them did not want to take it up at all."

"The banks had asked me to reconsider, but nothing's changed. So, we're not going to take the bill up," he added.

Because House supporters of the bill said they would not put the controversial measure to a vote unless the Senate acted first, the bill will not be voted this year.

Credit union lobbyists, who were guarded after the initial Senate decision to withhold a vote on the bill, were breathing easier last week.

"That means it's dead for this year. The House can't do it unless the Senate does it first," said Pat Jury, chief lobbyist for the Iowa CU League, who organized a broad statewide lobby against the measure.

Noting the heavy lobbying might brought in by the bankers, Jury said the tax victory illustrates the continued strength of the credit union movement in the numbers of members.

"This is a good example that what people say still matters to legislators," said Jury, who helped bring 1,000 credit union loyalists to a statehouse rally in the days after the tax bill was introduced.

CUs Bring In Heavy Hitters

Those numbers were enough to turn back the concerted lobbying by the Iowa Bankers Association, Iowa Independent Bankers Association, and several big banks, including nationwide power Wells Fargo.

The credit union lobby also brought in heavy hitters to support their case, including former Democratic Speaker of the House Donald Avenson and former Democratic gubernatorial candidate Jerry Fitzgerald.

The Iowa proposal was similar to bills introduced in Utah, New Mexico and Oregon as it would have separated the credit union movement by taxing only large diversified credit unions. The measure would have applied the state's 5% corporate franchise tax to credit unions over $150 million in assets operating in multiple counties, and would have affected a total of six credit unions.

Banks Can't Show The Votes

The Utah experience, where the three credit unions targeted by the unsuccessful tax bid have all applied to convert to federal charters to escape the state taxes, apparently affected the lawmakers in Iowa.

"I think that was pretty compelling to Stewart (Iverson)," said Jury. "We already have credit unions in Iowa looking at a federal charter."

Iowa is already one of just five states to tax credit unions, assessing a so-called monies and credit tax on all of the 176 state chartered CUs amounting to 0.5% of their legal and special reserves. Despite the death of the tax bill, Jury said he does not expect the issue to end soon. "It will come back next year," he predicted.