The effort to tax credit unions spread to Oregon last week with the introduction of a bill to assess the state's 6.6% excise tax on state charters over $100 million in assets.
Officials with the CU Association of Oregon accused the banking lobby with initiating the tax bill as payback for credit unions' efforts to gain access to municipal deposits. "This is a response by the Oregon Bankers (Association) for us getting our public funds bill introduced," asserted Pamela Leavitt, chief lobbyist for the state league.
The bankers conceded the charge. "This is in response to their attempt to get public funds deposited from tax dollars to be deposited in non-tax-paying financial institutions," said Thomas Pettrick, president of the Oregon Bankers Association. "Our position has long been, just on the fundamental fairness basis, that tax dollars should not be deposited in non-tax-paying institutions."
Pettrick said the bankers were ready to launch a similar tax effort in the last legislative session but resolved to hold off when the CU lobby agreed not to push the public funds issue too hard. "This year, unfortunately, we have not found any common ground on this point. Therefore, we decided to pursue this tax bill," he said.
The Oregon bill, noted Pettrick, is similar to proposals introduced in Utah, Iowa and New Mexico this year that try to delineate between large, diversified CUs and smaller, traditional credit unions. "It's merely an attempt, as all of them are across the country; Utah, Iowa, wherever, to strive for a level playing field, as we have been doing for all of these years," he said.
The bill would assess the state's excise tax, currently paid by banks, on about 10 state-chartered credit unions over $100 million in assets, costing them as much as $2 million a year.
Gene Poitras, president of the credit union league, said they have been working to dissuade several sponsors of the tax bill, ironically some of the same lawmakers who signed on to the public funds bill, and have apparently persuaded at least two of the four sponsors to remove their names. "I think we have done a good job of clarifying the issues with them," he said. "People didn't understand what they were getting into."
Poitras worried that the tax issue could interfere with the public funds bill, scheduled for a hearing March 27, either by complicating the issue or with banker-backed lawmakers seeking to attach the tax bill to it.
But Pettrick insisted that is not their strategy. He said they will oppose the public funds bill and work with legislators to move the tax bill separately.
Both Pettrick and Poitras, who meet on a regular basis to discuss issues of common interest, said they are open to discuss the tax proposal further.