A credit union representative is scheduled to face-off with a prominent banker nemesis this week before the National Conference of State Legislatures, as a prelude to a new assault on credit unions' tax exemptions.
In what is expected to be the preliminary round, CUNA Chief Economist Bill Hampel will debate Keith Leggett, economist for the American Bankers Association and a well-known credit union foe, over the credit union tax exemption. The debate is expected to provide a backdrop for a proposal by bank-allied state lawmakers to propose an initiative urging Congress to repeal the Federal CU Act's preemptions on state taxing authority.
While the referendum would be non-binding and still require Congressional action, it would have the weight of the support of state lawmakers. If adopted by Congress, it would free states to assess their own sales taxes and other levies on federally chartered credit unions, which are currently shielded from such taxes by the Federal CU Act.
The initiative is expected to be proposed by one of the state legislators on the NCSL's Financial Services Standing Committee from Utah, which lost more than $3 million in sales tax revenue when three large credit unions converted to federal charters two months ago. The rapid flight of the three Utah credit unions, America First CU, Mountain America CU and Goldenwest CU, and the ensuing loss of sales tax and supervisory fee revenues, stunned lawmakers, some of whom supported new taxes on CUs.
Framed As States' Rights Issue
Among the NCSL committee members believed to be preparing the initiative are David Clark, a member of the Utah House and vice president at Zions Bank, who proposed unsuccessful legislation last year that would have required Utah CUs to withdraw from the credit union-owned CO-OP Network. Clark did not return calls from The Credit Union Journal seeking comment.
Supporters of the proposal are expected to frame it as a states' rights issue in which the states, and not the federal government, should determine who they can tax.
Colleen Kelley, VP-state governmental affairs at CUNA, said the trade group is preparing for the proposal and will be at the conference to work with the NCSL and state lawmakers in attendance. CUNA will also be holding a meeting of its state credit union committee at the conference.