State lawmakers filled a $5-billion budget gap in the final hours of this year's legislature last week with a broad package of tax and fee increases, borrowing and gimmicks, like the sale and leaseback of state properties that will hit credit unions and banks hard in their pocketbooks.
But most painfully from the credit unions' perspective, the $53-billion spending package will hike supervisory fees on state-chartered credit unions by 50% this year. That will cost the 400 state-chartered credit unions a total of $1.9 million. The fee increase will range from $50 a year for the smallest credit unions all the way up to $80,000 for the state's largest credit unions, like United Airlines Employees CU, CEFCU and Baxter CU. The average credit union of $25 million will see a $6,500 increase.
The funds, traditionally earmarked for credit union supervision, will now be commingled in the state's general fund to help balance the budget, according to Keith Sias, chief lobbyist for the Illinois CU League. Even though the fees will still be below those assessed federal charters by NCUA, Sias said there is concern some state charters will convert to federal.
The spending bill will also assess a 5% annual administrative fee on 600 special funds, including the $3.8-million credit union fund, translating into a transfer of $300,000 in credit unions funds this year and $500,000 the next two years. But the pain accruing credit unions is minor compared to that felt by the state-chartered banks, which will see a doubling of supervisory fees this year. That translates into $12.4 million in additional fees for the state's 500 state- chartered banks. Credit union representatives were working till the final moment to minimize the bite on credit unions but with little luck, according to Sias.
"We tried to work with the administration to see if we could reduce the amount of fee increase and increase the amount of funds transferred. But they just weren't making any changes for any groups," Sias said.
The Illinois league will be meeting with representatives of Gov. Rod Blagojevich's office over the next few weeks to determine the best way and timing for credit unions to pay for and account for the extraordinary fee increase, said Sias. The credit union lobbyists were still studying the 600-page budget document last week to determine if there were any other items that are going to affect credit unions.