State lawmakers, spurred on by the unprecedented credit union proposal to buy a bank, were expected to introduce legislation last week that would assess the state's 5% corporate franchise tax on the largest state- chartered credit unions. The bill, similar to one being debated in the Utah legislature, would assess the state tax on all credit unions with more than $100 million in assets and operating community FOMs in multiple counties, a total of nine credit unions, according to John Sorensen, president of the Iowa Bankers Association, which is working with lawmakers to draft the measure.
But the proposal appears more ominous in the Hawkeye State because all but one of the state's 177 credit unions here are state chartered, raising the possibility it would be expanded to many more credit unions in the future. The bill, which was prompted by the proposed University of Iowa CU's acquisition of Hawkeye State Bank, is expected to obtain strong support in some parts of the legislature, which is working to close a $400- million gap in the state budget. "The acquisition of a commercial bank by a credit union has opened the door to a more serious discussion (of a credit union tax) in the legislature," said Sorensen.
Iowa's state charters currently pay a Moneys and Credit Tax (see item, right).
The bankers were hoping to have one of their legislative allies introduce the bill last week while dozens of bank executives descended on the state capitol for the IBA's annual lobbying pilgrimage.