Utah Bankers' CU Tax Bill Introduced; Seen as `Serious' Threat to Industry

SALT LAKE CITY – Labelling its tax fight with the banking lobby “the most serious” ever, Utah credit unions have begun buttonholing Utah legislators in attempt to turn back a restrictive tax bill introduced in the House which specifically targets the state’s three largest credit unions. The tax bill introduced on Jan. 20 and sponsored by Rep. Jeff Alexander,(R. Provo), would impose a a 5% corporate franchise tax as well as a 30% tax on net income against the three CUs – the $2.3-billion America First Credit Union of Riverdale; the $1.08-billion Mountain America Credit Union, Salt Lake City, and the $265-million Golden West CU, Ogden. Though aimed at the CU trio, the Utah League of Credit Unions warned the Alexander bill is couched as a measure to differentiate big state-chartered CUs which bankers say “operate like banks” and small CUs, and threatens the entire industry’s survival. Alexander, who is House Majority Whip and a Provo printer, acknowledged the Utah Bankers Association is behind his bill, but he suggested the state’s smaller CUs should not be impacted by the language since “it affects a few large credit unions that just continue to expand, that are basically banks that are trying to get more and more into the business of banks.” These large CUs, he charged, are “competing unfairly with small credit unions.” The Utah League has dismissed those contentions as an attempt by the banking lobby to divide the industry. Officials of Mountain America and America First have called the Alexander legislation harshly punitive. Working with the League they’ve been organizing a vigorous lobbying and media campaign to defeat the Alexander bill, which is currently before a House Rules Committee. An attempt by bankers to speed up action on the Alexander bill on Jan. 22 was defeated, perhaps a hopeful sign for CUs. A decidedly negative element is that the bill has the backing of the House Speaker Martin Stephens, a Republican and a senior vice president of Zions Bank. Stephens is reported to be planning a run for governor in 2004. Without identifying the institutions, the Alexander bill specifically imposes the new tax on CUs with $100 million or more in assets and with members in two or more Utah counties. The bill which amends the state banking code would also severely restrict the activities of CU service organizations, limit the so-called “taxable” CUs from opening new branches outside their home county and from merging or making business loans. It would also make them subject to the Community Reinvestment Act. “There’s no question that this is the most serious attempt the banking industry has waged against us,” said Brent Allen, executive vice president of America First, the state’s largest. The tax-CUs campaign, he said, “is well organized and well thought out and so we’re working day to day to defeat it.” He said America First “is throwing everything we have” against it as the Salt Lake City CU tries to hire the best lobbyists it can find. -