Utah League Pushes Campaign To Bring Public Scrutiny in Tax Fight

SALT LAKE CITY – With a key Utah House floor vote still in the balance on the credit union tax bill, the CU lobby was crossing its fingers late last week that its campaign to arouse opposition to the legislation may in the end win public favor. At least that was the hope of lobbyists for the Utah League of Credit Unions which did see hopeful signs early in the week when the bill sponsored by Rep. Jeff Alexander (R. Provo) to impose a 30% tax on large state-chartered CUs was bottled up awaiting floor action. That followed intense lobbying on the measure by the League, the Utah Bankers Association which drafted the bill, Zions Bank, and the three state-chartered CUs most impacted by the proposal, America First CU, Riverdale; Mountain America CU, Salt Lake City and Goldenwest CU, Ogden. “At the moment, they don’t appear to have the votes,” said Travis Wood, vice president of government relations for the Utah League, in assessing the House Leadership position in pushing the bill which the League sees as a threat to Utah CUs and an issue which has arisen this year in a handful of states, particularly Iowa, Florida and Texas. There was one report a House floor vote might take place on Feb. 14, Valentine’s Day, which as one wag put it, the CU lobby would be working extra hard to avoid any “Valentine’s Day massacre.” The League, meanwhile, was pushing its own House bill calling for creation of a task force to study the tax issue for at least a year, but it was uncertain how that measure would fare. The League, joined by Mountain America and America First, was orchestrating a costly media campaign through TV and radio ads as well as press briefings to raise public awareness over what the League sees as an unfair attack by the banking industry on CUs using the tax issue as a vehicle. At a League-sponsored news conference Feb. 10, Grover Norquist, president of the Washington-based Americans for Tax Reform and aide to the Bush administration on the federal tax cut proposal, charged the Alexander bill is “bad” legislation and is a “bad idea.” Norquist told reporters he was in Salt Lake because the Alexander bill “looks like it might pass” which would be harmful to CUs and is inequitable. Such a bill “is a potential model for other states,” Norquist said, and he compared the bill to an infectious disease which threatens Utahans and can then spread to other states. He said it would be better if the state simply cut taxes for banks rather than create new taxes for CUs. “You can’t chase a deficit with tax increases,” said Norquist. The Utah Bankers Association, meanwhile, continued its heavy-hitting campaign with charges that Mountain America and America First, in particular, are operating “outside their charter” through their multi-county operations and business lending and their expansion should be halted. When tax exempt entities “expand beyond their charter,” they lose their tax exemption, charged Howard Headlee, president of the UBA. “There’s nothing revolutionary or groundbreaking about that.” The League has charged the Alexander bill is highly punitive and would hit CU members the hardest. One lawmaker, Rep. Glenn Donnelson (R- North Ogden) questioned whether the Alexander bill might open what he said was a Pandora’s box of problems for the state clearing the way to tax other tax exempt entities like religious organizations that have more than $100 million in assets and have “operations” in more than one county. The League said it expects to keep up the pressure on lawmakers through e-mails and letter writing to seek defeat of the Alexander bill. The Utah BA led by Zions Bank also brought out scores of employees to the Capitol hallways last week urging passage of the Alexander bill. A backer of the Alexander bill has been GOP House Speaker Martin Stephens who is a vice president of Zions Bank working in the bond/securities area. -