New Mexico Tax Bill Bites the Dust - For Now

SANTA FE, N.M. – In quick fashion, New Mexico credit unions have for the moment turned back a banker-backed move to tax large CUs in the state. “We’re quite happy with the way this has gone for us,” declared Christopher Jillson, chairman of the New Mexico Credit Union League and president of Sandia Lab Federal Credit Union of Albuquerque, in describing the legislature’s shelving of a bill creating a 5% franchise tax on state CUs over $100 million in assets. The House Tax and Revenue Committee by a 11-4 vote on March 7 also rejected a separate bill setting up a legislative study of taxation on CUs over $150 million in assets operating in multiple counties. “This is good for credit unions and we’re pleased that the legislature has shown us support,” said John Radebaugh, president and CEO of the League, noting that the tax issue stands a chance of being revived in September when Gov. Bill Richardson’s Blue Ribbon Commission on taxes makes a report to the legislature. The League leadership forecasts banker groups might try again to raise the CU tax status in the Commission’s report. Nonetheless, CU executives were elated that an oddly-worded bill which would have impacted only one CU, Del Norte CU in Pojaque, was pulled by the sponsor, Rep. Raymond Ruiz (D-Albuquerque) who even agreed his bill drafted by the state’s independent banker organization was “poorly written and demeaning to credit unions.” The Independent Community Bankers of New Mexico, which wrote the bill, had said its intention was to include eight to 10 large Albuquerque and Santa Fe CUs which they claim have expanded through field of membership and have acted like banks, a theme echoed by Utah bankers who helped push through a tax-induced bill barring business loans for three large CUs in that state. That bill, stripped of the tax portion but still seen as punitive to CUs, was adopted by the Utah state Senate March 4 and is effective May 5 following the anticipated signature of Gov. Michael Leavitt. “We are now putting together an ad hoc committee to help educate the commission on the non-profit nature of credit unions and why they need to remain tax exempt,” said Jillson. “We are confident the legislature” will understand the industry’s strong message. Underscoring the positive attitude of New Mexico lawmakers toward CUs, a separate Senate-passed recodification bill has already cleared several House committees and is headed for passage. Among its provisions, it would allow CUs to accept electronic loan applications, enable CUs to provide money orders and wire transfers for non-members who are within their FOM and give the state regulator authority over out-of-state CUs with branches in New Mexico. The New Mexico League said it used language in CUNA’s Model Credit Union Act to help draft the bill. [email protected]