Off-Year Utah Task Force Ready to Revisit Credit Union Taxes

SALT LAKE CITY – Even if it is an off-year with politicking under way in the hotly contested governor’s race, a panel of the Utah legislature appears ready to air credit union taxation once again. After an eight-month hiatus, the legislature’s Financial Institutions Task Force created under the defeated 2003 tax-CU law was slated to conduct its first formal meeting in 2004 to examine “the status of the financial institution industry.” For some CU executives, that meant a forum for some of the leading CU antagonists, backed by the banking lobby, to rehash proposals for imposing a tax on CUs or lowering proposed taxing thresholds in 2005 to create a divide between large and small CUs. The Task Force is slated to make its recommendations to the 2005 legislature in January. One of the co-chairmen of the House/Senate panel and author of the 2003 bill which would have levied first-time franchise and “competitive equity” taxes of 35% on CUs is Rep. Jeff Alexander (R- Provo). The 2003 law, which while dropping the tax proposal did bar business lending, led to an exodus by 10 state CUs to federal charters, and that group included most of the largest. Since then, some lawmakers – and the gubernatorial candidates – have been wary of stepping into the bank-CU fight with some legislators agreeing with the Utah League of Credit Unions that the 2003 law did great harm to the dual chartering system in Utah. The League has urged lawmakers to “fix a broken system” in the 2005 legislature. Slated to speak before the panel is Ed Leary, the state’s Commissioner of Financial Institutions, who was to discuss federal law changes impacting both state and federal charters. “He is planning to respond to questions in discussing Regflex and CURIA,” said Orla Beth Peck, the chief CU regulator in his department referring to NCUA policies and the Credit Union Regulatory Improvements Act due for House hearings in July. In the meantime, the League, which has been highly critical of the Task Force’s creation and procedure claiming it is a tool of the Utah Bankers Association, once again said it “objects to the very composition and fundamental purpose of this panel” which is tainted by proponents of taxing CUs. -