Kentucky Credit Unions Gird for Banker-Backed Taxation Bill

LOUISVILLE, Ky. – Kentucky credit unions are bracing this month for a possible bank-sponsored bill in the state legislature to remove the tax-exemption for state-chartered credit unions. It’s not the first time that such legislation has been rumored, but this year the Kentucky Credit Union League is taking the threat more seriously in light of the stepped-up American Bankers Association campaign attacking CUs. The Kentucky League said its leadership met with state legislators earlier this month at a chapter meeting in Frankfort to discuss the prospective bill reportedly crafted by senators closely tied to the Kentucky Bankers Association and the independent Bluegrass Community Bankers Association. “We’ve simply been getting prepared and doing our homework with legislators,” according to Deborah Painter, director of governmental affairs for the league. The bill, which could get introduced in the next few weeks, would open the door for taxing 33 state-chartered credit unions. “It’s much like Utah,” said Painter referring to the 2003 bill in the Utah legislature which nearly placed a 33% franchise tax on state CUs and led to a flight to the federal charter for dozens of CUs. Officials of the league said they met with key legislators Jan. 5 in the state capital to discuss the prospective bill to help build support for its defeat. The state legislature has a 60-day session. Meanwhile, the chairman of the House Banking and Insurance Committee, Rep. James Bruce, (D-Hopkinsville), told Credit Union Times that so far he has not seen a banking bill, “but I did get a letter from some small group of independent banks that say they plan to get legislation introduced.” While dismissing the prospective legislation as “more of the same” banker attacks which have sprouted up periodically over the last two years, the Hopkinsville lawmaker warned that “credit unions always need to worry” about banker assaults on the legislative level. It was noted that in recent months Kentucky bankers, taking their cue from Utah’s Harris Simmons, the ABA chairman, have been clamoring for a rein on what they call the “mega credit unions in Kentucky which act like banks.” A spokeswoman for the Kentucky Bankers Association denied her trade group was working on a bill to tax CUs. “This is the first I’ve heard of it,” said the spokeswoman. She did add, however, that the KBA remains alarmed over the growth of large Kentucky CUs “which operate like large banks-no more of the mom and pop credit unions.” The issue “is one where we have concern but it is not on our agenda,” said the spokeswoman. Kentucky CUs have long pointed to articles and statements made by Ballard Cassady, the KBA president/CEO, attacking CUs. Cassady, it was noted, is also a member of the board of the ABA, where Simmons is chairman. -