With so many states facing huge budget deficits, the banking lobby last week fired the first salvo in Oregon in a re-energized national drive targeting the credit union tax exemption.
In attacking an Oregon bill levying a corporate tax on CUs, the Northwest Credit Union Association called the House measure sponsored by the Oregon Bankers Association a retaliatory move against enactment of a 2010 law allowing CUs for the first time to hold municipal deposits over $250,000. That law does not take effect until 2012.
Under the OBA corporate tax bill, state-chartered and interstate CUs over $50 million and receiving one municipal deposit over $250,000 or holding member business loans above 10% of assets would be subject to the tax. The OBA bill was to be referred to the House Committee on Revenue with no hearings scheduled.
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Meanwhile, bills proposing taxes on CUs were also introduced in Hawaii and Texas.
The Hawaii bill would suspend the general excise tax exemption for CUs and other nonprofits, levying a tax at a rate of 1%. No hearing has been scheduled but one was expected before a March 3 deadline. The Hawaii proposal would take effect in July and sunset in June 2015.
The Texas Credit Union League said it is monitoring several bank-supported bills to repeal the entire franchise tax code, including sections dealing with nonprofits. Although the league said it has strong allies in the legislature, it still faces an education job for the 35 new lawmakers who took office this session.
In Oregon, the Northwest CU Association issued a legislative bulletin discussing the corporate tax plan suggesting it was unsure for now the identify of "the key legislative players" but would let CUs know once that information is determined so lobbying could start.
"Oregon credit unions won a key victory in the 2010 Legislature by passing a bill to lift the cap of $250,000 on deposits of public funds," said NWCUA concluding "this bill was actively opposed by the Oregon Bankers Association and House Bill 3263 is a response to that victory."
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