Bill to Raise Public Deposit Level for Credit Unions Receives First Hearing in Washington Legislature
January 12, 2012
January 12, 2012
The Northwest Credit Union Association’s (NWCUA) effort to modernize Washington state’s public depositary laws received official support from the State Treasurer’s office and the City of Seattle yesterday during the new legislative session’s first hearing of the Senate Financial Institutions and Insurance Committee.
Sponsored by Sen. Margarita Prentice, D-11, as well as the committee’s Chairman, Sen. Steve Hobbs, D44 and Sen. Don Benton, R-17, Senate Bill 5913 will allow federal credit unions to accept funds from public entities and increase the permissible deposit of public funds with credit unions to the federal deposit insurance limit of $250,000.
Assistant State Treasurer Wolfgang Opitz testified that the treasurer’s office supported SB 5913 as presented and saw specific benefit in bringing state and federal credit unions into the pool of possible depositaries and holding them to the federal insurance limits.
“Allowing (credit unions) to index to the federal deposit insurance levels should they ever change in the future allows them to travel together going forward as they do with other public depositaries,” he said.
The City of Seattle signed on as supporters of the bill.
Spokane Media Federal Credit Union President and NWCUA Vice Chair Debie Keesee testified in support of the bill and asked that the committee remove the limitation on federal credit unions, saying that even though her credit union is the closest financial institution to the City of Millwood, Wash., it would be illegal for it to accept deposits of any of the city’s public funds.
“For credit unions, this has always been a member service issue,” she said.
Already making plans for the bill’s future, Hobbs seemed to indicate that he agreed with Keesee even before testimony began when he said that the legislation would be passed out of committee after additional testimony is taken next Tuesday or Wednesday.
“Well, if I have the votes,” he added.
The Washington Bankers Association is scheduled to testify next Tuesday’s committee hearing and will likely echo the opposition espoused by Brad Tower of the Community Bankers of Washington during yesterday’s hearing: “Because it deviates from the original justification and purpose for credit unions tax treatment.”
Prior to Tower’s comment, he warned the committee that his new testimony would be the same as his old testimony on bills from past years.
“It deserves reiterating,” he said.
What Tower didn’t remind the committee of is that credit unions only receive a break on federal income tax and on business and occupational tax, and federal credit unions get a break that state charters do not on sales and use tax. Credit unions pay all other taxes, however, including property, payroll, and the specific sales and uses taxes that state charters pay. More than a dozen for-profit banks in Washington receive the same federal tax treatment as credit unions.
Questions? Contact a member of the Association’s Legislative Affairs team: