Utah lawmakers are considering crafting a resolution, to be submitted to the U.S. Congress, asking the federal government to get involved in the fight over credit unions.
The co-chairmen of the Utah Financial Institutions Task Force, Rep. Jeff Alexander, R-Provo, and Sen. Dan Eastman, R-Bountiful, said at the committee's meeting Thursday that a resolution might be needed to to "stop the erosion of the state's tax base" — an erosion caused, according to Alexander, by federal credit union regulators' recent decisions broadening the operating area for federal credit unions in Utah.
Thursday's meeting was likely the task force's penultimate gathering, and Alexander and Eastman said they hope the group can put together something in the next month — either a report or a resolution to Congress — to present for the Legislature's approval next session. Committee members will submit their suggestions and accept recommendations from interested parties in the coming weeks, and hopefully have a draft of some kind ready by the committee's final meeting, scheduled for early November.
Alexander and Eastman said they believe a resolution is appropriate. Others did not agree.
"We believe, especially with the status of the federal charter, that Congress needs to act," Alexander said. "They need to be involved. . . . What we're finding is that as more and more credit unions go to the federal charter, we are eroding our tax base, and will continue to do so until Congress acts on this."
Reps. Jackie Biskupski, D-Salt Lake; LaVar Christensen, R-Draper; Mike Thompson, R-Orem; and Sen. Michael Waddoups, R-Taylorsville, were among the committee members who questioned whether a resolution was premature or necessary.
"I'm just kind of averse to asking Congress to tax any more, any of my constituents," said Waddoups. "It seems a chicken way out. If we messed up this situation, we should be willing to fix it.
"Maybe if we're writing a resolution, I'm thinking maybe what we ought to do is send a resolution to the credit unions that are changing over to the federal charters and tell them that we do appreciate them, that we recognize that they no longer have to pay sales tax in our state. But that we'd like them to be state chartered and . . . ask them what we need to do to be more attractive to them."
Other suggestions bandied about during Thursday's meeting included general taxation and state's rights issues, such as when or if it is appropriate for federal regulators to impact a state's tax policies.
"This is a chance to make a policy statement," said Sen. Tom Hatch, R- Panguitch. "What it boils down to is a state's rights issue — whether we have the right to set tax policy, or whether federal regulators do."
Eastman maintained that the task force was formed, at least in part, to research whether there were differences in the types of credit unions operating in Utah — some that functioned like "traditional" credit unions, and others that acted more like banks.
"My thought on it, and again we're brainstorming, is that we send that resolution, reiterating what took place (in 2003, with the passage of HB162), and express our desire that these large financial institutions — and I'm talking about banks and credit unions — be treated similarly when it comes to taxation. I think that's the crux of the bill that was passed, and that's about as far as the resolution, if we do a resolution, needs to go."
Major components of HB162 were postponed until 2005, when the Legislature will have to decide questions of credit union taxation and fees. HB162 provided for the designation of non-tax exempt credit unions, the possible imposition of "competitive equity fees," and taxation. Under HB162, lawmakers will have to bring new legislation to enact either the fee or the tax.