Guest Author
Each year, credit union supporters and advocates take their plea for fairness to Tallahassee with a simple message: Allow municipalities and public offices to have a choice when it comes to their banking needs.
To explain, current law does not allow credit unions to accept deposits from local government entities. It only allows for local governments to bank with commercial, for-profit banks. This means local governments, universities and school boards, just to name a few — many of whose employees are served by credit unions — cannot drive down the street to their local credit union and bank with them.
Why? Because the banking lobbyists have fought every year to stop legislation that simply allows these entities to have a choice. A choice that would ultimately lead to these entities receiving a better rate of return on their tax dollars and the ability to keep their funds within their communities. Further, credit unions are 100 percent member-owned and return all of their profits back to their members, and in turn, back into the community. Banks, on the other hand, are management/board driven, shareholder owned, for-profit institutions that transfer their earnings back to their shareholders, which are more than likely outside of the community or the state.
In the past, opponents of this bill have claimed that credit unions should not be allowed to serve local governments because they “do not pay taxes,” which is not only a grave misrepresentation of the facts, but a rather archaic and self-serving argument. To claim that only for-profit banks should be able to conduct business with municipalities and public offices is a clear attempt to maintain the monopoly banks have had on accepting public funds and limit another, highly-deserving, accessible and qualified institution to compete in this market. Credit unions pay tangible personal property taxes, property taxes, and as employers, pay all employment taxes, as would any other bank, and are exempt from paying federal income taxes due to their not-for-profit structure and mission to serve their communities. Essentially, credit unions pay the same taxes as a Sub S corporation, and currently, there are 35 Sub S banks in Florida, 22 of which are qualified public depositories.
Credit unions are not asking for any kind of preferential treatment when it comes to the public funds market. Credit unions are simply seeking the opportunity to provide depository choice for public offices, with which they may have strong community ties, and for which they can provide lower rates and bigger savings during an already tough economic environment.
This year should be the year that fairness prevails in this long-standing debate. This legislation is best for the community and for these public entities that could see a financial savings from depository choice.
Patrick La Pine is president of the League of Southeastern Credit Unions & Affiliates. Column courtesy of Context Florida.
