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Senate approves compromise on credit-union expansion; task force to study taxes and commercial lending
Summary
After hours of debate, the Utah Senate passed a negotiated substitute to House Bill 162, creating a two-year task force to study whether certain credit unions should pay a corporate/franchise-style assessment and restricting commercial lending by so-called "nonexempt" credit unions. Supporters called it a workable compromise; critics said it punts difficult tax decisions to the future.
The Utah Senate on March 4 approved a fourteenth substitute of House Bill 162 after lengthy floor debate, adopting a negotiated compromise to settle a years-long dispute between banks and credit unions. The measure defines a class of "nonexempt" credit unions (those with a field of membership covering residents of two or more counties when one county is of the first or second class), bars those nonexempt institutions from member-business (commercial) lending, and creates a task force to study whether such credit unions should face a statewide competitive-equity assessment or franchise-style tax.
Senator Richard Eastman, the bill's floor sponsor, said the substitute reflects extensive talks among industry and legislative negotiators and is intended as a transitional, studied approach. "We have a bill now that is in some form of agreement," Eastman said on the floor, urging colleagues to support the measure as a pragmatic step forward.
Under the substitute, nonexempt credit unions that wish to pursue broader statewide growth or commercial-lending powers may elect to pay a competitive-equity assessment to obtain additional authorities. The bill preserves grandfathered protections for small, locally based credit unions and creates caps and guardrails intended to prevent larger institutions from circumventing member-loan limits. The measure also authorizes the financial-institutions commissioner to approve rural branches and requires the task force to deliver recommendations to the Legislature in 2005.
Opponents warned the bill leaves important tax and regulatory decisions unresolved. Several senators pressed that the ultimate question — whether nonexempt credit unions should be placed on the state's franchise-tax base — is deferred until the task force reports, rather than decided now. Senator Wayne Steele said he could not support the bill as originally numbered but acknowledged the compromise removed the proposed corporate franchise tax from immediate effect. "I cannot support that" was his floor position when the franchise-tax portion was removed, he said during debate.
The Senate voted to pass the substitute under suspension of the rules and referred the bill back to the House for concurrence. The roll-call tally recorded in the transcript shows the substitute passed on a floor vote after a series of speeches and questions that stretched for several hours.
