Public hearing on HB344 splits bankers and volunteer fire departments over credit union access to public deposits

The committee opened a public hearing on House Bill 344, which Representative Klipsel described as an "access bill" that would allow volunteer fire departments and rescue squads to "deposit, invest, or manage funds in a federally insured financial institution," including credit unions. Klipsel told members the measure does not increase funding or change oversight and that participation would be optional.

The Alabama Bankers Association and several community bankers opposed the bill. Scott Latham, identified by the chair as the opponent called first, argued credit unions have grown beyond their original charters and warned that allowing tax-exempt credit unions to accept public deposits could shift public funds away from tax-paying banks that support local lending. "We view this as about fairness," he said, and cited counts of banks and credit unions in the state when urging caution.

Bank representatives and community-bank speakers described public deposits as an important part of bank balance sheets that enable local lending and investment in municipal bonds. "Public funds are a critical part of our business model," one community banker testified, saying such deposits help banks make loans to small businesses, homeowners and municipalities.

Volunteer fire departments and local officials urged the committee to allow the option. A volunteer firefighter identified as Lisa described an operational problem: "This helmet speaks volumes. We didn't have access to our funds to replace it," she said, explaining that restricted access to local accounts had prevented timely equipment replacement. Joe Taylor, mayor of Rainbow City and a former firefighter, said the bill would help retention and recruitment and "level the playing field" by letting departments choose locally available institutions.

Committee members asked technical questions about how much public money volunteer departments hold, the distinction between donated and taxed funds, membership rules at credit unions and banking reserve practices. Witnesses said deposit sizes vary by district — examples cited included small annual budgets of about $60,000 — and that credit unions often permit membership with a nominal deposit. Bobby Michael of All In Credit Union said one penny on deposit is sufficient to become a member.

Bankers pressed concerns about tax-exempt status and the competitive effect on community banks. Volunteer service leaders countered that the bill applies only to volunteer departments and rescue squads, not municipalities or other public entities, and that funds held by many volunteer units are small and intermittent.

The chair took no position at the close of the hearing and said HB344 would be carried over to his call for further consideration.

No committee vote on HB344 occurred during this session.