Credit Unions Vying for Public Deposits
Colorado Credit unions are vying to change the law so they can accept public deposits. Thanks to bankers' assistance and strong opposition, HB 1075 was defeated in the Business Affairs Committee by a 6-5 vote.
Background
Currently, state law prohibits the tax-exempt credit union industry from accepting, holding, (and subsequently profiting from) deposits from any government held funds (municipalities, state funds, school districts, county funds, etc) since those funds originate from taxes paid by corporations and citizens. Their industry has attempted to acquire this ability numerous times over the past couple decades – only to have the state legislature determine that the ability to hold and service tax dollars should be given to those institutions that pay all forms of taxes.
Current Status - (updated 4/30/10)
The bill was initially heard and voted on in the House Business Affairs Committee on Jan 27th. After 4 hours of testimony the Committee voted 6-5 against moving the bill out of Committee. But in a unique procedural twist, the Committee did not vote to kill the bill at that time either. To effectively kill a bill, a Committee must vote to “postpone the bill indefinitely.” This procedure is usually something that mirrors the support and opposition of the bill, but Rep. Ed Casso switched his vote and decided not to postpone the bill indefinitely, keeping it alive by another 6-5 vote.
That gave proponents of HB 1075 until February 11th to try and move the bill out of Committee. Since second efforts were unsuccessful, the bill officially died of inactivity on the 12th.
The credit union Association was attempting to secure a late bill and take another shot at passing their proposal in 2010. All requests have been denied to date, but a bill in 2011 is likely.
The Credit Unions Association ran a bill in the State legislature that would have allowed is conceptualizing a bill, not yet publicly available, and has lined up sponsors and supporters in the House and Senate. They are also attempting to lock in early support from other key groups such as county commissioners and municipal governments.
Thank You for Your Involvement
Thank you to all of the banks who helped send hundreds of opposition letters to state legislators during the bill's active period, and then generating over 240 thank you letters to those who voted in support of our position.
What's Ahead
While nothing is confirmed, CBA is expecting the credit union industry to attempt to run a similar proposal again in 2011.