War of words erupts as credit union bill resurfaces in House

With a little more than a week left in the 2005 general session, the Utah House on Tuesday was right back where it started: in a procedural fight over credit unions.

In the first week of the session, the fight was about HJR1, A Joint Resolution Related to Financial Institutions. On Tuesday it was about a new bill, HB277, sponsored by Rep. LaVar Christensen, R-Draper. The bill, according to Christensen, codifies the "public position" credit unions have taken during the past few years regarding their tax-exempt status.

HB277 states in part that credit unions are exempt from paying taxes on income because of the unique nature of credit unions as member-owned and controlled nonprofit cooperatives, and it requires that credit unions make members' contact information available to fellow credit union members upon written request.

HB277 also defines what a "meaningful affinity and bond among (credit union) members" means: a commonality of routine interaction, which includes residency in a geographic area, shared and related work experiences, or recognized and identifiable interests or purposes.

Further, the bill states that an essential characteristic of a member-owned and controlled cooperative and nonprofit association is "meaningful control by the members over the net income of the credit union after statutorily required reserves are satisfied and allowing for favorable interest rates for member loans and deposits so that the members have a substantive and informed choice whether to: (a) return excess net income to the members as cash dividends; or (b) use net income to fund further capital improvements and expansion of the credit union's operations as may be permitted by law."

The bill almost died a procedural death Tuesday, when the House Rules Committee approved by a 6-5 vote a motion by Rep. David Ure, R-Kamas, to pull HB277 from the agenda of the House Business and Labor Committee — keeping the bill from committee consideration and public debate.

Christensen moved to reassign the bill to that committee during House floor debate Tuesday, which began a brief but heated fight among representatives.

Christensen maintained he had "no axe to grind" with credit unions and that he had no desire to impose taxes on them. The bill, he said, simply put into code "what the credit unions have represented throughout the state as their position.

"I felt that now that HJR1 is going off to Washington, we have still not done what we promised to do — to look at our own code, our own back yard."

He called the Rules Committee's action an attempt to "submarine" the bill, and he wasn't alone.