Credit union plan's fate is uncertain

The House Business and Labor Committee adjourned Wednesday without taking action on an 11th-hour credit union bill, leaving the bill to an uncertain fate.

On a motion from Rep. Neil Hansen, D-Ogden, the committee opted to adjourn after hearing testimony on HB277, sponsored by Rep. LaVar Christensen, R-Draper. Because it was the last day of committee hearings during the 2005 Utah Legislature, all bills were shuttled back to their respective rules committees for prioritization. Some may emerge, some won't.

The bill states in part that credit unions are exempt from paying taxes on income because of their status 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. The bill 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, HB277 states that an essential characteristic of a credit union — as a nonprofit, member-owned and controlled cooperative — is "meaningful control" by credit union members over the net income of the institution after statutorily required reserves are satisfied; and giving members a "substantive and informed choice" whether to return excess net income to members as cash dividends or use that income to fund capital improvements and expansions.

During Wednesday's committee hearing, Christensen said the bill was late in coming because he was waiting for input from credit union advocates. He denied any allegiances with other special-interest groups or any "agendas" other than to codify what credit unions have proclaimed as their policy or position.

"I'm not asking for anything in this bill that our credit unions are not, at least from what they've been stating, is what they're either currently doing or willing to do, or acknowledged is inherent in their structure," Christensen said. "But I believe that by spelling it out in code this way, we will strengthen their entitlement to their (tax) exemptions and shrink the heated debate . . . that credit unions continue to be entitled to their exemption because they fulfill these characteristics of a member-owned and controlled nonprofit cooperative."

Howard Headlee, president of the Utah Bankers Association, was not present at Wednesday's meeting and did not testify.