SANTA FE, N.M. - New Mexico is the latest state to come under the national spotlight as a prospective new battleground for a banking/credit union duel over taxes. A bill, introduced in the New Mexico House Feb. 20, seeks to levy a 5% corporate franchise tax on state-chartered CUs with...
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SANTA FE, N.M. – New Mexico is the latest state to come under the national spotlight as a prospective new battleground for a banking/credit union duel over taxes. A bill, introduced in the New Mexico House Feb. 20, seeks to levy a 5% corporate franchise tax on state-chartered CUs with more than $100 million in assets and “with a field of membership that includes all residents” in multiple counties. The New Mexico Credit Union League interprets that to mean only one community-chartered CU, the $267 million Del Norte Credit Union of Pojoaque, but the Independent Community Bankers of New Mexico, which drafted the bill, says the measure’s “intent” is to include “eight to 10″ large CUs which have FOM members in multiple counties regardless of community charter. “I expect the bill to be heard in the House Business and Industry Committee and if needed any adjustments can be made,” declared Jerry Walker, executive director of the 52-member IBANM. John Radebaugh, president of the League, expressed guarded optimism the bill can be defeated in committee considering a wellspring of support the industry has in the state legislature. And yet, he warned, “I take nothing for granted,” adding the tax proposal is more evidence “of banking’s strategy to divide and conquer.” The bill is similar to a banker-backed measure progressing through the Utah legislature which also contains the $100 million threshold but focuses on CU branches based on a 1999 state law which restricts CU expansion of state-charters and follows passage of H.R. 1151. As in Utah, the banker group complained of CUs competing unfairly with banks “and operating tax free.” “There needs to be some support system to level the playing field,” said Walker in calling for taxes on the largest CUs in the state with branches in multiple counties. Del Norte CU which has seven branches in several counties in the Santa Fe/Los Alamos market, declined comment on the bill referring questions to the League. The League and other state-chartered CUs with branches in multiple counties contend the bill’s language is written so that it can only impact Del Norte since other $100 million CUs lack a community charter though retaining SEGs in outside counties. The president of the New Mexico independent banker group, David Stone, who also is president of Portales National Bank, recalled that “an Albuquerque credit union took over a credit union down here that went broke” in an apparent reference to the $200 million First Financial CU of Albuquerque’s acquisition last July of the troubled $13 million Roosevelt County CU of Portales merged under a request by NCUA. Prior to its takeover, said Stone, “that credit union was charging enormous fees and anyone who called in to check a balance was charged $3.00,”adding that now “it is important to level the playing field” between banks and CUs. While playing keen attention to the bankers’ tax bill, introduced by Rep. Raymond Ruiz (D. Albuquerque), the League was also focusing on a separate code modernization bill which has cleared a Senate committee and is awaiting House action. The League said it was hopeful the two bills would remain separate. The reform bill would allow state charters to provide check cashing and wire transfers to non members within a FOM as well as extend membership eligibility to household members and give state regulators greater authority over out of state CUs operating in the state. -
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