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AUSTIN, Texas – The Texas Bankers Association visited state legislators the week before the Texas Credit Union League’s Governmental Affairs Conference, and the Independent Bankers Association of Texas scheduled a luncheon with legislators while the event was taking place. Bankers’ message: Tax credit unions. Credit unions’ message: Don’t. It’s still early into the state’s 79th Legislative Session, and legislators have several weeks to decide how they will fund improvements to Texas’ public education system. They will be looking at many options, but the more than 200 credit union officials attending the conference Feb. 6-9 at the Marriott at the Capitol had assurances from the state’s top two elected officials that it won’t come from taxing credit unions. In a video address shown the opening day of the conference, Texas Governor Rick Perry threw his hat into the ring in favor of continuing credit unions’ tax exempt status. “I appreciate all that you do for our state.I wholeheartedly support retaining credit unions’ tax exemption.” Gov. Perry’s comments were met with applause from the credit union audience. The following day, Lieutenant Governor David Dewhurst also voiced his opposition to credit union taxation. “We’re not going to change any exemptions as far as the franchise tax is concerned for credit unions,” he said. The Senate has put together a “bold plan” for public education reform,” Dewhurst said, with a $6.7 billion price tag. To fund the initiatives, Dewhurst said his office will pursue “pro-growth policies” to create a balanced budget without raising taxes. A growing number of people are recommending repeal of the state’s franchise tax, according to TCUL’s Vice President of Governmental Relations Jeff Huffman, which could be replaced by a “business activity tax” or “uniform business tax.” The House has drawn up six plans that contain basically the same components, but with different numbers. “No matter what you call it, the important thing is that credit unions need to be exempt from it,” Huffman said. Protecting not-for-profit credit unions’ tax exempt status was the top state legislative issue identified by credit unions in a TCUL-administered survey. The other key issue was preserving the Texas Credit Union Department as an independent regulator and securing the full funding requested by the department in the 2006-2007 budget. Appropriations bills provide $3.3 million for the TCUD, but an additional $145,591 is being requested to support the agency’s efforts to attract and retain qualified, experienced examiner staff and to prevent staff turnover. The full TCUD appropriations request, if passed, would be funded entirely through credit union examination fees, not by Texas taxpayers. Money appropriated during the last legislative session has helped the Department lower its turnover rate from 54% to 30%, according to Texas Credit Union Commissioner Harold Feeney. The League will be monitoring other bills concerning financial education, rewrite of the state’s Finance Code, identity theft, health savings accounts and consumer privacy, among others, Huffman said. Credit unions heard from other legislators during the TGAC, including: State Senator John Whitmire, a member of the Senate Finance Committee; State Senator Kip Averitt, Chairman of the Senate Business and Commerce Committee and member of the Senate Finance Committee; Representative Norma Chavez, Chairman of the House Border & International Affairs Committee; Rep. Beverly Woolley, Chairman of the Calendars Committee, who has authored financial education bills in the past; Rep. Burt Solomons, Chairman of the House Financial Institutions Committee; Susan Combs, Texas Agricultural Commissioner; and Alphonso Jackson, U.S. Secretary of Housing and Urban Affairs. Credit unions received recognition in both the Texas House and Texas Senate on Feb. 7, with resolutions sponsored by Rep. Burt Solomons and Senator Averitt. Attendees spent one afternoon visiting lawmakers from their districts at the Capitol. -

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