In addition, CUs wanting to add a branch or change a name also must pay a $750 fee. The fees can be waived or modified by the department if it determined they would cause an "economic hardship" on the applicant.

The NYSCUL emphasized that while the new charges represent an increase from the previous fees for such mergers ranging from $2,000 to $5,000, they still represent a "dramatic decrease" from Gov. George Pataki's proposed fee of $25,000 that was included in his executive budget proposal.

"We were always hopeful we would be able to keep the fee increase as small as possible," said Lanotte. "Realistically knowing the state's financial situation, we did expect some increases across the board for all financial institutions. We never felt though that credit unions were singled out for rate increases. If anything, there was a positive singling out of credit unions in recognition of their not-for-profit status."

Lanotte explained that when the budget negotiations started at the beginning of the state legislative session in January, the league "had an idea the state legislature might be looking for revenue from a lot of departments. They indicated to us they would be increasing fees across the board for all banking institutions in the state."

When the league first became aware of the fees Gov. Pataki proposed, Lanotte and other league representatives met with officials from the governor's office to explain how increasing fees wouldn't be beneficial to credit unions because of CUs' tax-exempt status.

One of the points, for example, that league officials stressed was that federal credit unions do not pay a chartering fee.

"We made it clear to them that in spite of all the changes to improve the state credit union charter in New York State, we knew it would be difficult for a group of volunteers to charter a state credit union when they knew they wouldn't have to pay a fee if they chartered a federal credit union," said Lanotte.

"We know the state legislature is interested in preserving the state credit union charter, so we explained that the fee would be counterproductive," he said, adding, "We're not in favor of any fee increase. But in arguing our case to the governor, we were able to have them reduce their proposed fee increase. They had to balance the fiscal needs of the state with state-chartered credit unions' needs, and so they reduced the fee increase to something more reasonable."

Lanotte credited the behind-the-scenes efforts of state Senate Banks Committee Chairman Sen. Hugh Farley (R-Capital) for the successful further reduction of the governor's proposed fees.

Farley's measure, S.7528, would reduce the merger fee from $12,500 to $1,000 for any federal credit union or bank with less than $100 million in assets seeking to convert to a state charter. Lanotte said the measure "is in recognition that small banking institutions don't have the kinds of funds to pay a substantial increase."

S.7528 is still in the Senate Banking Committee, and no comparable bill has as yet been introduced in the State Assembly.

Lanotte said Farley has always been a strong supporter of credit unions and the league has had a close working relationship with the senator since he was named committee chairman.

He added that Farley also has a close relationship with several credit unions in his district, and the senator has been a sponsor of many pieces of legislation to make the state credit union charter more progressive and to lessen the competition between federal and state credit union charters in New York. -

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