LATHAM, N.Y. -- After strong pressure from the credit union community, New York Senator Thomas Morahan (R-Westchester/Rockland) has withdrawn his bill to tax federal credit unions in the state.

"He did not contact us," New York State Credit Union League Vice President of Governmental Affairs Amy Kramer explained about how they got the news. "We saw through our bill tracking that he did a standard legislative procedure to kill the bill." She added that Morahan's staff did not say a lot about the pulling of the bill but did note the credit unions' grassroots efforts.

The New York league said was a bit surprised by Morahan's introduction of the bill, S. 5701, which sought to impose corporate income tax on federal credit unions in New York, given the league's good relationship with the senator. However, the NYSCUL went straight to work immediately contacting Morahan's staff after learning of the bill.

Kramer, league President/CEO William J. Mellin, and Senior Vice President/General Counsel Michael Lanotte met with the senator following the bill's introduction in an attempt to persuade him to withdraw it. He declined to at that time, Kramer explained, so the league representatives said he would be seeing a lot of them and other credit union representatives. She characterized it as a "tense meeting."

The league followed up on its promise, encouraging members to write letters to their senators, make phone calls, and visit their senators, discouraging their support for the bill and sharing all their good works. They asked credit union-friendly members of the Assembly who had personal relationships with Morahan to ask him what was going on with the bill. Fortuitously, the league also held its Governmental Affairs Conference May 21, during which participants visited with their members of the General Assembly and "a sizeable contingent" of league and credit union representatives met with Morahan's staff about the bill.

"He's withdrawn his support so we're pleased to see that," First Source Federal Credit Union President/CEO Mike Parsons, also a NAFCU Board member, said of Morahan. Parsons, whose credit union is located in New Hartford, N.Y., attended the NYSCUL GAC though he was not in on the Morahan meeting.

Parsons visited his state assemblymen during the legislative day and did not hear of any support for the bill. "Certainly, we did not see any merit for the bill and no support in Albany..." he remarked. "Any time there's talk about taxation, that's cause for concern."

He added that First Source is pretty politically active and has solid relationships with policymakers at all levels. "We have a long-standing relationship with our folks personally," Parsons commented.

Parsons also said he has good relationships with his local bank competition and believes it is the trade associations driving much of the taxation talk.

NYSCUL CEO Mellin observed, "It felt wonderful to see the cooperative spirit and strength of New York credit unions that was exhibited when our tax-exempt status was threatened. I believe it was the constant credit union presence over the last four weeks that had the Senator and his staff re-examine the validity of the bill and ultimately withdraw it."

Though NCUA Vice Chairman Rodney Hood, CUNA, NAFCU, and others stood up and said a clear case for federal pre-emption existed in this instance, the league said this idea could have snowballed into something even more significant and nationwide.

"While we have dodged this bullet, we still need to keep our guard up for future attempts against credit union's tax-exempt status here in New York State and across the nation," Mellin said.

Morahan, a member of the Senate Banks Committee, had been considered a supporter of credit unions prior to his April 25 introduction of the bill. NYSCUL and credit unions in his district have said they will continue their outreach to the senator.

According to NYSCUL, Morahan had no co-sponsors for the bill and was not actively seeking support for it from other legislators. His staff also told the league that the senator has no other credit union bills planned for immediate introduction.

However, it is situations like this one that drive home the importance of political relations and awareness. "More people need to get involved in this political activity. Too many people sit back and let others do it for them," Parsons stated.

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