As private citizens, most of us are trying to make the best financial decisions for our family, which starts with where we bank and who we trust with our money. And, it stands to reason that, as taxpayers, we would want our local government entities to do the same.
Yet, Florida law does not allow for credit unions to accept deposits from local government entities and, instead, only allows for local governments to bank with commercial, for-profit banks. This means school boards, universities and colleges and local governments, to name a few, cannot take advantage of, and bank at, their local credit unions.
While it seems like common sense that our local government entities should have the same freedom we do as private citizens to bank where our needs will be best met, year after year the banking lobby protects the interest of banks and their shareholders, and blocks all attempts to grant public offices and municipalities depository choice. As the 2017 Legislative Session quickly approaches, we urge lawmakers to allow municipalities and public offices the freedom to bank where they want.
Credit unions return all of their profits back to their members, and in turn, the community. Credit unions are also 100 percent member-owned, whereas banks are usually shareholder-owned, management and board driven, for-profit establishments that transfer their earnings back to shareholders.
As current law only permits commercial, for-profit banks to receive deposit requests from local government entities, credit unions are forced to turn them down, limiting municipalities from seeking more competitive return rates for their investments with financial institutions. Credit unions are not asking for special treatment when it comes to the public funds market, rather the opportunity to provide depository choice for such entities, which many can provide lower rates and bigger savings to, and would allow universities, local governments and school boards, to keep their funds within local communities.
While opponents may argue that credit unions should not serve local governments because “they do not pay taxes,” this is simply a self-serving and disingenuous argument. It is strictly a claim so that for-profit banks may maintain their monopoly to conduct business with municipalities and public offices, and keep credit unions — accessible, competent and deserving institutions — from widening the marketplace and spurring competition for public deposits.
Because their mission is to serve the community and their not-for-profit structure, credit unions are exempt from paying federal income taxes. However, credit unions pay tangible personal property taxes and property taxes, and as employers, pay all employment taxes, as would any other bank. Credit unions essentially pay the same taxes as a Sub S corporation, of which there are currently 29 in Florida — 20 of which are qualified public depositories.
Just as many Florida’s families are under economic pressure, so too are our local government entities and it’s imperative that they are granted freedom in banking, in order to make the best financial decisions for their respective entity and maximize their returns.
Let’s make this the year fairness prevails for depository choice. This legislation is good for the community, as well as those public entities that could achieve financial savings from this move.
Patrick La Pine is president and CEO of the League of Southeastern Credit Unions & Affiliates.