The President's Perspective

​Dakota credit unions are fighting to protect their federal tax exemption, urging advocates to engage lawmakers and support the "Don’t Tax My Credit Union" campaign.

Greetings from the Dakota Tundra! Old man winter or, if you prefer, Jack Frost, certainly has made its presence known this past week. Why is it when the North Dakota legislative session opens every other January it gets bitter cold in the Capital city? Yikes, be careful out there.

I want to thank all our South Dakota Credit Union leaders and advocates for their engagement and participation in our Credit Union Day at the Capitol in Pierre last week. The day began on the second official day of the 100th legislative session with members of the South Dakota Governmental Affairs committee greeting lawmakers with morning coffee and sweets. After, we all hit the House chambers for the joint session that featured the “state of tribes" address from Sisseton Wahpeton Chairman J. Garrett Renville.

We wrapped up the afternoon with our Executive Director of Government Affairs, Chesney Garnos, hosting a legislative panel discussion that featured timely input from Senator Casey Crabtee, Madison, SD; Senator Steve Kolbeck from Sioux Falls; Lorraine Polak from Senator Round’s office: and Jody Gillespie from the South Dakota Attorney General’s office on Consumer Protection.

In Bismarck, even though on the outside we have sub-zero temperatures, inside the Capitol things are heating up. As we kick off week three there have been 839 bills introduced along with 12 concurrent resolutions. Your Dakota Advocacy team is already engaging with lawmakers about credit unions’ key priorities and issues that may have impact you.

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Celebrating North Dakota’s 34th Governor: A Festive Inauguration for Kelly Armstrong
This past weekend, I had the privilege and pleasure of attending the inaugural festivities for North Dakota Governor Kelly Armstrong at the Bismarck Event Center. Despite the bitter cold and subzero temperatures outside, several thousand people gathered inside to participate in and enjoy the celebration of the state’s 34th governor.  It was a great opportunity to catch up with fellow Dakota Credit Union professionals at the event.

Tyler Neether (Town & Country), John Alexander (DakCU), and Jeff Olson (DakCU)

 t​​Credit Union Tax Exemption is on House Budget Committee List
As the Trump administration takes over ‘officially’ this week, things are picking up in Washington, D.C., with hearings underway and legislation introduced in Congress.

While the House Ways and Means Committee did not mention the credit union tax status during hearings last week, we did get wind of new developments as the House Budget Committee released a comprehensive list of policy options that could be included in reconciliation as part of this list. The Committee is seeking feedback from House members on the viability of the various provisions and eliminating the credit union tax exemption is on that list.  

The inclusion of eliminating the credit union federal tax exemption in the U.S. House Budget Committee’s list of potential reconciliation and tax reform package and finding ‘Pay Fors’ – as a way to cover the legislation’s expense, puts all means to raise revenue, including the credit union federal income tax status, on the table.

The list spelled out that eliminating the exemption of credit union income tax would bring in an estimated $30 billion over a 10-year period or $3 billion a year.

This does not come as a surprise, as we have long been concerned that the credit union tax exemption would be on the comprehensive list of tax changes that are options to help pay for tax reform. Therefore, it’s more important than ever that we engage with our federal lawmakers now. Not only does the credit union difference bring tens of billions in benefits every year, but credit unions remain a vital source of financial services for the people the big banks leave behind. That’s why 60% of voters support preserving credit unions’ tax status—they recognize that a new tax will hurt American families and main street small businesses, only to the benefit of big Wall Street banks.
 
We are working closely as our partners at America’s Credit Unions are launching our Don’t Tax My Credit Union campaign.  This means our continuous engagement with our Dakota Republicans who will be influential in the reconciliation process. Our direct engagement is critical as developments are happening on reconciliation and tax reform on almost a daily basis in D.C.
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Not only is this a serious concern for the credit union industry. If pursued, this could significantly impact Dakota credit unions and their members by eroding their financial benefits and diminishing their ability to serve communities, particularly those underserved by traditional banks.

What This Could Mean for Credit Unions and our members
       1.  Higher Costs for Members: Without the tax exemption, credit unions would face higher operational costs, likely resulting in higher loan rates, reduced savings returns, and increased fees for members.
       2.  Weakened Competitive Advantage: Credit unions’ ability to offer affordable financial services compared to for-profit banks would be compromised.
       3.  Threat to Member-Owned Structure or elimination of the Financial Cooperative Structure: Unlike banks, credit unions are not-for-profit, member-owned cooperatives that reinvest earnings into their members. Losing the exemption would force a shift in priorities to cover tax liabilities.
       4.  Reduction in Community Impact: Many credit unions fund financial literacy programs, small business lending, and low-income community initiatives—all of which could be scaled back if additional tax burdens are imposed.
 
What Dakota Credit Unions Can Do
To ensure this recommendation does not gain traction, Dakota credit unions must mobilize immediately and engage lawmakers effectively:

• Encourage credit union members, employees, and volunteers to contact their congressional representatives and express opposition.
• Leverage America’s Credit Unions Member Activation Program (MAP):
  • This program helps your credit union engage with employees and members on key credit union issues. If you haven’t already, sign up to use ready-to-personalize content that highlights the credit union difference with your members. This is the first step in grassroots outreach, with follow-up email templates also available to encourage both your employees and members to take action by sharing a message of Don’t Tax My Credit Union with lawmakers when the time is right.
• Urge our North and South Dakota’s congressional delegations to publicly oppose any proposal to eliminate the exemption and emphasize the economic and community impact of credit unions.
• Highlight real stories from credit union members who would be affected.

 
This leaked policy list presents a serious but addressable challenge. The credit union industry has successfully defended its tax exemption for decades by demonstrating its unique structure, member benefits, and community-focused mission. However, Dakota credit unions must act swiftly and strategically to ensure this recommendation is not considered by the House Ways & Means Subcommittee.

We expect Congress and the Administration to try to enact comprehensive tax reform by May and Congress is not going to enact legislation without a “pay for” – a way to cover the legislation’s expense. That puts all means to raise revenue, including the credit union federal income tax status, on the table.

The greatest assets we have in the fight to protect our tax status are our credit unions and their members. Our grassroots advocacy is unmatched in Washington, D.C. In order to keep our grassroots strong, we are launching a consumer-facing Don’t Tax My Credit Union website to help mobilize members and other consumers, and we have updated Don’t Tax My Credit Union tools and resources ready for your credit union to use.

​Make Plans Today to Join our Congressional ‘Hike-the-Hill’ and Help Us Make the Case for Our Tax Status During the GAC!
Dakota credit unions advocates are needed and your participation in this year’s GAC is crucial. You can help us tell our credit union story as we meet with our Dakota delegation at the upcoming Governmental Affairs Conference in Washington, D.C. March 2-6, 2025.

For those interested in attending, DakCU has prepared a “one stop” GAC shop on our website, which you can find here. This convenience allows you to register for the conference, make your hotel reservations, and more.

Dakota Group Dinner at Historic 1789 Restaurant & Bar During GAC!
We will be hosting our annual Dakota Group dinner during the event at the Historic 1789 Restaurant & Bar in Georgetown on Sunday, March 3. DakCU will once again provide a hosted refreshment bar throughout dinner. We’ll be sending more information out directly to members who are planning to attend this year.

Have a great week. Safe travels and stay warm! 

​DakCU President/CEO