Could Measure 4 lead to taxation for state chartered credit unions in North Dakota? We are 21 days away from the November General Election. As in every election cycle, there are ballot initiatives that will have an impact if passed. However, at least one of these well-intended measures could have unintended consequences on credit unions and our members. A “hot topic” issue that we have heard a lot about as we visit with candidates and lawmakers this fall is property tax. Like many of you, I was not happy about my prospective tax bill that is due in February. Not having to pay that bill every year is very appealing! However, what many do not understand is that the state does not collect property taxes; it is left up to the local municipalities and school and park districts. Proposed Measure 4 would amend the North Dakota Constitution prohibiting all political subdivisions from levying any tax on real property. This is a “feel good” measure with many pitfalls. Better said, if Measure 4 passes in North Dakota the financial ramifications could be significant. Without a clear plan to replace this revenue, the state would be obligated to cover an estimated $3.15 billion per biennium. This could lead to cuts in state funding for essential services like infrastructure, public safety, education, and more, which are currently supported by property taxes. It would also likely mean that lawmakers will have to find revenue elsewhere, such as tax hikes across the board, sales, gas, and income. Credit unions should be concerned about possibly being lumped into the state’s financial institutions tax. The financial institution tax in North Dakota ensures that banks contribute to the state in recognition of the banks’ benefits from the state’s infrastructure and legal framework for conducting business. Essentially, it serves to compensate the state for those benefits, and both state and federally charted banks operating in North Dakota are subject to this tax. (Some states refer this to a “franchise fee.”) This would not be that unusual. Iowa state chartered credit unions, for example, are subject to a specific tax known as the “Moneys and Credits” tax. Although Iowa credit unions are exempt from state corporate income tax, the Moneys and Credits tax is their primary form of state taxation. Furthermore, the absence of an inflation adjustment in the measure means that over time, the real value of state funding could decrease as costs rise, further straining local governments. Large corporations and out-of-state property owners would benefit disproportionately, as they would see reduced tax burdens, while residents would potentially face increased state-level taxes or reductions in services. There is some concern this could increase home values and perhaps put home purchases out of reach for first time buyers. So, before you go to the polls, do some digging, and know the facts as you cast your ballot. Elections have consequences. Redlining is NOT the credit union way! Last week the U.S. Department of Justice announced a complaint and consent order with Citadel Credit Union, Pennsylvania, accusing them of redlining practices. Redlining in lending refers to the discriminatory practice where financial institutions refuse to offer loans, mortgages, or other financial services to people in certain neighborhoods or demographics. The term originated in the 1930s when maps were created, marking areas deemed too risky for lending with red lines. These were often predominantly minority neighborhoods. This practice was banned by the Fair Housing Act of 1968, but its effects have had long-lasting impacts on the affected communities, leading to generational wealth disparities. Even today, there are discussions about modern forms of redlining through algorithms or zoning laws. For over 90 years, our financial cooperative movement has had a proud and proven record of contributing to the financial well-being of our members and communities. Dakota credit unions are all unequivocally opposed to redlining, and any other form of lending discrimination. The bottom line, fair and equitable access to financial services is a critical part of the credit union difference. What is unfortunate about the Citadel situation is that it hurts the standing of the entire credit union movement. One credit union’s action does not indicate a need for additional regulatory burden, such as the Community Reinvestment Act (CRA), to be imposed on all credit unions. The current level of oversight and authority from the National Credit Union Administration (NCUA) and Consumer Financial Protection Bureau (CFPB) is sufficient to address situations that require action, without creating additional and undue regulatory or supervisory burdens for all credit unions. Here are some discussion points we should be sharing:
Governor proclaims Credit Union Day in ND! Governor Doug Burgum has proclaimed Thursday, October 17th as Credit Union Day (ICU Day) in North Dakota. On this day, credit unions worldwide will come together to celebrate International Credit Union Day and the role that financial cooperatives play in improving the lives of their members. You can download a copy of the proclamation here. We also reached out to the South Dakota Governor’s Office, but they were unable to fulfill our request as of this time. Congrats to Holly Jones – CCUE! Holly Jones, Chief Administrative Officer at Black Hills FCU (Rapid City, SD) has earned the distinguished Certified Credit Union Executive (CCUE) designation from America’s Credit Unions after completing the three-year Credit Union Management School. This is no minor accomplishment, as individuals spend approximately three weeks per year in Madison, WI where they undertake two large research projects, three rigorous exams, and a final oral presentation. The CCUE designation demonstrates the highest level of aptitude in credit union leadership. Congratulations to Holly on this major accomplishment! Learn more about Management School here. On a positive note. Huron Area Education FCU is using a clever angle in their social media marketing by putting the spotlight members. Their October's “Meet-A-Member” post features a 50-year member who was also a board volunteer for 25 years! Do not underestimate the power of social media in engaging your community, especially when it is personalized like this message. Well done! A benefit of membership: Employment and Labor Law webinar. Finally, I want to invite you to join us on Thursday, October 31, at 12:00 p.m. (CT) for a look at the latest updates surrounding employment and labor law. This past year has been an active one for updating rules and regulations affecting employers today, and your association is proactively offering insight and a closer look at what some of those regulations mean. This complimentary webinar featuring Chad Richter of Jackson Lewis, P.C. is part of the valuable dues supported services DakCU is offering to assist in answering the many questions credit union leaders and HR staff have in the Dakotas. Register here and please contact George McDonald with any questions. Have a great week! DakCU President/CEO
Comments are closed.
|
The MemoThe Memo is DakCU's newsletter that keeps Want the Memo delivered straight to your inbox?
Archives
October 2024
Categories
All
|