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The Business Council opposes this legislation which would grant credit unions the authority to accept deposits of state funds from the State Comptroller and Commissioner of Taxation and Finance.
The Legislature should not grant tax exempt credit unions the authority to accept state deposits. Since credit unions do not pay sales taxes and federal, state and local income taxes, the state could lose millions of dollars in lost revenue if state deposits are shifted from tax-paying financial institutions to tax-exempt credit unions. Since credit unions are tax exempt, they do not contribute funds for education, health care, public safety and economic development.
In 2010 it was estimated that savings banks and thrifts employed over 250,000 individuals and contributed over $1 billion annually in state income taxes; $1.4 billion in New York City income taxes; and hundreds of millions in income, sales and other taxes to Yonkers and the Metropolitan Transportation District. Conversely, credit unions do not pay these taxes and are exempt from the MTA payroll tax.
Community banks provide financial services and loans to consumers and businesses contributing to the revitalization of local economies. Employees of community banks are leaders in the neighborhoods, small towns, and counties they serve by supporting public events, charitable organizations, civic groups and other activities.
The loss of business will adversely impact our taxpaying financial institutions' ability to leverage capital for investment. There is no compelling evidence that shows that allowing credit unions to accept deposits of state funds would be beneficial to the State of New York.
For the reasons The Business Council opposes this legislation and recommends that it not be approved.