Credit unions could house public funds

The Banking, Commerce and Insurance Committee heard testimony Feb. 4 on a bill that would allow for the deposit of public funds in credit unions.

LB734, introduced by Columbus Sen. Paul Schumacher, would allow deposit of public funds in credit unions insured by the National Credit Union Administration.

Some small towns in Nebraska have credit unions but not a bank, Schumacher said, and the bill would give them another option for depositing public funds.

“[LB734] extends that authority to the local government to put their money there,” he said.

Brandon Luetkenhaus of the Nebraska Credit Union League testified in support of the bill, saying 25 states currently allow credit unions to accept public funds. He said the bill would increase local control and could provide municipalities with better rates and service.

“Credit unions are locally owned and operated,” Luetkenhaus said.

Beth Bazyn Ferrell of the Nebraska Association of County Officials also testified in support of the bill. She said at least one county seat in Nebraska does not have a bank, and an official must drive 36 miles one way to deposit funds.

“This will give counties more flexibility in where they put their deposits,” she said.

Robert Hallstrom of the Nebraska Bankers Association testified in opposition to the bill. He said credit unions should not “feed from the public trough” because some of them are exempt from federal taxation.

Hallstrom said the bill does not distinguish between state- and federally-chartered credit unions and that some institutions are not subject to the full array of taxes that banks are required to pay.

“To the extent that they don’t pay their full share of taxes, they should not accept public deposits,” he said.

The committee took no immediate action on the bill.