FEDERAL WAY, Wash. (3/1/12)--Washington's government entities soon could have a local option for their public deposits that would allow them to invest their tax dollars locally and support financial institutions--including credit unions--that reinvest in their communities.
Senate Bill 5913, which allows public entities to deposit funds up to the insurance maximum of $250,000 in any credit union headquartered in Washington, was passed by the State House of Representatives Monday, 80-16, with two members excused.
SB 5913 now moves to Gov. Christine Gregoire, where she is expected to sign it into law. The legislation would take effect June 8--90 days after the end of the session.
SB 5913 is opposed by banks.
"These legislative changes in Oregon, and now Washington, rectify a near-monopoly on some aspects of our financial markets," says Northwest Credit Union Association (NWCUA) CEO John Annaloro, referring also to a recent decision to allow Oregon credit unions to accept unlimited public funds. "All government-chartered financial institutions are now available to advance the communities of our region."
The bill, which modernizes Washington's public funds laws, was passed by the Senate on a 43-2 vote Feb. 9, where it was sponsored primarily by Senate Financial Services and Insurance Committee member State Sen. Margarita Prentice (D-11), as well as the committee's chairman, State Sen. Steve Hobbs (D-44), and State Sen. Don Benton (R-17). SB 5913 also received support from the state treasurer's office and Seattle.
Following the Nov. 5 Bank Transfer Day last year, the Seattle City Council unanimously adopted a responsible banking ordinance that called on the city to examine its banking and investment practices, a movement that is gradually gaining momentum around the nation, NWCUA said.
"Hard work by the Senate, along with committed supporters and a general public disgust with big banks, negated any opposition to this bill," said Mark Minickiello, NWCUA vice president of legislative affairs. "The momentum that carried over from November was palpable."
The issue of public funds deposits was not centered on credit unions' ability to accept public dollars. Rather, it is the state and local entity's inability to deposit those dollars that was the core of the problem, NWCUA said. Credit unions have always been allowed to accept public funds. The new law makes it legal for public entities to deposit those dollars in credit unions, Minickiello said.
"For credit unions, this has always been a member-service issue," testified Debie Keesee, president of Spokane (Wash.) Media FCU and NWCUA vice chairman, to a Senate committee, earlier this year. Even though her credit union is the closest financial institution to the city of Millwood, Wash., it would be illegal for the city to deposit of any of its public funds there, she said.