In a victory for credit unions and state municipalities, the Municipal Deposits Bill passed in the Senate on Thursday. Sponsored by Sen. James Sanders Jr. (D-10), the bill, S.670/A.8289, allows credit unions, savings banks, savings and loan associations and federal savings associations to accept and secure deposits from municipal corporations.
Although the legislation has not passed in the Assembly in the current legislative session, which is expected to end Friday, its passage in the Senate marks the first time in decades that municipal deposit legislation has passed either chamber and provides the Association with momentum for next year’s session. The passage of the measure is a direct result of advocacy efforts by credit unions, credit union advocates and the New York Credit Union Association as well as organizations representing municipalities and school districts across New York State.
“After years of lobbying and advocacy efforts, this priority legislation has passed in the Senate for the first time — a major victory for both credit unions and New York state municipalities,” said William J. Mellin, Association president/CEO. “Passage of the Municipal Deposits Bill in the Senate is an historic achievement and brings it much closer to ultimately becoming law.”
Federal law permits credit unions to accept public deposits, but in New York State, local governments are not authorized to make deposits of municipal funds into credit unions. As a result, large commercial banks enjoy a monopoly over the deposit of public funds. Credit unions routinely receive deposit requests from municipalities including fire departments, villages, schools, and libraries and must turn them away.
In debating the bill on the floor of the Senate, Senator Sanders emphasized that the bill simply gives localities the option of putting public funds where local leaders feel they can get the best return for their taxpayers. He said it would be particularly beneficial in smaller upstate communities where officials are forced to drive miles out of their way to deposit funds in banks even though a credit union is right down the street from their offices.
The Association joined with School Boards, Towns, and Conference of Mayors in support of the bill, which allows local governing bodies to make deposits into credit unions, giving municipalities a depository choice and an opportunity to save taxpayer dollars by incurring lower fees and taking advantage of the best possible return on deposits.
The Association sincerely thanks Sen. Sanders for sponsoring the bill and his leadership in getting it through the Senate. It also thanks all who took action and reached out to their legislators in support of the bill.