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Utahns center stage in national credit union tax issue
This is an archived article that was published on sltrib.com in 2004, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

When Utah legislators elected their House and Senate leaders last week they likely set the stage for an eventual national debate on whether credit unions should be taxed like banks, with Utah being on center stage of that conflict.

And outgoing House Speaker Marty Stephens, a former employee of Zions Bank, has his fingerprints all over the outcome of the House election.

Several members of the House Republican Caucus confirmed they were called by Stephens prior to the leadership election and urged to vote for House Majority Leader Greg Curtis over veteran Rep. David Ure of Kamas.

Legislators were warned that if Ure were elected, he might be unduly influenced by lobbyists for the credit unions, although both Ure and Curtis have taken a relatively middle-ground approach to the bank-credit union conflict in the past.

Many Republican representatives, though, were under the impression Curtis was running as a team with House majority leader candidate Jeff Alexander of Provo, House majority whip candidate Stephen Urquhart of St. George and House majority assistant whip candidate Becky Lockhart, also of Provo.

Curtis, Alexander and Urquhart won their leadership races and, with the election of Sen. Dan Eastman of Bountiful as majority whip in the Senate, observers feel that bank-friendly lawmakers have taken a firm grip on the steering of state policy on financial institutions.

Alexander sponsored the bill last year that attempted to tax Utah's larger credit unions, even though they argue that they are non-profit institutions.

Eastman was the Senate sponsor of that bill, which eventually was watered down to the point that a task force was established to study the issue further.

When Alexander and Eastman were appointed co-chairs of that task force by Stephens and Senate President Al Mansell, respectively, the large credit unions felt the decks were stacked against them and they dropped their state charters, operating now under federal charters.

The task force now is poised to offer a resolution, which will need ratification by the House and Senate in the 2005 general legislative session, that would ask Congress to authorize the states to impose a sales tax on federally chartered credit unions.

The significance of such a resolution is that Utah, a national leader in credit union membership per capita, would be the first state to officially ask Congress to join the tax-the-credit-unions bandwagon.

The incoming president of the American Bankers Association is Zions Corp. chairman and former Marty Stephens employer Harris Simmons.

With a Utah resolution to wave around and a Utah banker holding such a prestigious national post, bank lobbyists could only hope for a domino effect, with other state legislatures following the Beehive and passing similar resolutions.

Another implication of the leadership elections is the expected wane in influence of Salt Lake County on legislative matters.

Curtis, of Sandy, is the only one among the eight majority party leaders in the House and Senate who is from Salt Lake County, which contains 40 percent of Utah's total population.

Alexander and newly elected Senate President John Valentine hale from hyperconservative Utah County while Eastman represents Davis County. Urquhart, new House Assistant Whip Ben Ferry of Corrinne, Senate Majority Leader Peter Knudson of Brigham City and Assistant Majority Whip-elect Beverly Evans of Altamont all come from the rural interests of the state.

Salt Lake County previously has had a good deal of influence in the Legislature due to the close friendships among Salt Lake County Mayor Nancy Workman, Sandy Mayor Tom Dolan and Mansell. But Mansell is no longer in leadership, Workman, as of January, is out of office and Dolan supported eventual Republican Salt Lake County mayor candidate Ellis Ivory, who lost to Democrat Peter Corroon.

Whether this change in the guard hurts the county's ability to get the hotel tax changes it wants in order to raise the needed revenue to expand the Salt Palace Convention Center remains to be seen. But legislators from Utah's outback have not been shy in the past when it comes to expressing their jealousy about Utah's most populated county getting most of the attention from lawmakers and state policymakers.

While 36 percent of the House and 38 percent of the Senate represent areas within Salt Lake County, only 12 of the 56 House Republicans and five of the 29 Senate Republicans reside in Utah's most populous county.

That means that while Democrats make up just 25 percent of the House and 28 percent of the Senate, they hold 15 of the 27 House seats and six of the 11 Senate seats from Salt Lake County.

Because only the Republican caucuses matter when it comes to making state law, because the Democratic numbers are so paltry, Salt Lake County's impotence in the Utah Legislature becomes even more apparent.

prolly@sltrib.com

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