BEAVERTON, Ore. (2/25/10)--The Oregon Senate passed a credit union public funds bill, HB3700, Tuesday, 24-6. The bill, to be implemented in January 2013, removes the current $250,000 limitation on the amount of public fund deposits a credit union can receive, according to the Credit Union Association of Oregon (CUAO). “As our communities work to rebuild and rethink how best to support local, sustainable growth, the ability for public entities to invest more funds into credit unions provides them with additional local options," said Sen. Rick Metsger, a key supporter of the bill. "Since credit unions by definition serve a local community, those public fund deposits will stay and be reinvested in that community through consumer and business loans as well as sustaining and creating jobs. It’s a positive cascade effect," he added. Throughout the bill’s process, supporters have emphasized that the bill would extend the choice of public entities to seek a fair and competitive rate of return on “the people’s money.” A choice of depositories and competition for deposits of public funds is in the people’s interest, they say. “There are approximately 4,000 public agencies in Oregon that receive public funds and require the services of financial institutions to house those funds," said Pamela Leavitt, CUAO senior vice president of governmental affairs and public relations, in explaining why credit unions pursued the bill. "For years, credit unions have been hearing from local public entities that they would like the option of choosing a credit union. This bill simply gives them that option,” Leavitt added. In response to critics who indicated that credit unions’ not-for-profit status should preclude them from receiving public funds, CUAO reiterated that credit unions pay the same share of federal, state, and local taxes as any business, including real and personal property tax and employment taxes. Their tax exemption applies only to corporate income tax because of their not-for-profit structure. As in any cooperative, credit union members pay taxes on their dividend, CUAO said. In the 2003 legislative session, legislators passed a bill to allow public entities to deposit in Oregon credit unions up to the federally insured amount--which was then $100,000. Since federal deposit insurance limits increased to $250,000 per account, the current limit for public entities is $250,000. Since 2003, many public entities have indicated the current $250,000 limit is a great impediment and limits their ability to choose credit unions as a deposit option. The bill provides an open marketplace where all public agencies will be able to secure the most advantageous depository arrangements for the public's dollars, said CUAO.