HARRISBURG, Pa. (8/18/09)--The Pennsylvania Credit Union Association (PCUA) has sent a letter to state Auditor General Jack Wagner expressing strong opposition against one of Wagner's budget proposals: taxing non-profit entities. The suggestion is one of seven recommendations Wagner has made at least twice to the governor and General Assembly to explore during the state's budget impasse. He suggested evaluating the tax exemption and other non-profit entities as a possible funding source. "The Pennsylvania tax code is filled with tax breaks for special interests, and they should be thoroughly reviewed and either suspended, reduced, or eliminated for the duration of this crisis," Wagner said in a press release, adding that this suggestion could result in a minimum revenue gain of $100 million. In PCUA's letter, President/CEO Jim McCormack wrote that "we want to place our strong opposition on the record to your recommendation to evaluate and use tax-exempt entities as a funding source for the state budget crisis." McCormack outlined the reasons credit unions are tax-exempt financial institutions: democratic control, unpaid boards of directors, and earnings returned to members/owners in the form of increased or better products and services, dividends or other programs. "Consumers receive a 'better deal' in lower interest rates on loans and higher rates in savings due to the credit unions' cooperative structure," he said. "Credit unions focus on service to members, rather than squeezing the last dime from each and every transaction," he wrote. "Changing the tax status of credit unions would change the dynamics of the credit union business model. Earnings and profits would necessarily become a focal point rather than the current focus of providing quality services and attention at low to no cost to members and communities." He noted credit unions have hundreds of stories to illustrate how their tax-exempt status benefits residents and communities in the state. "Examples, relevant to the current state government dilemma, are the programs, voluntarily created by credit unions, to assist state employees during the state budget impasse." He outlined the loans credit unions designed to assist state employees until a state budget is passed, including 0% loans, skip-a-payment plans, and more. But he also emphasized that these efforts are "evident every day" while credit unions "fulfill their philosophy and mission of People Helping People. "All taxpayers, whether members or not, benefit from the presence of credit unions in the marketplace. Creating a tax on credit unions would disrupt the balance of market competition, but more importantly would endanger the services that they are able to provide to members and their communities," McCormack concluded.