Removing Barriers Blog

Letter sent to Congressional leadership in support of credit union priorities in budget
Posted December 18, 2019 by CUNA Advocacy

Earlier this week, CUNA wrote to Majority Leader McConnell, Democratic Leader Schumer, Speaker Pelosi, and Republican Leader McCarthy urging them to support H.R. 1158, the Consolidated Appropriations Act for Fiscal Year 2020 and H.R. 1865, the Further Consolidated Appropriations Act for Fiscal Year 2020. CUNA worked with House and Senate appropriators to fund several priorities for credit unions that are included in this legislation. 

The funding agreement is comprised of two funding measures.  The first package, H.R. 1158, includes measures for the Appropriations Subcommittees on Department of Defense; Commerce, Justice, Science, and Related Agencies; Financial Services and General Government; and Homeland Security.  The second package, H.R. 1865, includes measures for the Appropriations Subcommittees on Labor, Health and Human Services, Education, and Related Agencies; Agriculture, Rural Development, Food and Drug Administration, and Related Agencies; Energy and Water Development; Interior, Environment, and Related Agencies; Legislative Branch; Military Construction, Veterans Affairs, and Related Agencies; State, Foreign Operations, and Related Programs; and Transportation, Housing and Urban Development, and Related Agencies.  

H.R. 1158, the Consolidated Appropriations Act for Fiscal Year 2020, contains four of the twelve appropriations bills, including the Financial Services and General Government Appropriations Act for Fiscal Year 2020.  This legislation includes $262 million for the Community Development Financial Institutions (CDFI) Fund.  This account is increased by $12 million from the Fiscal Year 2019 level, an achievement in this austere fiscal climate. 

This legislation also includes funding of $1.5 million for the Community Development Revolving Loan Fund.  This is a reduction of $500,000 from its Fiscal Year 2019 level.  The president’s budget, as well as the Senate Appropriations Committee, zeroed out this program.  While the final result is not what we hoped for, CUNA will continue to advocate for full funding for this program in FY 2021. 

The bill also funds other accounts of importance to credit unions, including: 

  • $30 billion loan volume cap for the Small Business Administration’s (SBA) 7(a) program, which allows the government to guarantee up to 85% of loans, with the guaranteed portion not counting against credit unions’ cap on member business lending. 

  • $7.5 billion loan cap for the SBA’s 504 loan program, which is used for long-term, fixed-rate financing on major fixed assets, such as equipment and real estate.  Credit unions also participate in this loan program.

The bill’s report language contains language sought by CUNA, including: 

Page 11 of Senate Report 116-111: 

Current Expected Credit Loss—The Committee is aware of concerns regarding the potential adverse effects on the U.S. economy from the Financial Accounting Standards Board’s Current Expected Credit Loss [CECL] standard, especially during times of recession or economic crisis. The Committee directs the Department of the Treasury, in consultation with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration, to conduct a study on the need, if any, for changes to regulatory capital requirements necessitated by CECL, and to submit the study to the Committee within 270 days of the date of enactment of this act.  

H.R. 1865, the Further Consolidated Appropriations Act for FY 2020, contains the remaining eight appropriations bills, including the State, Foreign Operations, and Related Programs Act of FY 2020.  Included in this bill is a funding level of $17 million for the Cooperative Development Program, an increase of $5 million over last year.  The Cooperative Development Program (CDP) is essential to furthering the worldwide development programs at the World Council of Credit Unions (WOCCU). 

Also included in H.R. 1865 is an extension of the National Flood Insurance Program until September 30, 2020.  This program is essential to many credit unions making residential property loans. 

Finally, this second spending bill includes numerous tax provisions, including bipartisan retirement legislation, the Setting Up Every Community for Retirement (SECURE) Act.  In addition, the bill repeals the nonprofit "parking tax."  The Tax Cuts and Jobs Act of 2017 (TCJA) imposed a 21 percent unrelated business income (UBI) tax on certain employee fringe benefits, namely transportation and parking benefits.  Some cities, including Washington, DC, New York and San Francisco, have mandated employer-provided pre-tax mass transit benefits. As a result, employers in those cities cannot avoid the new tax.  Nationwide, thousands of credit unions and other not-for-profit entities that have historically had very limited contact with the IRS and also never needed this type of administrative expertise.  This provision in the TCJA suddenly required many credit unions and other entities to begin filing tax returns and pay income tax.  CUNA has long advocated for the repeal of this TCJA tax and I am pleased that it is included in this larger legislative package.  

H.R. 1865 also includes two other tax provisions of interest to credit unions.  The first is a provision that would extend through 2020 a tax exclusion of up to $2 million for certain cancelled mortgage debt income.  This provision would allow relief to taxpayers by not requiring them to pay personal income tax on forgiven mortgage debt.  In addition, it would eliminate the requirement for most financial institutions (including credit unions) to file an IRS Form 1099-C ("Discharge of Indebtedness") on a mortgage default involving an individual's primary residence.  The second provision would also allow the taxpayer to treat certain mortgage insurance as qualified residence interest through 2020.