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 As this issue of Indepth is being distributed, the fall elections are in full swing and the veto session of the Illinois General Assembly (IGA) is rapidly approaching.
During this time, credit unions are continuing to monitor several issues that have defined a complex legislative year. These include the on-going effort to resolve the issue over regulatory fees paid by state-chartered credit unions via both legislative means and litigation, and the fall elections, particularly the Governor’s race.
ICUL and four other financial institution trade associations representing banks, thrifts, mortgage bankers and mortgage brokers are continuing to move forward a lawsuit initiated against the State regarding the regulatory fee rate escalation and “sweep” arrangement contained in the State’s budget measures. The suit stems from the action by the Administration under its FY2004 Budget Implementation Bill that escalated financial institution regulatory fees far in excess of the actual amount necessary to cover budgetary expenses of regulatory oversight. Those excess monies were then transferred by the Administration from the co-plantiffs’ dedicated funds to the General Revenue Fund (GRF) in order to help balance the State budget. ICUL’s complaint states this arrangement was legally impermissible, operationally unacceptable, and violated the existing statutory framework that limits the specific purposes for which expenditures from the dedicated funds may be made.
Since March 2005, the state has been unable to transfer additional funds from the Credit Union Fund to the GRF. This is directly due to a preliminary injunction issued at the request of the League and its co-plantiffs by the Sangamon County Circuit Court.
ICUL pursued a legislative initiative during Spring 2006 to “settle” the ongoing legal dispute between the Administration and the ICUL-led coalition of co-plantiffs. This measure was part of a “dual track” strategy attempting to implement a legislative resolution of the issues presented in the suit. Although this bill unanimously passed the Senate by a vote of 51-0 in March 2006, it ultimately was not passed into law.
The litigation against the Administration is in the “discovery” phase, in which the State is required to produce documents and related materials regarding facts in the case. It is our anticipation that the case will continue to move forward throughout 2006 and into 2007. Interestingly, since ICUL and its co-plantiffs sued the State, three additional groups have filed actions against the state challenging the constitutionality of similar transfers of dedicated funds to the GRF.
Credit unions were spared from any adverse proposals in the State’s FY 2007 budget. Further “sweeps” from the Credit Union Fund were not included in the final budget measure and no new fee escalations were imposed on the industry. The Attorney General’s office, which represents the State in the pending case, again confirmed that no transfers of money from the Credit Union Fund or other dedicated funds involved in the case and covered by the Judge’s order would be affected by any new legislation, so long as the Judge’s order remains in effect. So even though the fee escalation remains in place, the State is unable to use the excess by sweeping it to the GRF.
The Fall veto session of the IGA is scheduled to take place November 14 – 16 and 28 – 30. This annual session is limited to acting on unfinished business and legislation vetoed by the Governor during the Spring. Legislative leaders have indicated that a lighter than usual schedule should be expected, as the House and Senate chambers are both undergoing major renovations. The House will be meeting at the Old State Capital and the Senate will convene at the Lincoln Presidential Library. On the election front, it has been widely communicated that the Credit Union Political Action Council (CUPAC), a bi-partisan political action committee serving Illinois credit unions, has determined that Judy Baar Topinka would best represent credit unions and has asked for credit union support in her Gubernatorial election campaign. Most recently, CUPAC Chairman Tory Eckstein issued a letter to all credit unions asking for their support of Topinka by personally encouraging their friends and families to vote for her via a “friend to friend” letter.
By their very nature, credit unions are bi-partisan entities when it comes to supporting candidates for political office. Rather than supporting specific candidates, most credit unions raise funds for political purposes and contribute the monies to CUPAC. CUPAC analyzes the positions and policies of candidates and determines which ones to endorse based on their support of credit union issues.
Credit unions throughout Illinois have become actively involved with the Topinka campaign, with a number of them featuring an article in their newsletter requesting support. In addition, she has made appearances at many functions, including chapter meetings, ICUL’s Small Asset Size Conference and the annual dinner dance for CTA credit unions in Chicago. These were in addition to other events previously reported on, including the Chapter Leaders Conference and Legislative Day, where Topinka signed a written statement demonstrating her support of credit unions. Among other assurances, Topinka has stated that she will work with ICUL to pursue remedial action in the IGA to “unwind” the fee escalation/sweep scheme — if she is elected Governor.
Other contested elections of significant interest to credit unions include determination of the next State Treasurer and a host of other local races. It is estimated that Illinois may see as many as 18 new lawmakers after the November elections, which will provide an opportunity and a challenge for credit unions to reach new key decision makers about the positive attributes of the Illinois credit union movement.
For highlights on other ICUL legislative initiatives, please see the Spring Legislative Recap included in this issue of Indepth. A complete Bill Status Chart and Topinka campaign resources are available via the League’s Web site.
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