Last Friday evening, California’s Credit Unions staff heard from the California State Assembly, State Senate, and Governor Gavin Newsom’s office that the league’s request for parity on the digital software products and services (SaaS) tax issue did not make the final cut for the budget trailer bills.
While credit unions were in a unique position on the tax, most other entities in the state were also pushing for changes that would benefit their respective memberships. Ultimately, the decision was made not to open the SaaS issue despite the California league’s unique position.
California’s Credit Unions did not receive the outcome it wanted on the SaaS tax, but make no mistake: the league moved the conversation and made an impact. California’s Credit Unions engaged directly with legislative leadership, the top brass of the governor’s office, the budget chairs, the California Department of Financial Protection and Innovation commissioner, and the DFPI’s secretary of Business and Consumer Services Agency (Rohit Chopra).
The league also activated its grasstops network with targeted calls to key decisionmakers. That level of engagement and outpouring of support was not a drill that California’s Credit Unions takes lightly, especially given its victory on the state Community Reinvestment Act (CRA) and other pieces of legislation this legislative cycle. The California league was in the room, at the table, and able to address the menu.
The state legislature and governor’s decision to bypass addressing the SaaS tax is part of a broader trend impacting businesses across California. Unfortunately, with credit unions having a viable alternative, the impending results will lead to difficult choices for each credit union — and their business models.
Advocacy on this issue is not concluded. The league’s advocacy team is engaged in the regulatory process and working to mitigate the impact.
California’s Credit Unions plans to run a state charter modernization bill during the state’s next legislative session, and a parity exemption will be included in the draft. If your credit union is leaving the state charter, the league knows that one day your credit union may wish to return. The objective remains what it has always been: a strong dual-charter system that provides credit unions with the best ability to serve their members.
Meanwhile, credit union CEOs received a survey this past week regarding charter conversion and timing. Member credit unions of the league are interested, and the DFPI is interested — and the state legislature needs to see the consequences of its inaction and public policy choices.
The league would like to thank every credit union CEO who has answered this survey and stayed engaged.
