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South Carolina state representative Nathan Ballantine introduced legislation this month to allow local governmental entities access to credit unions.
In a press conference announcing the bill, Rick Osbon – the former mayor of Aiken, S.C. – called it “an important piece of legislation that will give local governments, cities, counties, local fire departments and public entities the freedom to choose the type of financial institution that is best for their communities when it comes to depositing taxpayers money.”
Osbon is the chairman of the Palmetto Public Deposits Coalition, a group which bills itself as “an alliance of community leaders, credit unions, and local government associations advocating a more competitive environment for returns on taxpayer dollars.”
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Ballentine’s bill (H. 3221) aims to amend S.C. Code of Laws § 6-5-15 – which dictates how municipalities, counties, school districts and other local political subdivisions can secure their funds.
As it currently stands, these entities are relegated to banking with national and state banking associations, as well as federal and state loan associations and savings banks. Multiple municipal officials joined Ballantine and Osbon in calling on the General Assembly to add local credit unions to the list of approved financial institutions. West Columbia councilman Mike Green told FITSNews the measure “will add competition to the public deposit marketplace.”
Green cited the impracticality of physically delivering funds to faraway financial institutions for rural communities.
“We love both our banks and credit unions in West Columbia, but I believe this is necessary for our rural communities that don’t have a banking institution,” Green said.
According to the councilman, the change would allow municipalities which only have a credit union close to their physical location the option of saving “staff time and money from driving to deposit cash and check payments while also keeping taxpayer money in their community.”
Osbon pointed to the desire to keep South Carolinian’s money in-state during the press conference.
“In 2023, 77 percent of all deposits in South Carolina were held by out of state banks,” he said. “That’s not right, and that’s not how our state’s taxpayer dollars should be managed. There’s often a credit union that is based in these same communities, and particularly rural communities who can offer better rates and keep those tax dollars in South Carolina.”
Despite the rhetorical emphasis on keeping dollars in the Palmetto State, the proposed legislation would also allow municipalities to deposit funds in federal credit unions.
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This increased competition would afford municipal money managers more options, something advocates of the bill argue will allow governmental entities to earn better interest rates on deposited funds.
While vocal opposition to the legislation has yet to materialize, the bill’s threat to deprive traditional banks of a portion of their hitherto statutorily guaranteed revenue all but ensures an organized effort to prevent the passage of this legislation.
Lowcountry legislator Sean Bennett (S.60) also recently introduced companion legislation in the South Carolina Senate, telling FITSNews he did so because there are “areas of our state that lack a local banking presence but have access to credit unions.”
Bennett also noted that “municipalities have an obligation to their citizens to be good stewards of the publics’ funds” and argued that “prohibiting access to tools that may assist in achieving this goal seems counter productive.”
FITSNews welcomes anyone with an intelligent opinion on either side of issue to submit a column or to reach out to us directly. Count on us to provide continued coverage of legislation pre-filed ahead of the 2025 legislative session.
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ABOUT THE AUTHOR …
(Via: Travis Bell)
Dylan Nolan is the director of special projects at FITSNews. He graduated from the Darla Moore school of business in 2021 with an accounting degree. Got a tip or story idea for Dylan? Email him here. You can also engage him socially @DNolan2000.
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