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Yes on HB22-1277

HB22-1277 has been introduced in the Colorado State Legislature. This bipartisan, broadly supported bill seeks to authorize credit unions to hold public money.


Under current law, public money may be deposited in or invested with banks and savings and loan associations that are protected by the federal deposit insurance corporation. The bill permits the deposit or investment of public money with a credit union that is federally insured by the national credit union administration.

The bill is sponsored by Representative Kyle Mullica, Representative Patrick Neville and Senator Julie Gonzales.

Simply put, we are working to pass legislation to allow the state of Colorado and local governments—such as counties, cities and towns, school districts and fire departments—to use credit unions for their financial and banking needs.

This bill is broadly supported in the state. Check out the growing list of cities and other entities that support. HB22-1277. 


Myth vs. Fact on HB22-1277

Myth:  HB22-1277 expands credit union power to accept public deposits.

Fact:  Credit unions can already accept public deposits under state and federal law.  HB22-1277 gives public entities the ability to choose their financial institution.  Current law states public entities can only use banks or savings and loan associations.  Banks want to limit the choice of public entities in Colorado and maintain a monopoly on taking taxpayer dollars.

Myth:  Colorado credit unions do not pay taxes.

Fact:  Credit unions pay all taxes—sales, property, payroll, etc.—except corporate income tax.  These local taxes directly benefit the local communities credit unions serve, rather than an income tax that goes to the state or federal government.  Credit unions are not-for-profit financial cooperatives and cannot make a profit.  Any profits must be reinvested into the credit union to benefit credit union member owners.  Credit unions paid $146.6 million in state and local taxes in 2020.

Myth:  Credit unions do not make as many business and agricultural loans as banks.

Fact:  Credit unions are subject to a member business lending cap that restricts the overall amount of lending to 12.25% of assets.  This is an arbitrary cap lobbied for by banks at the federal level.  Banks also control 86% of assets in Colorado compared to just 14% for credit unions.  It is not an apples-to-apples comparison.  Overall, small business lending is growing faster at credit unions and 62.5% of total mortgage applications from low/moderate income borrowers are approved at Colorado credit unions.

Banks claim to need public deposits to make loans.  This means banks need public money to make a profit on lending.

On federal PPP loans—while banks were making large loans, Colorado credit union PPP loans were smaller and more efficient in the jobs saved per dollars lent.

Myth:  Banks do more to invest in communities through the Community Reinvestment Act (CRA).

Fact:  Banks engaged in deliberate discrimination against low/moderate income and minority communities known as redlining.  Congress passed the Community Reinvestment Act (CRA) to ensure banks are doing their part to serve communities and there remains serious doubt whether banks would continue to do so without proper regulatory oversight.  Credit unions were founded by those with common bonds to serve people of modest means.  As credit unions already serve their communities, follow the same anti-discrimination, and fair lending laws, and do their part to serve everyone within their field of membership, they are not subject to CRA requirements.  This has been reaffirmed by Congress continuously since 1977.

Additionally, credit unions are more local than banks in Colorado

Colorado Branch and Merger Overview: 2011 – 2021
CO CU Bank
% Local 2011 88.4% 46.7%
% Local 2021 90.3% 35.1%
# Branches 2011          302         1,629
# Branches 2021          351         1,397
% Change Branches 16.2% -14.2%
% Counties w/ Zero Branches 2011 43.8% 0.0%
% Counties w/ Zero Branches 2021 32.8% 1.6%
% Counties Gain Branches 35.9% 6.3%
# Counties Gain Branches            23                4
% Counties Loss Branches 12.5% 54.7%
# Counties Loss Branches              8              35
% of Mergers Local 92.0% 32.4%
% Merged Assets Small In-State 63.7% 12.8%
% Merged Assets Large In-State 15.1% 6.8%
% Merged Assets Small Out-of-State 21.3% 4.0%
% Merged Assets Large Out-of-State 0.0% 76.4%

Myth:  Community banks will be harmed by having to compete with credit unions for public deposits.

Fact:  A study by the Credit Union National Association (CUNA) found that TOTAL bank deposit market share in the state would decline from 86.5% to 85.6% – a mere 0.93 percentage point decline.   That’s far from the cataclysmic change some have suggested.   Banks operating in Colorado have established relationships with public entities over many decades, so any shift in deposits resulting from a change in credit union authority would not happen immediately – but would likely occur over many years.  And it defies logic to conclude that such a change, while benefiting public entities, would harm overall banking industry operations or profitability.

Furthermore, credit unions are simply not a threat to banks in the marketplace.  Banks control 86% assets in Colorado compared to just 14% for credit unions.

Myth:  Credit unions are not as secure as banks.

Fact:  Credit unions are federally insured through the National Credit Union Association to the exact same levels as banks–$250,000 backed by the full faith and credit of the United States.  Credit unions’ federal insurance has been significantly more stable than the FDIC over the last 15 years.

HB22-1277 also subjects credit unions to the requirements of the Public Deposit Protection Act (PDPA).  Credit unions want to follow the same rules as banks to ensure public deposits are safe and secure.

Myth:  Banks deserve a monopoly on public deposits.

Fact:  In a free market economy, local governments deserve the ability to choose the financial institution that best serves their needs.  With federal ARPA money and continued demand for public assistance, public entities have pressure to stretch public dollars further and credit unions can offer a better return than banks.  HB22-1277 would provide local choice for local governments.  Current law states that local governments must use banks and do not have a choice.

Banks claim to need public deposits to do their lending.  This in effect means public dollars are being used for banks to make a profit.

The original statute was enacted in 1939 when FDIC was the only federal deposit insurer available.  NCUA insurance was established in 1970.  The law is now an outdated and there is not a sound reason to prevent credit unions from being a choice for local governments.  Colorado is now an outlier in the country—27 other states allow public entities to use credit unions.

Myth:  HB22-1277 violates Article XI, Section 2 of the Colorado Constitution regarding ownership by state, county, city, town, or school districts.

Fact:  HB22-1277 is constitutional.  Credit unions are authorized to accept deposits from public entities as nonmembers under C.R.S. 11-30-104.  Nonmember status allows credit unions to serve public entities without a conflict of interest under the Colorado Constitution.  Nonmembers enjoy the same higher yields, lower rates, and lower fees of credit union members, however, cannot vote on credit union issues or hold elected office within the credit union.  This is all subject to the regulatory oversight by the National Credit Union Administration and the Colorado Division of Financial Services who can make membership determinations for credit unions.

Why it’s Warranted and Dispelling the Arguments


Level Playing Field. Local government agencies should have the option of depositing funds with credit unions, since deposit yields are often higher than most banks. Allowing this option may provide more, and sometimes better, financial options for communities.

Update the law. Outdated provisions in state law prevent credit unions from offering the same financial services to the public sector—such as towns, counties, school districts and other government entities.

Broad Support. Colorado’s credit unions, the Colorado Municipal League, the Special District Association of Colorado, and the City of Boulder believe there is no longer a sound reason to bar credit unions from holding the public sector’s tax revenue, since we comply with the same rigorous financial standards and state regulations as banks.

Locally Owned and Operated. Credit unions are deeply rooted in Colorado communities and were founded by people with a common interest, like teachers, farmers and ranchers, and service members and their families.

Taxes. In 2020 alone, Colorado credit unions paid $146.6 million in federal and state taxes. Credit Unions pay sales and property taxes to their local communities, while providing jobs and paying employment taxes for thousands of Coloradans. Not-for-profit status does not require credit unions to pay corporate income tax.

Local ties. Because of strong local ties, credit unions invest heavily in their members and their communities, and historically, credit unions have been champions of communities that empower members to achieve the American dream.

Find out why credit unions are consumers’, and communities’, best financial partner.

Consumers’ Best Financial Partner

The Colorado law is outdated, and public entities should be able to decide for themselves where they invest their community’s money.

Level Playing Field

Public entities have approached credit unions, and have not been able to utilize them for public deposits. Learn why they deserve the choice.

Choice for Public Entities



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