By Doug Wareham, President and CEO, Kansas Bankers Association
Moments before the bill signing ceremony held recently at our State Capital building, where Governor Laura Kelly signed Senate Bill 15 (economic recovery & tax equity) into law, I asked myself the following question: What was the overarching factor that led to achieving state-level tax equity for Kansas banks and their rural/agricultural borrowers? The answer to that question came to me when I witnessed KBA Chairman Jonathon Johnson and other Kansas bankers in attendance interact with Governor Kelly, State Treasurer Lynn Rogers and Republican legislative leaders, including Senate President Ty Masterson, Senate Financial Institutions Chairman Jeff Longbine and House Financial Institutions Chairman Jim Kelly, to name a few. In that brief moment, I was reminded that almost every Kansas policymaker, regardless of party affiliation, recognizes and truly appreciates the critically important role banks and bankers play across our state.
While the opinions and priorities of the 165 individual Senators and Representatives that comprise the Kansas Legislature vary greatly, I believe the near-unanimous support for Senate Bill 15 was a testament to the respect earned by banks and bankers that stepped forward this past year to support their customers and communities during one of the most tumultuous periods in our state’s history. The health and economic crisis caused by COVID-19 forced individuals and businesses across Kansas to seek financial advice and financial relief. Most of those Kansans found the financial expertise and support they needed at their local bank. Banks answered the call by providing forbearance, restructuring loans, and helping more than 102,000 Kansas small businesses tap into nearly $7 billion in relief from the Paycheck Protection Program (PPP) alone. Yes, Kansas banks and bankers stepped up during this crisis, and Kansas policymakers noticed.
Achieving tax equity for ag real estate and rural housing loans was not an easy task. Team KBA invested significant time and resources for nearly three years, consistently reminding state lawmakers that a level playing field would benefit ag/rural borrowers. We also stressed that tax equity is paramount to preserving access to local credit and sustaining the community bank model long-term. I want to personally thank every Kansas banker, bank director and bank customer that helped us deliver a winning message at the Kansas Statehouse.
Rest assured, KBA is not resting on any laurels with the adoption of Senate Bill 15. Our tax equity efforts now shift to Congress and the adoption of the Enhancing Credit Opportunities for Rural Americans (ECORA). As a reminder, the ECORA Act creates a targeted federal income tax exemption further enabling banks to offer more competitive interest rates for ag real estate and rural housing loans. Kansas bankers should take pride in Senator Jerry Moran leading the charge for the ECORA Act in the U.S. Senate. Identical legislation has already been introduced (H.R. 1977) in the U.S. House of Representatives by Rep. Ron Kind (D-Wisconsin) and Rep. Randy Feenstra (R-Iowa). Kansas bankers are not alone. Advancing the ECORA Act is also a top legislative priority of the American Bankers Association and the Alliance of State Bankers Associations.
With Congress expected to tackle federal tax reform this fall, it’s imperative that bankers nationwide garner support for the ECORA Act before those tax reform deliberations get underway. You’ve undoubtedly read that President Biden is publicly calling for an increase of the federal corporate income tax rate from 21% to 28%. With more than $5.3 trillion in supplemental spending authorized by Congress the past twelve months to battle COVID-19 and additional spending on infrastructure now at the top of the Biden Administration’s priority list, it’s difficult to see a path forward that doesn’t include some level increase for both corporate and individual income taxes. Our industry and our customers’ reality is any income tax rate increase will create an even more unlevel playing field with tax-exempt competitors, including the Farm Credit System. Now is the time for Congress to advance the ECORA Act to ensure farmers, ranchers and rural homeowners that rely upon their local bank are not caught in the tax and spend crossfire.
