When it comes to managing taxpayer dollars, South Carolina’s local governments know their communities best. As both the mayor of Goose Creek and president of the Municipal Association of South Carolina, I firmly believe that convenience and efficiency in financial management are crucial for effective governance. That’s why I’m calling on our state leaders to give towns, counties and school districts the choice to bank with credit unions if they decide that’s the best fit for their community.
This may sound like a small change, but it’s a vital step toward empowering local governments with the ability to manage taxpayer funds more effectively. By allowing local governments to bank with credit unions, we can address critical inefficiencies, especially for smaller towns and rural areas that often lack nearby financial institutions.
Consider the challenges faced by Whitmire, a town with fewer than 1,500 residents. Until just six months ago, the town staff had to drive an hour round-trip to deposit cash and check payments because state law prohibited them from banking with local credit unions. This wasn’t just inconvenient; it wasted taxpayer resources and staff time that could have been better spent serving their community.
Thankfully, our state Legislature took a step in the right direction last year by approving a limited proviso that allowed Whitmire to bank with a credit union. The impact was immediate. Whitmire’s staff now saves valuable time and resources, redirecting their focus to better serving their community. However, the proviso’s scope was narrow and temporary, leaving countless other communities across our state without similar relief.
Now is the time for a permanent solution.
The South Carolina Financial Freedom Act — introduced as H.3221 by Rep. Nathan Ballentine, R-Chapin, and S.60 by Sen. Sean Bennett, R-Summerville — would allow all public entities to deposit taxpayer funds in credit unions. This legislation removes outdated barriers and provides local governments with an option that better aligns with their logistical and operational needs and the opportunity to secure higher returns on deposits.
Credit unions are often more accessible and better connected to local economies. They provide an alternative to time-consuming trips to faraway banks, giving town staff more time to focus on the needs of their communities.
Critics of this legislation argue that credit unions don’t pay taxes and aren’t adequately insured. These claims are misleading. Credit unions paid $38.1 million in South Carolina state taxes in 2023 alone. Additionally, credit unions are federally insured through the National Credit Union Administration, providing the same level of deposit insurance as banks.
For municipalities, there is no practical difference between a bank and a credit union. Both pay local property taxes, and neither is subject to business license fees. By allowing access to credit unions, we can ensure that our local governments have equal footing in choosing the most convenient and effective financial partner for their needs.
This issue isn’t just about banking; it’s about making government work better for the people it serves. Local governments should have the ability to make financial decisions that best serve their constituents. By passing the S.C. Financial Freedom Act, the Legislature would ensure that cities and towns have a choice in where their taxpayer dollars are deposited and managed, saving time, reducing costs and increasing efficiency.
I urge our state legislators to act swiftly in passing this bill. It’s time to empower South Carolina’s communities with the financial convenience they deserve. Together, we can create a system that works better for everyone.
Greg Habib is the mayor of Goose Creek and president of the Municipal Association of South Carolina.
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