Let local governments choose where to bank

https://www.indexjournal.com/opinion/guest_column/let-local-governments-choose-where-to-bank/article_4c147d64-685c-4afb-9a38-90384568a232.html

When it comes to managing taxpayer dollars, local governments like the Town of Saluda should have the ability to make the best financial decisions for their communities. Right now, South Carolina law prevents cities, counties, school districts, and other public entities from depositing taxpayer funds into credit unions. That restriction limits competition, reduces the financial returns on taxpayer dollars, and forces municipalities into a one-size-fits-all approach dictated by outdated regulations.

As a mayor and former city council member, I’ve always believed that competition drives better outcomes. That’s why I support allowing local governments to choose where they deposit public funds—whether it’s a credit union or a traditional bank. Competition leads to better interest rates on deposits, lower borrowing costs, and, ultimately, better services for the people of South Carolina. That’s also why Saluda is excited to welcome a new, local credit union—Neighbors United Federal Credit Union—which brings even more options for our residents and public institutions.

This issue is about removing an outdated monopoly and leveling the playing field. Credit unions and banks already operate under similar regulations when it comes to business licensing and property taxes, as Goose Creek Mayor and Municipal Association of South Carolina President Greg Habib has pointed out in his recent op-ed. If they are treated the same in these areas, why shouldn’t they be treated the same when it comes to holding public deposits?

The current restriction on public deposits is an antiquated statute that serves no practical purpose other than limiting financial choice. Just as lawmakers are cutting through red tape at the federal level, we should be doing the same in our state to ensure municipalities have the flexibility to manage funds in the most effective way possible, ultimately leading to better outcomes for taxpayers.

In fact, 28 other states already allow public entities to deposit funds into credit unions. South Carolina is behind the curve, and it’s time to catch up with the rest of the country in modernizing our financial policies. If these states have successfully implemented this reform without issue, why should South Carolina continue clinging to an outdated restriction?

When public entities can earn higher returns on their deposits, that money can be reinvested into critical services like public safety, infrastructure, and education. When they can access lower borrowing rates, local elected officials can stretch taxpayer dollars further to fund necessary projects without raising taxes. South Carolina communities deserve these benefits, and our state legislature has an opportunity to deliver them.

Fortunately, there’s a solution on the table. Representative Nathan Ballentine and Senator Sean Bennett have introduced H.3221 and S.60, also known as the South Carolina Financial Freedom Act, legislation that would allow local governments to deposit funds into credit unions if they choose to do so. This isn’t a mandate—it’s about giving our municipalities, school districts, and public agencies, your most local forms of government, the freedom to make financial decisions that best serve their constituents.

The General Assembly should pass this bill without delay. It’s time to give local governments the power to manage taxpayer funds. Let’s increase competition, drive better financial outcomes, and ensure South Carolina communities have every tool available to maximize their resources.

I urge state lawmakers to support this commonsense reform and stand with local governments across our state. Our communities deserve the best financial options available—and that starts with the freedom to choose where we bank.

Miliken Matthews is the Mayor of Saluda.