Kansas Gov. Laura Kelly yesterday signed into law a bill that will help ensure greater parity at the state level between banks and the government-sponsored Farm Credit System. The bill—which is similar to the ABA-supported Enhancing Credit Opportunities for Rural America Act that was introduced in the last Congress at the federal level—creates a targeted tax exemption for bank interest income generated from agricultural real estate loans, making it easier for banks to support the farm sector by offering lower-cost ag loans. The bill also includes a tax exemption for rural housing loans in communities with populations of 2,500 or less.
The measure—which was overwhelmingly adopted by the Kansas state legislature—also creates an Economic Recovery Loan Deposit Program that enables Kansas financial institutions to access low-cost state idle funds for the purpose of making low-cost loans to small businesses impacted by the COVID-19 pandemic, and modifies Kansas’ credit union field of membership statutes to mirror the current federal standard.
“The adoption of the tax equity provisions in Senate Bill 15 is the culmination of three years of perseverance, tough negotiations and the thoughtful leadership from state legislative leaders of both political parties here in Kansas,” said Kansas Bankers Association President and CEO Doug Wareham (pictured at right with Kelly). “At the end of the day, our state policymakers supported creating a level playing field for agricultural real estate and rural housing borrowers and they recognized the need to maintain access to local credit provided by the strong community banking network we have in Kansas.”