The House Omnibus Tax bill was released Monday, April 8. We are in it. If passed we would no longer pay sales tax on prizes for bingo, raffles, etc. to the tune of $400,000 in relief per year.
I would like to thank House Tax Chair Marquart for including us in his bill. There were many that did not make it into the bill. While I am thankful that we are in the bill it does show that we have a difference of opinion as to the severity of our issue.
I want to thank the following Representatives for standing up for charities and authoring or co-authoring legislation to help us this session. Representatives Davids, Fabian, Dettmer, Theis, Lueck, Zerwas, McDonald, Gruenhagen, Mekeland, Lucero, Munson, Drazkowski, Lien, Nornes, Boe, Haley, Persell, Lillie, Erickson, Backer, Poston, Gunther, Pierson and Ecklund deserve our thanks and appreciation. Please thank them, especially if they represent you.
If charitable gaming ever ceases to exist the state will inherit close to a half billion dollar annual problem; $150 million in economic stimulus (games, rent, revenue share, wages, audits), $100 million in gambling taxes, $75 million in community aid/donations, $15 million in income taxes and many millions more in unemployment benefits.
Our state legislators are on break from April 13 – 22. Most of them will be in their districts at some point during their break. It is an opportunity to see and talk to them about the impact of the current tax structure for charities is having on your overall ability to serve your communities.
We believe that the Senate Omnibus Tax bill will be released when the Senate returns from break.
Here are some points to make to your legislators along with how the current tax structure is directly impacting your organization.
We now have charities that can only make donations when they are not paying the 36% combined receipt rate (a 72% effective rate after paying expenses).
We now have charities that are making no donations in a fiscal year. You ask how that can be and still hold a license. The average charity is paying 28% of every dollar that they get to the bank to the state in taxes. That equates to 2.8 stars as taxes count towards the star rating. A charity averaging 30% to the state in taxes annually (of which 126 of us did just that in FY2018) has met the three star criteria for keeping their license, no donations are required.
We now have charities that are bouncing their tax checks to the state. Many more are in a position where one bad month will place them in the same situation. The margin of error for many charities is declining rapidly.
Our bottom line will never improve under the current tax structure. If our business continues to grow our overall tax burden as a percentage of what we get to the bank will grow at a faster rate than our business increase due to the current combined receipt rates. If our business does not increase or decreases our bottom line will never improve as our expenses will continue to grow each year. Rising tax rates and rising expenses can only come from one place, mission dollars.
I want to thank all of you that took the time to contact your legislators in regards to how the current tax structure is impacting your organization.
This is not over until it is over. We still have six weeks left to go until the end of session. Keep talking to your legislators and our Governor.