The Senate Omnibus Tax bill (SF5) was released today. We are in it for two provisions.
I want to thank the following Senators for standing up for charities and authoring or co-authoring legislation to help us this session. Senators Newton, B. Anderson, Chamberlain, Koran, Ruud, Goggin, Lang, Relph, Draheim, Howe, Senjem, Kiffmeyer, Utke, Tomassoni, Hoffman, Ingebrigtsen, Eichorn, Eken and Nelson deserve our thanks and appreciation. Please thank them, especially if they represent you.
A special thanks to Senate Tax Chair Chamberlain. He deserves our thanks and appreciation.
Provision one would change the combined receipt rates (effective July 1, 2019) to 8/16/24/32% from the current 9/18/27/36%. This would be an 11.2% overall reduction in the rates. It is concrete recognition of the issue we are facing regarding taxation of the funds that we raise for our communities and missions.
Provision two would change the star rating system. As we read it, a five star rating would require a minimum 70% of net receipts go to LPE in a fiscal year. A four star rating would require a minimum of 55% LPE. A three star rating would require a minimum of 40% LPE. In FY2018 42 charities (5% of us) were on probation for not having at least a three star rating. If the proposed provision was applied to our FY2018 numbers an additional 285 charities for a total of 327 charities (28% of us) would have been on probation.
There is a concern at the legislature that tax relief gets to the bottom line for community and mission. I think that we can all agree with that. I think that we would also agree that increasing the number of charities on probation almost eight fold is probably not the best way to go about it. I have spoken with Director Barrett of the GCB and he assures me that the proposal did not come from the GCB. We will work to better understand the thinking behind the provision.
While the tax proposal is very welcomed, I would caution that we have a long way to go before a tax bill that includes us sits on the Governor’s desk for him to sign. Please keep helping your legislators know what tax relief would mean for your organization, your community and your mission.