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Eagle editorial: Tax perk undeserved

  • Published Wednesday, March 27, 2013, at 12 a.m.

It’s hard to believe 25 state senators could think a property-tax exemption for Kansas’ for-profit health clubs would be a wise idea, given how much benefit many such businesses already received from last year’s income-tax elimination and how the budgets of local governments and school districts will be hurt.

Then there is how it looks to bestow such a special tax break on a business owner, Rodney Steven of Wichita’s Genesis Health Clubs, who was behind a total $45,000 in campaign donations to 24 senators’ campaigns (including four who voted “no” Tuesday).

Senators may be shocked – shocked! – that anyone would dare connect the dots from the contributions to the bill’s passage. “I really don’t like those kinds of aspersions,” Senate Tax Committee Chairman Les Donovan, R-Wichita, said on the floor Monday, noting he received none of the donations in question.

But Kansans aren’t naive about how things work in Topeka. Indeed, the whole legislative session has been one big return on the investment of campaign donations last year, especially in the conservative GOP takeover of the Senate that occurred in last August’s primaries.

Steven argues that the property-tax relief for private health clubs is only fair because they are in competition with YMCAs, which are tax-exempt nonprofit organizations. “It is time to treat all health clubs the same,” Steven said in testimony to a Senate committee.

But they are not all the same. The Greater Wichita YMCA, for example, provided a record $10.2 million in free, discounted or subsidized services last year for 70,000 children and adults, including for a summer camp and child care program for 2,500 children and swimming lessons for 1,900 low-income second-graders. That $10.2 million represented a quarter of the agency’s funding, and was $400,000 more than the year before.

Genesis is a great local business playing an important role in south-central Kansans’ health and wellness, but it and the 190 similar health clubs statewide do not deserve a special property-tax break. Plus, such tax goodies, once passed into law, tend to be impossible to roll back.

It’s telling that the Senate Tax Committee decided against similarly exempting for-profit health clubs from collecting sales taxes on membership fees, which Steven also wanted. That exemption would have cut $3.4 million in state revenue at a time when the state needs every dime to offset income-tax cuts. Yet senators had no problem with the property-tax exemption, which could mean millions of dollars in lost revenue for local governments and school districts.

It’s now up to the House to think better of Senate Bill 72, which is an undeserved perk for health clubs that will only inspire other businesses to go to Topeka with their checkbooks open and their hands out.

For the editorial board, Rhonda Holman

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