TOPEKA — Nonprofit organizations warned legislators Monday that services will suffer if groups are forced to start paying Kansas' sales tax to help eliminate a state budget shortfall.
The House Taxation Committee heard fresh testimony from critics of a bill to eliminate exemptions to the 5.3 percent sales tax. Dozens of the exemptions allow specific nonprofit groups to avoid paying the tax on the items they buy.
Estimates for how much the bill would raise have varied, but the latest figure is about $182 million for the fiscal year beginning July 1. A committee vote could come as early as Wednesday.
Kansas is facing a projected budget shortfall of $416 million for the next fiscal year. Democratic Gov. Mark Parkinson wants to avoid deep cuts in education funding and social services, but with the GOP-controlled Legislature's annual session nearly half over, no proposal to raise taxes has emerged from committee in either chamber.
The House committee already has rejected a proposal from Parkinson to raise the sales tax rate from 5.3 percent to 6.3 percent for three years. Some legislators are interested in eliminating sales tax exemptions, particularly for businesses, but nonprofit groups worry that their breaks will be lost, too.
For example, the American Cancer Society expects to pay $87,000 a year in sales taxes if it loses its exemption, said Stephanie Weiter, a regional vice president in Topeka. She said it could be forced to provide less free housing or fewer gasoline cards for cancer patients undergoing treatment.
"Every dollar is critical to our lifesaving work," Weiter told the committee.
Janet Schalansky, chief executive officer of the Kansas Children's Service League, said eliminating its exemption would drive up the cost of food and educational materials for its preschool programs in western Kansas.
But the bulk of the revenues raised by the bill — at least $140 million — would come from applying the state sales tax to residential water, electric and natural gas bills, a proposal even less popular with lawmakers. The committee plans to have a hearing on that idea today.
"There's only so many places to get revenues from," said Rep. Julie Menghini, D-Pittsburg.