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YMCA says bill would probably force it to cut programs

Updated: 2014-02-12T13:43:43Z

By Bryan Lowry

Eagle Topeka bureau

Kansas lawmakers are considering a bill that would result in YMCAs paying sales and property taxes.

The Greater Wichita YMCA estimates the bill would cost it up to $6 million a year.

House Bill 2498 would redefine “humanitarian services” so that organizations that make more than 40 percent from the sale of memberships or services would no longer qualify for sales and property tax exemptions.

“Pardon me being paranoid, but this bill seems to target YMCAs,” said Bob Fry, a volunteer with the Olathe YMCA.

The Office of Revisor of Statues could name no organizations other than the YMCA that would be affected by the legislation.

The bill is separate from legislation that passed the Senate last year and would grant private health clubs property tax exemptions. Both bills are being considered by the House Taxation Committee and are meant to address a perceived inequity between the YMCA and private health clubs.

Dennis Schoenebeck, president of the Greater Wichita YMCA, said his organization serves a different mission than private health clubs. “They’re catering to just the upper income. We’re catering to everyone,” he said.

At a committee hearing Tuesday, Schoenebeck outlined services the YMCA provides in Sedgwick County, ranging from after-school programs to youth sports leagues. He said private health clubs do not offer these community programs and government would have to fill the void if the YMCA could no longer perform that role.

Jim Korroch, a volunteer with Greater Wichita YMCA, said there’s no comparison between the YMCA and private health clubs. He said gym memberships for adults were the only area of crossover, and the Y has a wide variety of other programs.

Contacted after the hearing, Rodney Steven, president of Wichita-based Genesis Health Clubs, said the YMCA directly competes with private businesses.

“YMCA makes a lot of money … and the biggest portion of their income is from selling adult fitness memberships and they’re doing it without tax,” he said in a phone call Tuesday evening.

Fry contended during the hearing that the YMCA predates private business competition.

“When they (private health clubs) did their market research, were they not aware of the existence of the YMCAs?” he asked. “I’m puzzled why now it’s the YMCA’s job to subsidize the for-profit organizations. … What percentage of their profit is used to help low-income people?”

No proponents for HB 2498 appeared at the hearing. Legislators from both parties said it has no direct connection to the Senate bill, which has received vocal backing from Steven.

Steven said he opposes the House bill because it does not include local government-run recreation centers, which he said also compete with private health clubs free of taxes.

The author of the House bill is unclear. Rep. Richard Carlson, R-St. Marys, the committee’s chair, said it is a committee bill with no single author.

Rep. Tom Sawyer, D-Wichita, said the bill was the result of a discussion about the YMCA’s tax exemptions started by Carlson.

One legislator from the other chamber, Sen. Michael O’Donnell, R-Wichita, who serves as a board member of the YMCA’s South Wichita branch, came to address the committee.

“In Sedgwick County the YMCA is one of the most monumental figures and they would be devastated by this,” O’Donnell said. He encouraged lawmakers to consider the Senate bill instead.

O’Donnell noted that about 200,000 people used the YMCA in Sedgwick County last year.

Schoenebeck said that if the bill passes, the Greater Wichita YMCA probably would have to cut programs.

“There’s no question that a lot of these kids and families that we help, we just wouldn’t have the capability of doing it,” he said.

Rep. Scott Schwab, R-Olathe, suggested that the YMCA could make up revenue by increasing membership fees.

Carlson questioned why the YMCA should benefit from sales and property tax exemptions that some other nonprofits do not receive.

Several Sedgwick County legislators, while praising the work of the YMCA, are weighing the bill seriously.

Sawyer was skeptical that the loss of the tax exemptions would devastate the YMCA. He noted that the Greater Wichita YMCA’s 990 tax form showed an ending balance of more than $16 million in 2011.

Rep. Mario Goico, R-Wichita, said the issue is fairness.

“Basically, the issue on this bill … is how do you treat everybody fairly, and I don’t know the answer to that,” he said. “We’re looking at property taxes and sales taxes, because we have a lot of organizations that are treated differently and they’re doing the same thing for the community.”

After the hearing, Schoenebeck said the discussion focused on dollars and cents and ignored the social role the YMCA plays as a community center.

Reach Bryan Lowry at 785-296-3006 or blowry@wichitaeagle.com. Follow him on Twitter: @BryanLowry3.

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