Goodwill Industries leader warns about tax exemption changes

The head of Goodwill Industries of Kansas brought the state’s tax problems into sharp focus on Thursday.

Because of a historic drop in tax collections, the state has cut Medicaid and increased unemployment insurance. These actions have significantly increased expenses for Goodwill, according to Emily Compton, the organization’s president and chief executive officer.

But a bill designed to increase revenue to state coffers by eliminating numerous sales tax exemptions would further hurt Goodwill, Compton said.

“Please do not cut our sales tax exemption. It is very valuable to us,” Compton said. Items purchased by Goodwill are exempt from the state sales tax.

Tax Committee members said they are caught between a rock and a hard place. State officials have already cut $1 billion from a $6.4 billion budget, and still face another $400 million deficit. There are 5,800 Kansans with disabilities on a waiting list for services; 58 have died while waiting; and record cuts have been made to prisons, schools and higher education.

House Bill 2549 would eliminate sales tax exemptions primarily dealing with nonprofits, charities and religious organizations.

Between 1985 and last year, the number of sales tax exemptions handed out by the Legislature has increased from 30 to 96, removing $4.2 billion last year in forgone taxes, according to the Kansas Department of Revenue.

Even with the current budget crisis, there are bills before the Legislature to allow more tax exemptions.

Advocates for social services and education urged passage of the bill, saying that while many of the exemptions are given to organizations performing exemplary work, the exemptions are increasing the tax burden on everyone else, and decreasing the amount of state money it needs to provide basic services.

The hearing on the bill will continue today.