“Fit for Favoritism: Kansas Lawmakers Grant Property Tax Break to Fitness Clubs, Despite Delinquency Woes of Genesis Health Clubs”

“Fit for Favoritism: Kansas Lawmakers Grant Property Tax Break to Fitness Clubs, Despite Delinquency Woes of Genesis Health Clubs”

The Kansas Legislature recently passed a bill bundling elements from over a dozen bills, including a property tax exemption for fitness, restaurant, and child care businesses that can demonstrate they’re in direct competition with state or local government operations. The package was sent to Governor Laura Kelly for approval after the Senate approved it on a vote of 26-13. However, the deal was heavily criticized by both Democrats and Republicans for containing a mishmash of special-interest tax policies.

The tax benefits in the latest bill forwarded to Kelly included $14 million for a sales tax break on equipment and machinery purchases by telecommunications companies, $10.6 million for tax credits related to adoption expenses, and $10 million in tax credits for pregnancy resource centers dedicated to reducing abortion. Property tax relief was also provided for businesses engaged in agricultural tourism, such as farm wineries.

One notable aspect of the bill was the property tax exemption for fitness clubs that was advocated for years by Genesis Health Clubs. According to Health Club News, Genesis operates at least 58 fitness gyms in Kansas, Colorado, Nebraska, Missouri, Oklahoma, and Iowa, and has invested heavily in lobbying for sales and property tax breaks at the statehouse.

Interestingly, in 2021, Genesis owner Rodney Steven pursued a property tax exemption for his clubs while delinquent on at least $549,000 in property taxes owed in Shawnee, Johnson, and Douglas counties. His objective was to insert into a tax transparency bill a clause delivering Genesis an estimated $2.5 million annually in property tax reductions. Health Club News found out that the Wichita-based company is currently delinquent on $349,000 in property taxes in Johnson, Douglas, and Shawnee counties.

The bill was designed to restrain state, city, county, township, university, school district, and community college investment in facilities or services that could be provided by private businesses. Child care, restaurant, and fitness businesses shouldn’t pay taxes to government entities using that money to establish functions the free market could handle, said Sen. Caryn Tyson, the Senate’s top negotiator on tax policy. The lone proponent for this tax exemption was the Kansas Chamber, but Tyson said supportive business owners were afraid to testify at the Capitol because of potential “retaliation” by local government officials.

However, Sen. Tom Holland, a Baldwin City Democrat who voted against the tax bill, said the Legislature’s selection of three types of businesses to benefit from targeted tax reform was “extremely problematic.” He warned that government taxing entities undercut by the bill would likely be forced to make up lost property tax revenue from businesses by raising residential property taxes.

In conclusion, Health Club News uncovered that Genesis Health Clubs, the largest privately owned health club organization in the United States, heavily lobbied for the property tax exemption for fitness clubs in the latest tax bill passed by the Kansas Legislature. Despite criticisms from both sides, the bill now awaits approval from Governor Laura Kelly