Wichita fitness club owner bets $45K on healthy tax break

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Posted March 28, 2013 3:49 pm by

Wichita fitness club owner bets $45K on healthy tax break

http://cjonline.com/news/state/2013-03-25/wichita-fitness-club-owner-bets-45k-healthy-tax-break
 

Rodney Steven, a vocal critic of public funding of nonprofit YMCA and YWCA operations, poured money into campaigns of Republicans during the past two years to build support in the Legislature for tax breaks applicable to his Genesis Health Clubs and the owners of approximately 190 similar businesses.

“In nearly all of the cities there are Genesis Health Clubs the largest competition is from tax-exempt facilities,” Steven said in testimony to a Senate committee. “It is time to treat all health clubs the same.”

The GOP-led Senate voted 25-14 to approve Senate Bill 72, which would provide a property tax exemption for facilities that provide “cardio, weight training or strength and conditioning equipment for physical fitness.” Twenty of the senators who received contributions from Steven voted to send the bill to the House, while four members of the Senate accepting his donations voted against it.

“This is a special-interest carve out. Senate Bill 72 is the best bill money can buy,” said Senate Minority Leader Anthony Hensley, D-Topeka and among Senate tax panel members who didn’t receive money from Steven.

The state would surrender several hundred thousands of dollars in property tax revenue annually under the bill, but local units of government could lose millions of dollars through shrinkage of the property tax base. It is unclear how much Steven would personally benefit from the bill.

Melissa Wangemann, general counsel for the Kansas Association of Counties, said the association was concerned about manipulation of the tax base. She said tax exemptions to benevolent organizations providing services to communities make sense, but adding private health club businesses to the list would be perplexing.

“We understand that the proponent of the bill has expressed concern about a ‘level playing field’ for his health club facility with the YMCA,” Wangemann said. “The YMCA has long had a tax exemption based on its charitable purpose.”

Steven or his company, Genesis, donated in the just-completed election cycle to 24 of the Senate’s 40 current members. A majority of the Senate Assessment and Taxation Committee — six of 11 members — pocketed checks from Steven or Genesis prior to winning Senate elections in November.

Sen. Michael O’Donnell, a first-term Republican from Wichita, was the top recipient with $4,000. Senate Majority Leader Terry Bruce, a Hutchinson Republican, took in $3,250. Senate President Susan Wagle, R-Wichita, received $2,000.

Overall, Steven signed checks totaling $2,000 for nine GOP candidates for Senate in 2012. Sixteen Republican Senate candidates took in $1,000 each.

Bruce, O’Donnell, Sen. Garrett Love, R-Montezuma, and Sen. Jeff Melcher, R-Overland Park, spoke Monday during Senate floor debate in favor of the special tax break or against amendments modifying the bill and voted Tuesday for the bill. Melcher and Love were among candidates accepting $1,000.

“This bill just represents a matter of fairness,” said Melcher, who suggested the property tax state benefits for YWCA and YMCA organizations ought to be revoked. “If we had the fortitude to do the right thing, we’d remove that exemption.”

Love described the tax legislation as a rescue line thrown to private health clubs on the verge of being run out of business in Kansas by government-backed recreation programs. Lack of private-sector health facilities in western Kansas should be recognized as a rural health issue, he said.

However, Sen. David Haley, D-Kansas City, said some senators expressing admiration for the bill couldn’t claim, with a straight face, their perspective was unconnected to flow of campaign contributions.

“Why are we here saying health clubs and gyms should be given this kind of a deal?” Haley said. “Why would my senator vote to give a carve-out in an unprecedented fashion to health clubs?”

Sen. Tom Holland, D-Baldwin City, offered an amendment that would allow for-profit fitness business owners to petition county commissions for the property tax exemption. It was overwhelmingly defeated.

The bill provides incentive for private golf clubs, child-care centers or waste collection companies to seek similar tax treatment from the Legislature in the future because each provides services available from tax-exempt organizations or municipal governments, said Sen. Laura Kelly, a Topeka Democrat.

“This will just open the doors for any private entity that competes with municipal services,” she said. “This will have a devastating impact on the local tax base.”

Sen. Vicki Schmidt, R-Topeka, received $500 from Steven, which was the least given to any Senate recipients of campaign cash from Stevens. On final action Friday, Schmidt voted against the bill along with Hensley, Haley, Holland and Kelly.

Originally, Senate Bill 72 also extended to for-profit fitness facilities a sales tax exemption on membership fees. Steven supported that tax benefit, but it was removed from the bill by the Senate tax committee.

 

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