CCP Policy Update: Bills That Would Have Levied Taxes on Nonprofits with Endowments - May 15, 2019

Tuesday, May 14, 2019

On April 25th, we alerted you to SB 1137, An Act Concerning Deposits In Lieu Of Taxes, that had been filed by the Joint Committee on Finance, Revenue and Bonding, and that would levy new taxes on nonprofits with endowments, pension accounts, or significant savings accounts. CCP submitted testimony on this bill and another, SB 1138An Act Concerning Community Restoration Funds, that would similarly levy new taxes on nonprofits with endowments, pension accounts, or significant savings accounts.

Thanks to the CT Community Nonprofit Alliance, the Universal Health Care Foundation of Connecticut, the Hartford Foundation for Public Giving, and all of the organizations that submitted testimony opposing these bills. You can find all of the submitted testimony here: https://www.cga.ct.gov/asp/menu/CommDocTmy.asp?comm_code=fin&date=04/29/2019. I know that many of you reached out to your legislators. Thank you for taking these actions!

We are following up with an update.

SB 1137 was not passed out of committee. This means that this bill is dead this year.

SB 1138 was passed out of committee with new, substituted language. The section of the bill that initially levied new taxes on nonprofits was rewritten. It now reads that nonprofits, the state, and municipalities that do not pay property taxes may pay into this fund. The bill has been filed with the Legislative Commissioners’ Office. Next, it will go to the Senate. Initially, this particular bill aimed to raise revenue through taxes on marijuana sales and nonprofits that would be committed to community restoration and development issues. Now, the bill will raise revenue through taxes on marijuana sales only.

Analysis: While CCP is pleased that there is no longer language that will levy new taxes on Connecticut’s nonprofits, there are some concerns about this bill. The intent seems admirable, but there remain some concerns about the bill. It is prescriptive; rather than allowing communities to determine their needs, the bill directs all communities to address the same issues. It relies on community development credit unions to do work that it may not be equipped to accomplish. And the accountability measures in this bill are limited. The Hartford Foundation for Public Giving submitted testimony that well articulates these issues: https://www.cga.ct.gov/2019/findata/tmy/2019SB-01138-R000429-Williams,%20Jay-Hartford%20Foundation%20for%20Public%20Giving-TMY.PDF .

Regards,

Karla Fortunato
President
Connecticut Council for Philanthropy

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