House Bill 412 calls for closing many exemption loopholes to address the budget crisis that our state faces. No doubt, there are many aspects of the Tax Reform Bill that need just that—reform. However, HB 412 also calls for eliminating the sales tax exemption for nonprofits—all nonprofits large, small, 501c3, churches etc., thus subjecting nonprofits to sales and gross receipts tax.
Under HB 412, nonprofits would need to collect and pay GRT on all contracts (local, state, federal), grants from foundations and United Way, fees from programs, classes and services. Most nonprofits are local, community-oriented, and are responding to community needs. Many exist on grants and contacts to provide services that government is not.
This has the potential to be disastrous for nonprofits, and I have a front row seat in that regard, as a volunteer sitting on the board of The Family YMCA. Nonprofit organizations add immeasurably to the quality of life, sense of community, and provide many of the social services and programs needed to help communities thrive as well as relieve the burden on government, often with prevention and intervention strategies that are very cost effective, with dollars raised by the community. I suspect it is not a donor’s intent to help pay government taxes.
The Family YMCA operates a teen center in Espanola. It is free for our more than 600 youth served annually. Tutoring, meals, mentoring, STEM activities—all funded by local contracts, foundations, and United Way. And even at that, we raised another $40,000 to keep our teen center doors open. Paying gross receipts tax on our Espanola Youth Teen Center (EYTC) contacts (which local government cannot fully fund) and grants would be devastating. Our Los Alamos Teen Center also is funded through a contract with our County, and many of our programs are through contracts with the Juvenile Justice Advisory Board (JJAB). We do not have the ability to pay GRT, as our teen programs and services are free (as well they should be).
We gave more than $85,000 in direct aid, so that 90 children could attend after-school care programs and summer camp enabling parents to work or attend school. At a time when youth and adult obesity rates are at an all-time high, and in New Mexico where nearly 30 percent of adults and 14.4 percent of children are obese, we assisted 126 individuals and children with more than $13,000 in financial aid. No one is turned away from the Y due to inability to pay.
Any added tax will only translate into fewer in need being served: fewer children and teens in safe, supervised, skill-building out-of-school-time programs; fewer children or adults in physical activity; fewer seniors trying to stay strong and without injury so they can live independently for as long as possible; fewer people who want to overcome being overweight or obese.
From my vantage point as a volunteer board member, the return on investment is demonstrated on a daily basis and has been throughout the 62-year history of our Y. Removing the tax-exemption for nonprofits such as the Y will impact the communities we all work in service to, and quite honestly, impact those who need us the most.
As a long time donor and a strong advocate for the difference the Y, and so many other nonprofits make in our state and society, why would our state take our taxed dollars that so many give willingly only to see it taxed again? If you understand the term “nonprofit,” then why take from them? Leave the nonprofits alone. The state has already over extended itself, why trust it with nonprofit dollars again.