The Neighborhood

Entrance to The Neighborhood agencies. KEVIN GOLDY | THE DAILY INDEPENDENT

ASHLAND The fundraising plans for Kentucky nonprofits have just changed.

Starting July 1, each organization will have to begin collecting a 6 percent sales tax on admission to events under the state’s sales tax expansion, which is part of the state’s tax reform bill that was passed by the 2018 Kentucky General Assembly in April. The bill taxes services that have not been taxed prior including fitness centers, golf courses and country clubs, dry cleaning and pet grooming and boarding.

Safe Harbor of Northeast Kentucky Executive Director Ann Perkins said the organization will now have to tax its Lobster Fest proceeds, a fundraiser that is set for August. She estimated it would cost $7,500 in taxes.

Perkins said the funds from the event are used to help the organization operate, complete renovations and run programs. Safe Harbor is an emergency shelter and advocacy center that offers free, confidential support services to all domestic violence and sexual assault victims in Boyd, Greenup, Carter, Lawrence and Elliott counties, serving about 150 people a day.

“(We) operate mostly on grant money, competitive grant money, and this is the little bit of community money I get and I’m going to get taxed on it? ... The legislators can do better than that to ask us to balance Kentucky’s budget,” she said.

Perkins said she feels the state’s decision to tax the services is ridiculous, explaining the state is not taxing everybody equitably.

“You’re going to let for-profit corporations not pay sales tax? No. If you’re going to do it, do it across the board. I don’t (mind) paying my fair share of taxes,” she said, noting a penny sales tax across the board could be sufficed to balance the state’s budget.

Todd Young, director of The Neighborhood, said it is also his understanding that the organization will be taxed on areas like silent auction items as well. He said he is unsure how the tax expansion will impact letter writing campaigns.

The Neighborhood houses five nonprofit agencies with a purpose of assisting needy community members including CAReS (Community Assistance & Referral Service), River City Harvest, the Ashland Community Kitchen, The Dressing Room, Pathways and Clean Start. Young said fundraisers allow the organization to bring in money to operate the building.

“We’ll I guess we’ll figure it out as we go but we definitely realize that we’re probably going to change ticket prices just to stay where we’re at,” he said, pointing out he didn’t have an opinion whether the tax was right or wrong.

YMCA Executive Director Bob Green recently told The Daily Independent that he feels the sales tax is a bad idea. He said all YMCA services, including membership fees, would now be taxed.

“We do a lot of good for the community here that we have to put a sales tax on now; for swim lessons, things like that, things that we’re doing to help the community,” he said. “We don’t make a lot of money on it but it does help. It does further the fitness, the exercise, the welfare of the community and right now the way it stands we have to put a sales tax on there and that just hurts everybody.”

The tax reform bill was passed by the Republican-controlled legislature with zero Democrats in the House and Senate voting yes on it. House Democratic Majority Leader Rocky Adkins and Sen. Robin Webb, D-Grayson, both expressed their frustration with how quickly the bill passed, giving them little time to read over it and allow the public to voice their opinions.

“We didn’t have the opportunity to vet the bill, to look at the numbers, to have any data or conversation behind the policy of it,” said Webb.

Adkins said he the bill has the potential to have a negative impact on nonprofits across the state.

“It basically raises taxes on 95 percent of Kentuckians while giving tax breaks to the top five percent of the most wealthy in Kentucky,” said Adkins. “I think it’s a very unfair tax package and I think it’s one that basically will not be good for the economy in Kentucky as we move into the weeks and months ahead.”

Rep. Dan Bentley, R-Russell, voted yes, saying one reason behind his decision is the bill’s implementation of reducing the state income tax rate from 6 percent to 5 percent.

“If you’re in that middle class of Kentuckians really you pay taxes there on the 5 percent so it really gives more money back to them,” he said, noting that Kentucky’s income tax is now the 10th lowest in the country.

He touched on how the bill impacts nonprofits saying it does not infringe on their tax-exempt status and that contributions made to the nonprofit are not taxable. The only areas that are charged are those that involve a taxable product or service, he said.

“The buyer is taxed, not the nonprofit,” said Bentley.

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