Kansas Threat to Nonprofit Advocacy Rights
The Kansas Department of Social and Rehabilitation Services (SRS) reportedly has started inserting language in its contracts with service providers that significantly curtails the constitutionally-protected advocacy rights of nonprofit and other organizations. The new language states: “No funds allowed under this agreement may be expended by the recipient of the grant to pay, directly or indirectly, any person for influencing or attempting to influence an officer or employee of any agency, a member, or employee of a member of the United States Congress or the Kansas Legislature.” An SRS official tried to justify the new policy on the grounds that “It is just good public policy to prohibit the use of taxpayer dollars to lobby the Legislature to spend even more taxpayer dollars.” The new contract language, however, goes far beyond lobbying activities to include virtually all communications with local, state, and federal employees, even responding innocently to their requests to help constituents. Within the year, all Kansas agencies are expected to impose the new language that was crafted by administration officials without public input.
The National Council of Nonprofits has analyzed the new language in Kansas contracts and believes it to be unnecessary, unconstitutional, and un-American. According to the analysis published today, “The language is an unsupportable abridgement of the fundamental advocacy and speech rights of nonprofit organizations in Kansas and should be stricken from existing contracts and withheld from all future negotiations.” The National Council’s President and CEO Tim Delaney has written to the leaders of two news associations in Kansas highlighting how the new contract language is an infringement on the shared mission of nonprofit and news organizations to identify the impact of governmental policies on the public.
Reassessing the End-of-Year Fiscal Cliff
An explosive report by the Congressional Budget Office (CBO) is causing House leaders to rethink their positions on how to deal with the spending cuts and tax hikes that are scheduled to take effect at the beginning of 2013. If no action is taken by Congress, nearly $100 billion in spending cuts will occur as a result of the budget deal struck last August to raise the federal borrowing limit. Plus, several tax provisions expire on December 31, 2012, including the Bush-era income tax cuts, estate tax rates, a fix to the Alternative Minimum Tax, and a two-percent payroll tax cut – all of which combine to raise taxes by about $400 billion on January 1. CBO estimates that if Congress fails to act the U.S. economy will drop into a recession, and that if Congress simply cancels the automatic spending and tax changes a future economic slowdown is guaranteed because the expanding federal deficit will consume capital needed for growth.
In response to the CBO report, House Budget Committee Chairman Paul Ryan (R-WI) and Ways and Means Committee Chairman Dave Camp (R-MI) are calling for a delay of most of the so-called “fiscal cliff” spending and tax issues until the end of 2013 and the establishment of a fast-track review process that will require Congress to act, rather than allow further delays. House Speaker John Boehner (R-OH) announced that the House will vote on a measure extending all 2001 and 2003 tax cuts for one year prior to adjourning for August recess, thus delaying the impact of the largest item on the “fiscal cliff.” The White House reiterated that President Obama supports only the extension of tax cuts for taxpayers below $250,000 in income, although some Democrats are proposing drawing the line at incomes over $1 million.
States Ask U.S. Supreme Court to Revisit Citizens United
Attempting to keep undue influence out of their election processes, 22 states and the District of Columbia have urged the U.S. Supreme Court to prevent the 2010 Citizens United decision from being used to strike down state laws that limit corporate spending to influence elections. The Montana Supreme Court recently upheld the state’s Corrupt Practices Act, enacted directly by Montana voters who saw the need to ban corporation contributions. The U.S. Supreme Court has temporarily blocked that decision until the matter is briefed for further consideration. The states initially urge the Court to let the states regulate their own elections to prevent corruptive influences, and then to revisit the entire decision in Citizens United – something two Justices invited in February when the Court first issued its order staying the Montana Supreme Court’s decision.
New Criteria for Tax Exemptions of Illinois’ Nonprofit Hospitals
The Illinois Legislature has approved a bill that the state’s hospitals say will set clearer tax-exemption guidelines and better define charitable care for the state’s nonprofit hospitals. To meet the new requirements, the charitable activities of a nonprofit hospital must equal or exceed the value of the hospital's property-tax exemption. The bill defines charity care as those activities that 1) benefit low-income individuals’ health and 2) lower burdens on government by providing care to low-income individuals. The state’s Department of Revenue revoked the tax-exempt status of three Illinois hospitals last year before the Governor placed a moratorium on additional revocations. The legislation is expected to be signed into law by the Governor.
Taxes, Fees, and PILOTs
- PILOTs: On May 21, the Urban Institute held a day-long session on the issue of payments in lieu of taxes titled, “State and Local Budget Pressures: The Charitable Property-Tax Exemption and PILOTs.” Three panels examined the feasibility of PILOTs in the current economic environment, looking into the issues leading local governments to take an interest in PILOTs, the instances in which PILOTs are occurring and why, and what pitfalls and problems exist for nonprofits and local governments alike through their use. Represented among the panelists, the National Council voiced opposition to PILOTs and other similar taxes and fees on nonprofits as a source of revenue for local governments.
- PILOTs: Pittsburgh, Pennsylvania, is working with a group of 41 different nonprofits known as the Pittsburgh Public Service Fund (PPSF) to reach an agreement on how much these nonprofits will contribute to the city this year. The city has budgeted for at least $3.17 million from the group, and PPSF is proposing a new two-year agreement in which they would pay about $3 million. The 41 members of PPSF include the University of Pittsburgh, Carnegie Mellon University, Highmark, the Jewish Healthcare Foundation, and Trinity Episcopal Cathedral.
- Property Taxes: North Dakota voters decide June 12 on a constitutional amendment to repeal the state’s property tax.
- Tax Exemptions: Pennsylvania Senate leaders have introduced a constitutional amendment that gives the Legislature say over which organizations qualify as tax exempt. The proposal is intended to override a recent Pennsylvania Supreme Court decision denying the property-tax exemption of a religious camp on the grounds that it did not relieve a burden of government, a requirement under the Commonwealth Constitution.
Government-Nonprofit Contracting Update
- Donors Forum and others from Illinois’ nonprofit community have successfully advocated against an amendment to the state Freedom of Information Act (FOIA) that threatened to subject nonprofits contracting with the state to redundant and extensive reporting requirements on a new, online Illinois Transparency and Accountability Portal. Donors Forum, the State Association of nonprofits in Illinois, opposed the additional reporting burdens the bill would have imposed on already capacity-stretched nonprofits and expressed concern that it conflicts with other contracting streamlining efforts underway in the state.
- The Massachusetts Senate unanimously approved an amendment to its budget for the year beginning July 1 that would provide a $20 million Salary Reserve for Massachusetts’ human service workers. The amendment would benefit 31,000 human service workers by as much as a $12 to $15 increase in weekly earnings. Providers’ Council President Michael Weekes says many human service workers’ low wages could push them into needing the very services they work to provide. Passage of the amendment is “really good news for people who work really hard” caring for others, adds Weekes.
Nonprofits Challenge Voter Suppression Efforts
In Florida and Michigan, policymakers are taking steps to limit voter registration efforts, and nonprofits are stepping up to defend democracy. Last week, a federal judge struck down new Florida policies that would limit voter registration efforts and shorten the period for early voting. Nonprofits such as the League of Women Voters and Boy Scouts of America reportedly had said that the new restrictions would have caused them to give up registering voters. In Michigan, a coalition of nonprofit groups, including the Michigan Nonprofit Association, is working to fight off several voter suppression bills before the Michigan Legislature that would create new burdens on voters and organizations trying to help them. One bill would require organizations working with two or more voters to register with the state, receive advance trainings, and maintain signed statements from each volunteer and employee in order to be able to provide voter registration or election-related activities. Michigan legislators are also considering legislation to require verification of citizenship and photo IDs at polling sites. “Burdensome regulations that do not clearly improve the integrity of the ballot do little to help community-based nonprofits promote civic engagement. Putting barriers to getting voters to the polls could have a chilling effect on their important efforts to engage citizens. We do not want to be in a place where nonprofits give up promoting their missions and educating and bringing eligible voters into our democratic process,” says Kyle Caldwell, the President and CEO of the Michigan Nonprofit Association.