House Budget Would Cut Spending, Reform Taxes
The House Budget Committee approved a budget that would cut spending more than previously agreed by Congress and protect defense from scheduled cuts – actions that could shift burdens onto nonprofits. Viewed largely as an election-year political statement by the Republican majority, the House FY 2013 budget resolution is not expected to be approved by the full Congress due to strong opposition from the Democratically-controlled Senate, which is expected to insist on spending caps established in the Budget Control Act enacted last August. The House budget would reduce spending by $5 trillion over ten years through spending cuts and entitlement reforms, including a modified voluntary voucher program for Medicare-eligible seniors. The House measure also calls for simplifying the tax code by decreasing the number of tax brackets to two, a 15 percent rate and 25 percent rate, and repealing the adjusted minimum tax (AMT). The budget proposes spending more on defense than sought by President Obama, and it ignores the $55 billion in automatic defense cuts required to occur in January 2013 as part of the Budget Control Act.
OMB Hears Nonprofit Concerns on Federal Grantmaking Rules
The White House Office of Management and Budget is seeking feedback from nonprofits on its Advance Notice of Proposed Guidance that explores ways to reduce burdens on grant recipients and government agencies and better coordinate and streamline reporting requirements. On a call for nonprofit organizations conducted March 16, the Office of Management and Budget explained its proposals for reducing audit burdens, modifying cost-reimbursement rules (including consideration of a flat rate for indirect costs), and reforming administrative requirements for federal grants. Concerns were raised during the call about lack of corrective action in response to a 2010 Government Accountability Office report that highlighted the confusion surrounding indirect cost recovery and the practice by the states of keeping for themselves some of the federal funds allocated for indirect costs. The National Council of Nonprofits seeks input from nonprofit organizations about their experiences in negotiating indirect cost rates and their indirect cost recovery from governments at all levels. The deadline for filing comments on the OMB recommendations has been extended to April 30.
Senate to Consider Postal Reform The Senate is scheduled to take up postal reform legislation that would close an $11 billion budget deficit of the Postal Service, but would not alter nonprofit postal bulk rates as proposed in a House bill. Sen. Barbara Mikulski (D-MD) and other Senators are expected to try to delay consideration of the bill out of concerns over post office closures and other potential changes. Congress is under pressure to pass an overhaul bill before a moratorium on closing postal facilities expires on May 15.
Supreme Court Considers Health Care Reform Law
For the first time since 1966 in Miranda v. Arizona, the U.S. Supreme Court will hear oral argument over three days this week when it considers the constitutionality of the individual mandate among other issues in the Patient Protection and Affordable Care Act. Published reports indicate that nonprofits (especially 501(c)(4)s and (c)(6)s), as well as businesses, the states, and political parties, will be lining up on both sides of this politically-charged issue before the Court rules this summer to ensure that it is at the center of the presidential and congressional elections in November.
Massachusetts Nonprofit Employees Eligible for State Retirement Plan
Taxes, Fees, PILOTs Update
- Rhode Island Nonprofit Property Tax: The Senate Majority Leader in Rhode Island has announced that he is introducing a bill to allow municipalities to tax educational institutions and hospitals 25 percent of what they would pay in property taxes if they were not tax exempt. The proposal would also completely remove tax exemptions on properties those nonprofits use to produce income by means other than providing educational and healthcare services.
- City Council Votes Down Nonprofit Ticket Tax: The City Council of Tacoma rejected a proposal to place a five percent ticket tax on nonprofit museums, theaters, and performing arts groups, citing concerns that the proposal unfairly targeted a few nonprofits.
- Oregon City Nonprofit Water Fee Challenged: A nonprofit school in Canyonville, Oregon is challenging in court a city ordinance that provides, “churches, schools, and non-profits like our local YMCA and a non-profit senior residence will be charged double the normal water rates and substantially elevated sewage fees.” The city says the fee in lieu of taxes is necessary to cover the costs of police and fire protection.
- Lowell Massachusetts Seeks to Mandate PILOTs: The Lowell City Council voted 7-0 to seek home-rule power from the Massachusetts Legislature enabling it to charge some tax-exempt property owners 25 percent of the equivalent residential property tax bill. Churches and governmental entities would be exempt. The measure is being pushed by the Lowell City Manager, who is also chair of the Massachusetts Municipal Association’s fiscal policy committee. In Massachusetts, as in all states, charitable nonprofits are exempt from property taxes and municipalities are not authorized to tax the property of nonprofits or charge taxes that are disguised as fees.
Nebraska Nonprofits Push to be Included in Job Trainings
Nebraska is one of the few states that anticipates a surplus in its unemployment trust fund, and pending legislation would ensure that nonprofit employees receive the same professional development benefits as their counterparts at for-profit enterprises. Nonprofit Association of the Midlands testified and successfully lobbied for the bill to expand eligibility for training funding from the Nebraska Training and Support Trust Fund. The measure is awaiting the signature of Governor Dave Heineman.
Government Contracting Update
Ordinance Would Favor Contracting with Benefit Corporations, Not Nonprofits
The San Francisco Board of Supervisors is considering a proposed ordinance that would create a city contracting preference ahead of nonprofits and businesses for a new corporate form known as a California Benefit Corporation in an effort to promote the new form of “social enterprise” approved by the California Legislature last year. At a recent hearing, Jan Masaoka, the CEO of the California Association of Nonprofits, stressed the need for public oversight and offered to assist nonprofits and for-profit businesses that are considering these new corporate forms to make informed choices among the variety of corporate structures and frameworks for blending public and private purposes. For more, see this article.
Arizona Easing Nonprofit Regulatory Burdens
The advocacy efforts of the Alliance of Arizona Nonprofits paid off last week when Governor Jan Brewer signed legislation to raise the threshold from $25,000 to $50,000 for filing annual financial reporting requirements by nonprofit organizations. The change puts Arizona filing levels in line with new federal requirements and prevents overburdening smaller nonprofits with a more cumbersome filing process than required by the IRS. The legislative victory is a key component of the Alliance’s 2012 Policy Agenda.