The Minnesota Council of Nonprofits has joined the groups lining up to oppose some of Gov. Mark Dayton's proposed budget.
The Council says it supports much of the plan — such as the parts about raising revenue and reducing regressivity — but doesn't want to see many nonprofits included in the proposal to extend the sales tax to include services.
Business associations and groups also have railed against the plan to tax services such as accounting, advertising, legal and consulting services. (While adding services to the tax, the governor's plan called for cutting the existing 6.875 percent sales tax to 5.5 percent.)
Many services provided by nonprofits would remain untaxed under the governor's proposal, including those involving human services and health, said Susie Brown, the Council's policy director.
And some nonprofits — those that operate "exclusively for charitable purposes," according to the law — already are exempt from the current sales tax and would continue to be exempt from the proposed tax on services.
But other services provided by nonprofits, including music lessons, swimming lessons, legal services and financial counseling, would be subject to the expanded services tax.
So, too, would the accounting and legal services that nonprofits use.
"We don't think this makes sense," Brown said. "Resources that come from the community or the government to help people would then be diverted back to the state."
Asked if it seems like the group likes tax changes, except when it affects them, Brown said that's not the case here.
"Reducing nonproits' ability to provide core services, or reduce citizens' ability to have access to services isn't good policy. It doesn't make sense," she said.
The Council of Nonprofits informed its members of a House Tax Committee hearing at 7 p.m. Wednesday on the matter; Brown will testify about the impact on nonprofits, and the group gave the committee administrator's phone number, in case other nonprofit leaders would also like to testify.
"We're not recruiting testimony but offering the opportunity," Brown said.
I asked Brown if the same kinds of discussions about exemptions for nonprofits came up in the 1960s, when Minnesota first instituted the sales tax. It was 3 percent then.
She said they haven't yet researched that history.
The governor's staff says these nonprofit-provided services would be exempt:
- Crisis intervention services
- Drug prevention services
- Day care
- Nursing homes
- Residential care facilities for people with intellectual and developmental disabilities,mental illness or substance abuse problems
- Foster care
- Life skills training
- Emergency and relief services
- Rehabilitation counseling services
- Fees for camps.