Rodney Steven II, owner of Genesis Health Clubs, Wichita, KS, is optimistic after a bill passed in the Kansas Senate that would exempt for-profit health clubs from paying property taxes.
Senate Bill 72 was passed last month by a 25-14 vote and is now in a House-Senate conference committee. Both the House of Representatives and the Senate in the Kansas Legislature are on break and will resume the 2013-2014 legislative session on May 8.
"We still have hopes that it can make it through this year through conference committee for the House side," Steven said in an email to Club Industry. "If not, we have next year to get it through the House as it is a passed bill on the Senate side."
For several years, Steven, who testified for Senate Bill 72, has been fighting local YMCAs in Wichita and the state of Kansas that receive tax-exempt status, citing the Ys have an unfair advantage over for-profit health clubs such as Genesis Health Clubs that pay property taxes.
The bill has ignited a debate on multiple levels. Steven, according to multiple media reports in Kansas, and his company has donated at least $45,000 to Kansas Senate Republicans during their campaigns over the past two years. Of the 24 senators who received contributions from Steven, 20 voted for Senate Bill 72 while four voted against it, according to reports.
"This is a special-interest carve out. Senate Bill 72 is the best bill money can buy," Senate Minority Leader Anthony Hensley, a Democrat, said in The Topeka Capital-Journal.
Hensley, who did not receive a contribution from Steven, went on to say in a prepared statement that Republican Sen. Michael O'Donnell, who received $4,000 from Steven and his company, "has been bought and paid for."
Steven Defends Contributions
While neither confirming nor denying the amount of contributions reported, Steven says he has been politically active for years.
"Last year, I contributed to several Kansas senators and representatives who support lower taxes for individuals and businesses, who support reduced government spending and who have a reputation for less regulations on businesses," Steven says. "Some voting for the bill did not receive any contributions. When the donations were made, there was no bill written, and no one was expected to vote one way or another based on donations. I have in the past and will continue in the future to support candidates who share some of my philosophies."
Some say Senate Bill 72 would have an impact on local school and municipal budgets that collect property tax money. The exemption, according to reports, applies to health clubs that focus on cardio and strength equipment but not specialty clubs such as golf courses, spas and tennis facilities. Private golf clubs, and also child-care centers and waste collection companies, may seek similar tax exemptions, according to Sen. Laura Kelly, a Democrat.
"This will just open the doors for any private entity that competes with municipal services," Kelly told The Capital-Journal. "This will have a devastating impact on the local tax base."
Steven says that argument does not have merit.
"No other group of business competes directly against competitors that do not pay any taxes," Steven tells Club Industry. "Even municipal golf courses in Kansas are required to collect and pay some taxes. Not every non-profit in Kansas is tax-exempt. Only non-profit and municipal health clubs are 100 percent exempt from collecting and/or paying any taxes. This unique exemption was granted to non-profit health clubs in 1998 by the Kansas Legislature. The Legislature needs to fix their creation of this inequity."
Rep. Richard Carlson, a Republican, told The Capital-Journal that he has received several hundred emails on the bill, both for and against it, and prefers to leave the bill alone because tax negotiations have yet to be completed this session. Carlson also said he would rather add a sales tax to YMCAs rather than provide a tax break to for-profit health clubs. The House-Senate conference committee could refuse to take the bill to the House floor.
"I'd say that could put a big roadblock in its way," Carlson told the newspaper. "But as we all know, in the Legislature, nothing ever really dies."
Steven acknowledges the criticism he has faced in recent weeks but is undeterred in his mission.
"Obviously, no business wants criticism," Steven says. "However, when there is an extreme injustice created by the state in its treatment of similar businesses, I must work to correct this injustice. I will continue to try to educate the public, the media, and lawmakers on the impact this unequal treatment is affecting the health club industry in Kansas."