Health clubs seek tax exemption in Kansas House

By Hannah Swank
KU Statehouse Wire Service

Lexena Mayor Mike Boehm says state government is overreaching on Senate Bill 72. That’s just one issue he has with the bill that will exempt Kansas health clubs from property and sales taxes.

“The exemption of these specified businesses will certainly reduce city revenue and compel us to force other taxpayers to take up this additional tax burden,” Boehm said in written testimony Monday.

SB 72 passed in the Senate last year and was introduced in the House Taxation Committee on Monday. In the Fiscal Note for SB 72, the Department of Revenue estimated the proposed bill would reduce state revenues by more than $3.9 million for fiscal year 2014.

Boehm wrote that there are more than a dozen health clubs in Lenexa that currently pay property taxes, including one that pays more than $400,000 per year.

Larry R. Baer represented the League of Kansas Municipalities to oppose SB 72. In written testimony, Baer said key concerns of the bill are loss of property tax base, shift of taxes to other taxpayers, loss of state revenues and impact on a city’s ability to fund operations.

Supporters of the bill said it would eliminate an unfair advantage for health facilities that are already tax exempt.

Rodney Steven II, President of Genesis Health Clubs in Wichita, said his direct competition is from tax-exempt facilities, such as the YMCA, which has seven facilities in Wichita. Steven said more than 80 percent of YMCA profits come from adult fitness memberships.

“These are buildings that are twice our size and they are able to charge half our price because they do not pay or charge any sales tax, any property tax and of course income tax,” Steven said. “They provide nearly the same services, collect membership dues and they are, for all intents and purposes, in the health club business.”

Committee Chair Richard Carlson (R-St. Marys) said the hearing on SB 72 would likely continue next week.

Published by:
The Garden City Telegram

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