Bills may jeopardize sales tax exemptions for churches, Bibles

TALLAHASSEE (FBW) – Sweeping legislation possibly jeopardizing sales tax exemptions enjoyed by churches, religious organizations, religious schools, parochial schools and other charities has been introduced in both houses of the Florida Legislature, which began its 60-day legislative session March 3.

Legislation to repeal sale tax exemptions on religious items, including Bibles, is also under consideration in Tallahassee.

Meanwhile, Gov. Charlie Crist continued his push for legislative approval of his gambling compact with the Seminole Indian Tribe, which the Florida Supreme Court invalidated last year.

As legislators grapple with an expected $5-6 billion state budget deficit for the 2009-2010 budget year – and a likely continuing deficit for the current budget year in spite of a special legislative session in January, some members of the Legislature are calling for reform of Florida’s sale tax exemptions in order to address inequities in the system and to help balance the budget.

Rep. Dorothy Hukill, (R-Port Orange) has introduced HB 1163, the “Sales Tax Fairness Restoration Act,” which, if enacted, would subject all current exemptions – with limited exceptions – to review by the Legislative Sunset Committee and repeal if the exemptions are not later explicitly affirmed by the Committee and the full Legislature.

The Senate companion bill, SB 2576, is sponsored by Sen. Evelyn Lynn (R -Daytona Beach).

“The purpose of the bill is to make the state’s tax system more fair and equitable for all Floridians by creating an orderly and standarized review process for the review of sales tax exemptions,” Hukill told Florida Baptist Witness in an email interview March 5 and 6.

Hukill said the review process will “allow each exemption to stand on its merits and will give citizens confidence that any exemption on the books provides an important benefit of statewide significance.”

Asked if she supports repealing exemptions for churches, religious organizations, and religious and parochial schools, Hukill said, “I would support maintaining these exemptions upon review.”

Hukill’s legislation, as well as a more narrow review of 51 sale tax exemptions by the House Finance and Tax Council, has prompted concern by pro-family advocates and others legislative experts.

Michael Batts, an Orlando-based certified public accountant whose firm does work for the Florida Baptist Convention, churches and other non-profits, sent an e-mail alert about the Hukill bill, urging recipients to express concerns to legislators.

“Our firm is in contact with legislative leaders and has already been asked to provide amendment language that would remove the repeal for churches and charities from the bills. We will be doing that soon,” Batts wrote on March 5.

Hukill told the Witness, “An amendment that would exempt churches and religious organizations from the bill’s review and repeal process is currently being worked on so that such an amendment can be filed if and when the bill is heard.”

Florida Baptist Convention legislative consultant Bill Bunkley told the Witness that movement of Hukill’s bill without an amendment exempting churches and religious organizations “would be of utmost concern to Florida Baptists and other 501(c)(3) charities,” noting that he is monitoring whether the bill will advance.

He said if the bill begins to move without an amendment protecting churches and charities, “We would alert Florida Baptists to contact legislators with their concerns.”

Because of the bill’s potential impact on many entities beyond churches and charities, Bunkley said he expects “widespread opposition to this bill.”

On a different legislative track, the exemption of taxes on the sale of religious items – including Bibles, religious publications, and various religious paraphernalia – was included in a list of items for possible repeal when the House Finance and Tax Council met on March 5. The council meeting adjourned before considering the exemption for religious items.

All 51 exemptions, including sale of religious items, movie tickets, agricultural property, fitness clubs, skyboxes, school sporting events, eyeglasses and contacts and bottled water, total $388 million in annual revenue to the state, according to the Miami Herald.

“The United States Supreme Court has found similar laws to be unconstitutional because they determine a book or publication’s tax status on the basis of its content,” notes background material provided to members of the Council as to possible grounds for repealing the religious items exemption.

Bunkley told the Witness he was prepared to testify against repeal of the sales tax exemption for religious items March 5, but the Council adjourned before taking up that issue.

He has expressed his concerns to Council Chairman Rep. Ellyn Bogdanoff (R-Fort Lauderdale), and will testify before the panel when the matter is revisited.

The state budget deficit is also driving discussion in Tallahassee about the Seminole Indian gambling compact negotiated between the Tribe and Gov. Charlie Crist that was voided last July when the Florida Supreme Court ruled the governor acted improperly in failing to seek legislative approval, especially because the agreement permits the Tribe to operate illegal games.

In his State of the State annual address opening the legislative session March 3, Crist urged legislators to “quickly approve” the compact, promising the agreement will result in “at least $2.5 billion over 25 years to help educate our children.”

Crist added, “Approval of the compact will preserve and create thousands of jobs for Floridians and will safeguard us against the expansion of gambling to every corner of our state. Failure to act will take the process out of our hands, and may lead to the loss of all revenues. Whether you are for or against gaming, the compact makes sense and deserves your support.”

The U.S. Supreme Court recently denied the Seminoles’ appeal of the Florida high court ruling, enhancing the leverage of legislators who remain skeptical of the compact, either because of concern about expanded gambling or because of its potentially harmful impact on the state’s pari-mutuel industry.

During the first week of the legislative session both houses of the Legislature held hearings about the compact, receiving testimony from representatives of the Seminoles and pari-mutuels.

Bunkley told the Witness, “It is very difficult to assess what the real status is concerning the Seminole gambling compact. While it is probably not going to be ratified in the original terms agreed to by the governor and the Seminoles, it is anybody’s guess where any restructuring or new negotiations will lead.”

Pari-mutuels’ lobbyists “have been very effective” in arguing for a “level playing field” with the Seminoles, calling into question whether the compact can be resolved in this legislative session, Bunkley noted.

“Florida Baptists should insist that all expanded gambling at the Seminole casinos immediately cease, as they are clearly operating illegal games under the now voided compact,” Bunkley said.

“The Florida Legislature should be encouraged to continue its stance against expanded gambling. The tough decisions on how to move the state of Florida through these very difficult economic times should be accomplished without the addition of any new gambling revenues.”