Testimony on H.B. 7408: AAC Municipal Revenue and Stormwater Authority, Studies of the Pilot Grants Program and a Property Tax Exemption for Machinery and Equipment, and Enterprise Zones

Finance, Revenue & Bonding Committee

April 10, 2019

Submitted By: Stephen Wanczyk-Karp, LMSW

On behalf of the National Association of Social Workers, CT Chapter representing over 2,500 members, we are opposed to Section 6 of H.B. 7408. This section allows municipalities to enact fees on non-profits within the municipality for certain services provided by the municipality.

NASW/CT is a 501 (c) (6) non-profit organization that is not tax exempt thus, our organization is not affected by Section 6 of this bill. Nonetheless, we oppose Section 6 as many of our members are employed by non-profits that are tax exempt. For tax exempt organizations to be charged for services such as police and fire protection, the cost will mean reduced funding for service programs and staffing. This is counterproductive to the value that non-profits bring to communities.

The non-profit sector for social services provides critically important assistance to populations in need, such as older adults, persons with disabilities, the unemployed, persons with mental illness and children & families. These services, if not picked up by the non-profit sector would have to be paid for by public programs that would be a cost to municipalities and the state. Any fees that municipalities would levy in the end will cost the public sector, far likely at considerably more than the fees revenue.

Besides the cost shifting that Section 6 would lead to, we are very concerned that Section 6 is a back door to taxation that non-profits are exempt from under IRS rules. Section 6 is at minimum a violation of the spirit of the IRS rules, and if challenged should be found as a violation of the IRS rules. Section 6 essentially is a tax by another name.

NASW/CT is not unsympathetic to the cost’s municipalities face however this is not the way to address financial strain on cities and towns. The state needs to find other ways to support our towns and cities instead of the current over reliance on property taxes.

The non-profit sector is struggling financially, with many non-profits having been forced to merge and/or close. In such a financial environment, with the state giving at most 1% increases in state funding, Section 6, if implemented, may be the “straw that broke the camel’s back for many non-profits. We urge the Committee to delete Section 6 from H.B. 7408.