Key measures on HANO’s 2012 public policy watch list
As the 2012 Hawaii Legislature gathers steam, HANO is watching bills that would have sector-wide impact on nonprofits. Here are the major measures:
> Charitable giving tax incentive – HANO worked to get Senate Bill 2544 introduced, which would repeal the temporary limit on the amount of itemized deductions that may be claimed by certain taxpayers. The measure removes section 3 of Act 97, passed in the 2011 Legislature, which capped the charitable deduction amount that certain taxpayers can claim on their state income tax. HANO and many others in the nonprofit community fear that this cap will hinder charitable giving in our sector. The bill awaits a hearing by the Senate Ways and Means Committee.
At the federal level, according to the Nonprofit Quarterly, White House officials acknowledged on Jan. 27 that efforts to limit the value of the federal charitable deduction are off the table for 2012.
> Unemployment payroll tax increase – House Bill 2096 addresses the scheduled increase in the unemployment insurance tax for all Hawaii employers. HANO supports keeping the tax rate at the same level for the next two years to help businesses recover during this protracted down economy. If left alone, the tax schedule will jump from its current schedule F to schedule H, resulting in an additional average tax of $550 per employee – an expense that nonprofit businesses can ill afford. The bill passed out of the House Committee on Labor and Public Employment with amendments and moves on to the Finance Committee.
> Board liability for general excise taxes – Senate Bill 2238 would repeal Act 155, which among other things, imposes personal liability on key board members when a nonprofit organization fails to pay its general excise tax obligation. Under this Act, the nonprofit is also at risk of losing its state tax-exempt status if it fails to file its annual G-49 reconciliation, whether there is a tax obligation or not.
HANO supports SB 2238, concerned that Act 155 requires changes in the administration of the GET that will catch taxpayers unawares, failing to provide for basic taxpayer protections and due process. The penalties imposed by Act 155 are disproportionate to the act. The Senate Economic Development and Technology Committee heard this bill and deferred decision making on it until Feb. 1.
> Prompt state contract payments – The Prompt Payment Task Force that met during the last 5 months of 2011 will ask the 2012 Legislature for an extension until June, after realizing that the challenges of government contracting with nonprofits include systemic issues much greater than the sole issue of prompt payment. When certain task force members could not agree to the scope of the issue or the proposed recommendations, it was determined that an extension was needed.
> Honolulu real property taxes – At the county level, the Honolulu City and County may consider changes to the real property tax exemption rates for nonprofits, but will not do so until after the Mayor's budget is released in March.
