Veto sidetracks tax break for medical charities

Print Friendly and PDF By: Andy Miller Published: May 14, 2013

Among Gov. Nathan Deal’s five vetoes this year, probably the most surprising one targeted a bill that would have given sales tax breaks to charitable medical clinics, federally qualified health centers, food banks and other charities.

The measure, House Bill 193, had overwhelming legislative support. It passed the House unanimously during the 2013 legislative session, and the Senate approved it 52-2.

The legislation would have restored sales tax exemptions for community health centers and volunteer charity clinics – tax breaks that had sunset (expired automatically) in 2010. Other exemptions would have gone to food banks; hunger relief nonprofits; food donated for disaster relief; and for Goodwill.

If the bill had not been vetoed, medical and other supplies that these nonprofits buy would not have a sales tax imposed. The fiscal impact of the bill would have been a total of $9 million over three years in state and local tax revenue.

Deal’s veto message on HB 193 notes that a 2010 tax reform council recommended that all non-government and non-business exemptions sunset so the Legislature can decide whether they justify being renewed.

Deal said in his message that he would ask the Competitiveness Initiative task force to review the bill and render an opinion on whether it is justified.

But Alan Essig of the Georgia Budget and Policy Institute told GHN in an interview Tuesday that this principle of reviewing tax breaks “was used selectively’’ by the governor. Deal signed a tax break bill that will benefit Gulfstream, and that will cost the state more in tax revenue than the break for charities would have, Essig said.

There are “clear public benefits’’ to the charities bill, Essig said, and “no public benefits to House Bill 164,’’ which renews a sales tax exemption for parts used in repairing and upgrading aircraft registered to out-of-state owners. It will primarily benefit Gulfstream, a luxury aircraft maker headquartered in Savannah.

Deal’s use of the Competitiveness Initiative task force, Essig said, ‘‘came out of left field.’’ That body mainly has to do with economic development, he said, and it hasn’t met since last year.

Brian Robinson, a spokesman for the governor, said, ‘‘The Gulfstream tax issue was a renewal. Moving forward, we want to have a system in place for groups seeking exemptions so that [the process is] not piecemeal. Yes, the Competitiveness Initiative council will be meeting again, and that’s where this process will begin.’’

The veto came as a surprise to people who followed the charities bill, including its sponsor, state Rep. Ron Stephens (R-Savannah), a pharmacist.

Duane Kavka, executive director of the Georgia Association for Primary Health Care, whose members include 28 federally qualified health centers (FQHCs) with 141 clinic sites, said ‘‘any money our members save is put back into services to the uninsured.’’

Donna Looper, executive director of the Georgia Charitable Care Network, which has more than 100 clinics, told GHN that the veto was puzzling to her. “Any money that the clinics don’t have to spend paying sales tax goes right into patient care,’’ she said.

The free clinics and the FQHCs are a major part of the health care safety net in Georgia, serving the state’s large number of uninsured.

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