Tax break for charitable gambling

Charitable gambling organizations could get a temporary tax break if they contribute some of their proceeds to local governments.

The House Commerce and Labor Committee approved HF2818, sponsored by Rep. Al Doty (DFL-Royalton) Feb. 16. The bill would reduce taxes paid by charitable gaming operations by the amount they contribute to local government projects and programs.

Doty said public assets in his district ranging from sidewalks to fire trucks to baseball fields have been funded with charitable gambling proceeds.

“Here’s the simple idea: if the charitable gaming funds are being used for something that would otherwise be a function of local government, then we are going to give them their taxes back,” Doty said.

Gambling organizations that qualify for the credit could apply for a quarterly refund from the Department of Revenue. The tax exemption would be effective July 1, 2010, and expire June 30, 2013.

King Wilson, executive director of Allied Charities of Minnesota, called the plan “a brilliant idea.”

“A large portion of money raised by charitable gambling goes to the local city, goes to the local high school. … Anything we can do that would allow organizations to have more money to spend on these local projects would be beneficial,” he said.

Committee members had bipartisan support for the proposal — though some expressed concern about its impact on the state’s projected budget deficit. Doty said the bill would cost $8.3 million in lost tax revenues.

“This has great merit; I just don’t know how you pay for it,” said Rep. Tom Anzelc (DFL-Balsam Township).

The bill now goes to the House Taxes Committee, where Doty acknowledged it faces potential opposition because of its state budget implications.

“I know what the tax committee is going to say,” he said, adding, “If this bill doesn’t happen today, then I think very shortly after we find $8.3 million would be the right time, because I think it’s a good idea.”

A companion, SF2523, sponsored by Sen. Paul Koering (R-Fort Ripley), awaits action by the Senate State and Local Government Operations and Oversight Committee.