Kansas lawmakers consider restoring tax credit program
May 5, 2015
By: Kelsie Jennings
TOPEKA — Andy Brown has been helping people for more than half his life. It’s where he finds enjoyment and fulfillment.
“I didn’t get as much satisfaction working at places that were for-profit companies,” said Brown, a 38-year-old Lawrence resident. “I like what I’m doing; giving back to the community.”
It started in high school with volunteering. When Brown attended Washburn University to earn a bachelor’s degree in human services, and then a master’s in social work administration from the University of Kansas, he continued to volunteer.
Even now, as a 38-year-old married father of four, Brown is still in the business of helping people. He is the executive director of Headquarters Inc. in Lawrence, a counseling center for suicide prevention.
His position allows him to have a positive impact on nonprofit organizations, although he also enjoyed working one-on-one with those who are touched by those organizations.
“I think people that work in nonprofits oftentimes get a chance to see the world a little differently than folks that are working at for-profits,” he said. “You learn that anybody can change. … When you’re working with people as a case manager, the idea is to find out what their strengths are and help them achieve their goals. So you get to see people as they kind of go through a transformative process.”
But the tables have turned a bit for Brown and his family, and now they are the recipients of help.
Brown was working at Lawrence Community Shelter when he learned of CASH, Creating Assets, Savings and Hope, a program that helps low-income households match their savings so they can purchase their first home, go to college, make major home repairs or start a business.
Brown realized they qualified for the program and decided to take advantage of it so his family could purchase their first home. They have been in the program for about two years and are saving for a down payment for a house. Once the Browns have saved $2,000, the program will provide a two-to-one match, giving the Browns $6,000 for the down payment.
But representatives of Interfaith Housing Services, Inc., a nonprofit organization in Hutchinson that runs the program, say it can’t continue to help Brown and others like him unless legislation is passed to create funding.
Funding could come by restoring a tax credit that was removed a few years ago.
Before 2012, individual taxpayers in Kansas could donate to a nonprofit program in exchange for a tax credit, but legislators restricted the credit to corporations. Since then donations have dropped from about $600,000 annually to $21,000 in 2014.
In 2008, the Kansas Individual Development Account (IDA) program was created and any taxpayer could choose to donate a minimum of $250 or more to the program, which helped fund Interfaith’s CASH program. In exchange for a donation, either 75 percent of their donation would either be refunded or it would help pay what they owed in state taxes.
But with fewer donations, Interfaith can’t help additional participants.
“In 2014, we received only $21,000 (in donations). Instead of being able to help 200 people a year, we were only able to help about three,” said Lorna Moore, program director for CASH. “If we don’t get this funding changed, the program can’t continue.”
The House Taxation Committee held a hearing in February for House Bill 2209, which would restore the individual tax credit option and Kansans could once again donate to the IDA program.
Since the Kansas IDA program’s beginning in 2008, more than 200 Kansans have completed the CASH program. Currently, around 250 are enrolled, but Moore said they are not able to enroll any more with dwindling funds.
To qualify for the program, the participants’ income must fall below 200 percent of the federal poverty level. Moore said for a four-person household, this is an annual income of $48,500, or $23,540 for a single household. The participants must have a job and take a financial education course that teaches them about saving money and how to responsibly manage it. Once they’ve completed the course and have been accepted, they must remain employed and can start saving toward one of the four goals. When they’ve met their savings goal, Interfaith will match it two to one.
Before the restriction, the IDA program helped raise $1.2 million each year. Over $600,000 of it was raised by tax credit donations and the rest was matched with federal grants, according to Moore.
But when legislators restricted the IDA program to just C corporations, a tax classification for larger corporations, Moore said this caused a huge drop in funding because the eligible corporations don’t really use the tax credit option, which is why only $21,000 was raised in donations for 2014.
“C corporations don’t want these tax credits. They just don’t need them,” Moore said.
The restriction to the IDA tax credit was part of a broad cleanup to tax credits by legislators, said Dale Goter, government relations manager for Wichita. The City of Wichita introduced HB 2209 to the legislature earlier this year.
The Department of Commerce oversees the tax credit and administers the IDA program through Interfaith. Chris Harris, a program manager in the business and community development division for the Kansas Department of Commerce, said if the bill were to pass, Interfaith would be able to offer the program to more people in need.
“What it would do for Kansans, in particular low-income Kansans, is it would provide a tool to help lift them out of poverty,” Harris said. “It’s been a very effective program.”
Harris also said there are very few C corporations that use the tax credit, partially because organizations have trouble identifying and locating eligible corporations and convincing them to use the credit.
Last month, the House Taxation Committee recommended the bill to be passed on to the whole House. The House and Senate are on break until April 29, but after the break the House can still debate bills and HB 2209 could be discussed and put up for vote. Moore said there wasn’t any opposition to the bill when Interfaith testified at the hearing in February.
The fiscal note for the bill said it could reduce about $300,000 in revenue from the State General Fund, but Goter said $500,000 of annual “credit” is already accounted in the budget just for IDA donations, so restoring the individual tax credit would not take away from the budget.
Rep. Sydney Carlin (D-Manhattan) started the legislation for the IDA program in 2005 and remains supportive of the program. She said the financial education component helps participants learn how to manage money in the future.
“People who are poor can’t get over being poor because they can’t accumulate money. They can’t accumulate money for an education, they can’t accumulate money to buy their own home, they can’t accumulate money to fix the heating and air conditioning in their home,” Carlin said. “It’s a real good way to teach people on low income how to save and accomplish something with their own money. It’s a hand up.”
Moore said the reason they’ve been able to keep the program going until now is because they saved money every year in a reserve account.
“One of the things that I did … is exactly what we teach our clients to do: Every year, I took a portion of what we raised and I put it into savings,” she said. “We’re using the money that I had held back in reserves, and so that’s how we’re continuing this year, but all of that money is gone now.”
Despite the program’s diminishing funds, Brown said they will stayed enrolled in the program as long as they’re following its rules of staying employed and saving at least $20 a month, the minimum monthly requirement. Once the Browns reach their goal, they plan to buy a home in Lawrence.
Brown also plans to continue his career of helping others.
“I’ve been doing it my whole life, and it’s what I derive enjoyment and satisfaction from,” he said.
Kelsie Jennings is a University of Kansas senior from Olathe majoring in journalism.
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