FRANKFORT, Ky. (AP) — Thousands of people traveling to Kentucky’s Fancy Farm picnic this weekend hope to win prizes in bingo and other games. But the biggest winner could be the Kentucky state government, which is poised to collect $13,000 from the church that hosts the picnic because of changes to the state’s tax code.
Kentucky no longer exempts religious and nonprofit organizations from state sales taxes, meaning every bingo card, ice cream cone, Sun Drop bottle and pulled pork plate requires a 6 percent tax. Leaders of the St. Jerome Catholic Church balked at collecting the tax from attendees, foreseeing headaches from merchants trying to make change on a 50-cent bingo card. Instead, the church will keep all prices the same and write a check to the state once the picnic is over. Father Darrell Venters estimates it will be about $13,000.
“Some of these little kids’ games are 25 cents apiece. That’s taxable. They would end up charging them 27 cents,” Venters said. “It’s just not feasible.”
While impacting the church, the changes will also likely impact the politics of the picnic that dates back to 1880 and has become the launching pad for the fall campaign season. The picnic’s “political speaking” event is famous for pitting politicians from both parties on the same stage before a crowd of rowdy hecklers while all of it is broadcast live on statewide television. This year’s speakers include Senate Majority Leader Mitch McConnell.
Democrats are already pouncing on the tax issue ahead of the midterm elections by blaming the Republican-controlled state legislature. Democratic Secretary of State Alison Lundergan Grimes, a potential candidate for governor in 2019 and a scheduled speaker at the event, said the taxes mean the church will make less money for its charitable causes — including paying for mission trips and helping poor people in the community pay their utility bills.
“As I have said before, this is wrong. Raising new revenue should not come at the expense of our Kentucky churches, nonprofits, and small businesses,” Grimes said. “It is abundantly clear, from taxes to tariffs, the Republican majorities in Frankfort and Washington are not working for Kentucky families.”
But Republican leaders say they are not to blame for the taxes on St. Jerome Church or other nonprofits. The legislature enacted a new law this year that extends Kentucky’s sales tax to a variety of new services, including “admissions” such as tickets for events. But the new law also coincided with a recent Supreme Court decision that ruled the state Constitution’s tax exemption for nonprofits applies only to property taxes, not sales taxes. Both the Supreme Court ruling and the new tax law went into effect July 1.
“Unfortunately, the Supreme Court decision coincided with tax reform and has created a tax burden for non-profits,” acting state House Speaker David Osborne said. “The Secretary of State either knows this and is only worried about politicizing the issue and ignoring the facts, or she is ill-informed, which should cause concern for Kentucky voters since she clearly is campaigning for higher office.”
Pamela Trautner, spokeswoman for the Finance and Administration Cabinet, said the tax impact on churches and nonprofits in general is a combination of the new law and the Supreme Court ruling.
Osborne has already filed legislation that would exempt nonprofits, including churches, from sales taxes. But the legislature won’t vote on that proposal until early next year.
In the meantime, it’s likely to become an issue in the midterm elections and a key line of attack for Democrats this weekend as they seek to gain an advantage over their Republican counterparts. Those scheduled include Grimes and Andy Beshear, the attorney general who has already declared his candidacy for governor in 2019.
But the attack likely won’t stick to Republican Gov. Matt Bevin. The first-term governor vetoed the tax bill, but Republican lawmakers voted to override him. Bevin confirmed Friday afternoon he would not attend the picnic on Saturday. Republican U.S. Sen. Rand Paul and GOP state Treasurer Allison Ball also will not attend.