Community foundations seek stronger tax credit rather than new sports betting money

DES MOINES — Community foundations would no longer get new state funding, as has been proposed in the Legislature, but they would be helped by extension of a state tax credit under legislation being considered by state lawmakers.

The charitable groups themselves proposed the altered legislation, even though it would mean missing out on a new funding stream.

The original legislation, House File 710, would expand the Endow Iowa Tax Credit for charitable giving to community foundations, add additional funding to clear a waitlist for the tax credit, and send state tax revenue from sports betting to community foundations as well as to casinos’ charity arms.

That new revenue stream from taxes on sports betting would have produced a projected $8 million in the state budget year that begins July 2024, according to the state’s nonpartisan Legislative Services Agency.

Lawmakers in the Iowa House recently unanimously approved the bill.

But when the bill started the legislative process in the Senate, representatives for community foundations proposed an amendment that would eliminate the new sports-betting funding stream.

Their stated reason: They believe the tax credit extension can pass the Senate, but the sports betting revenue provision may not. In the interest of not losing both, they decided to focus on the tax credit.

One concern some state lawmakers have with dedicating future sports-betting state tax revenue to any program is what they say is uncertainty about how much revenue it will produce annually.

Some have argued that as more of Iowa’s neighboring states legalize sports betting, that will impact future state revenue from the betting tax.

“There is uncertainty with all gaming revenue due to our neighboring state’s legalization of gaming. With this uncertainty, there was concern about establishing a structure that drew from these funds,” Kristi Knous, president of the Community Foundation of Greater Des Moines, said in a statement.

“With this in mind, we support the Senate’s desire to focus solely on the Endow Iowa piece of House File 710.”

Iowa’s 19 state-licensed casinos are in 15 counties. Under current law, the 84 counties that do not have a casino receive 0.8 percent of the state revenue on casino gambling.

As originally written, House File 710 would have directed $1.8 million from the state tax revenue on sports betting for the state’s gambling addiction treatment program and directed $1 million to the state’s general fund to expand the Endow Iowa Tax Credit to a total of $7 million.

Of the revenue that would remain after those appropriations, 85 percent would go to the County Endowment Fund, from which counties give money to community foundations.

For Knous, preserving the Endow Iowa Tax Credit is paramount. In 2021, she said, donors using the tax credit gave more than $68 million to community foundations.

“Community foundations have worked hard to promote the Endow Iowa Tax Credit program for the last 20 years. The program is extremely popular and does incredible things for the long-term quality of life of the state of Iowa and our local communities,” she said.

“The proposed legislation strengthens the program and provides future certainty for donors and the state, keeping the program relevant and a community-builder for Iowans.”

Lawmakers likely will need to make a decision on the proposed legislation soon, as the end of the 2023 session draws near.

Comments: (515) 355-1300, erin.murphy@thegazette.com