City Government

Tax-Exempt Status In Campaign Finance Questioned

Idaho’s non-profit hospitals could face scrutiny from the I.R.S. if U.S. Senator Max Baucus of Montana gets his way.

Baucus is chairman of the Senate Finance Committee and wrote the Commissioner of Internal Revenue Tuesday expressing concerns that various organizations are abusing their tax-exempts status as improper conduits for campaign finances.

In a NY TIMES story, Baucus was quoted saying the I.R.S. should consider whether the tax code is “being used to eliminate transparency in the funding of our elections.”

Here in Idaho, private hospitals–the majority of which are non-profits–funnel cash through their member dues to the Idaho Hospital Association which is currently advertising on television and promoting passage of a constitutional amendment on the November 2 ballot. HJR4 will abolish the right of citizens to vote on debt at public hospitals.

Not only do tax-exempt revenues go toward funding the association (through membership fees), the association was actively involved in crafting the amendment as it appears on the ballot.

No doubt the IHA will claim their advertising effort is merely an “educational effort,” just like Boise’s Team Dave claims their $60,000 in public funds is not intended to garner support for HJR5 which will eliminate voter approval of airport debt. Take a look at their WEBSITE. It certainly doesn’t tell voters that everything public hospitals wish to do can be done under existing law. The amendment’s PRIMARY change is to eliminate the very public they claim to serve from a voice in financing the public debt.

Associations like the hospital group and the Association of Idaho Cities use funds generated either by taxes or through tax-exempt income to cater to the wishes of members, but Baucus raises the specter of I.R.S. scrutiny when they engage in campaign issues on the ballot. The Idaho Tax Commission should be aware of the issue as well.

Comments & Discussion

Comments are closed for this post.

  1. John L. Runft
    Sep 29, 2010, 8:08 pm

    Throughout Idaho Statehood, the Idaho Supreme Court has consistently and strongly supported the voters’ right to approve or reject public funding:
    “The framers of our Constitution were not content to say that ‘no city shall incur any indebtedness in any manner or for any purpose,’ but they rather preferred to say that ‘no city shall incur any indebtedness or liability in any manner, or for any purpose.’ It must be clear to the ordinary mind, on reading this language that the framers of the Constitution meant to cover all kinds and character of debts and obligations for which a city may become bound, and to preclude circuitous and evasive methods of incurring debts and obligations to be met by the city or its inhabitants.” Feil v. City of Coeur d’Alene, 23 Idaho 32,50, 129 P. 643 (1912; upheld in in Koch v. Canyon County, 145 Idaho 158, 177, P.3d 372 (2008)

  2. serendipity
    Sep 29, 2010, 8:22 pm

    “Educational effort”?
    If they can get away with this, soon political campaign ads for candidates will be claimed as educational efforts.

    This ploy needs to be nipped in the bud before legitimate and prudent regulation of the spending of public money simply vanishes forever. I am annoyed, rather than shocked, that the Boise city council goes along with this travesty of effective and fair governance.

  3. Well, now that unlimited corporate money is considered protected speech in campaign finance, I suppose it was only a matter of time before corporations started looking for ways to further increase their legislative clout. Cutting NPO’s out of the picture is a good start.

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