Iowa takes raffle money from kids
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By Barb Ickes | Monday, May 12, 2008 |
Technically, the kids at McKinley Elementary School could have been hauled off to jail.
But the state only wanted their money.
At McKinley in Davenport, the PTA throws fundraisers to pay for things the school district doesn’t cover. It goes that way at a lot of schools.
In five years of raising and saving money, the McKinley PTA has spent about $35,000 on playground equipment, drainage, mulch and whatever else the kids’ play area needed, PTA member Carrie Hummel said.
On April 11, the group put on McKinley’s Fun Night, which included a raffle-ticket sale. The kids especially enjoy the ticket sales because they have a chance of winning prizes for each packet of tickets they sell.
“They went door-to-door, to grandparents and to neighbors,” Hummel said.
Then the state came knocking.
Cynthia Weeks, the PTA treasurer, was notified by the Davenport School District that the students’ raffle-ticket sale was, in fact, a form of gambling. The PTA owed the state 7 percent of the raffle-ticket take in gaming taxes.
“We had to write a check for $356, which is 356 raffle tickets,” Hummel said. “It turns out you now have to basically be an accountant to be a PTA treasurer.”
Another PTA member, Jennifer Chen, has been involved with the group for 10 years, including a stint as president. But she didn’t know the state expected a take on school raffles. So she dashed off a letter to local state legislators, asking that the gaming law be rewritten “immediately” to exempt nonprofit groups.
“How shocking to learn that some of the fruits of our children’s hard-earned fundraising efforts are taxed at 7 percent!” she wrote. “Taxing our raffle proceeds brings less than $500 to the state budget and takes money directly away from our students.”
Iowa Rep. Jamie Van Fossen, R-Davenport, read Chen’s letter and immediately pounced.
He proposed an amendment last month that would have exempted public-school raffles from the state gaming tax. A vote to suspend House rules and vote on the amendment failed.
“It seemed to me like a technical correction,” Van Fossen said of the proposed exemption.
But Rep. Cindy Winckler, D-Davenport, didn’t see it that way when she cast a no vote. She explained Wednesday that the amendment came up too quickly and at the very end of the Legislative session.
“At that time, you don’t have the opportunity to know what the financial impact is going to be,” she said. “Good decisions aren’t made that way.”
Unfortunately, she’s right. It isn’t wise to simply dump a funding stream, no matter how obviously it needs to be dumped, when the money already has been committed to something.
What’s curious about this tax law is how unevenly it’s applied. If longtime PTA officeholders at McKinley didn’t know about the tax for the past decade and failed to comply with it all these years, how many other schools don’t know about it?
If the tax is a good, solid, fair tax, why isn’t the state enforcing it?
“We probably don’t do a good enough job of informing (schools),” Winckler said.
But it’s not just raffle-ticket fundraisers that are being taxed at a level that might surprise many taxpayers.
“It wasn’t just Davenport, either,” Van Fossen said. “I heard from people in Des Moines who said Little League concessions are getting hit (with sales tax), too.”
That hardly seems fair. In McKinley’s case, it hardly seems legal, either. If the gambling age in Iowa is 21, how can elementary school kids be taxed for gaming? Unless they’ve all been held back for about a decade, they’re not of age.
Some might argue that little kids shouldn’t be hawking raffle tickets, anyway, particularly if it is widely regarded as gambling. But isn’t it harmless? It’s not as if the kids get all juiced up on raffles and meet on the playground to shoot craps.
Most of them aren’t even allowed to say it.
Barb Ickes can be contacted at
(563) 383-2316 or bickes@qctimes.com. Comment on this column at qctimes.com.
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