IHRSA - Jun 2004 CBI

IHRSA's State Legislative Spotlight

These are the issues, the bills, the decisions that will affect your club's fate

by Kristen A. Walsh

Though 2004 is barely half over, it's already distinguished itself as the busiest ever with respect to state legislation that has a direct impact on the health and fitness club industry. Lawmakers from coast to coast, and border to border, are studying a wide range of issues'e.g., sales taxes, exercise incentives, consumer protection'looking for ways to better serve the public, business, and, of course, their respective state governments. IHRSA, its member clubs, and lobbyists in several states are equally involved and active'aggressively opposing measures that are unreasonable or would have a negative effect on the industry; and eagerly championing those that are pro-fitness.

The hot topics? The hot spots?

The year's legislative risks and opportunities are chronicled below.

Automated External Defibrillators

IHRSA expects that, during the coming year, at least two states will adopt measures requiring health clubs to have automated external defibrillators (AEDs). The industry must be prepared to work for language in any such bills that will be acceptable to, and protect the rights of, clubs in general. IHRSA is lobbying to insert language that would stipulate that no 'right of action' exists with respect to the use, or nonuse, of an AED, and that would provide a grace period for compliance. Among the states with AEDs-related issues on their legislative agenda are:

Illinois'House Bill 4232/Senate Bill 4219 would require every health club to have an AED unit and a person trained in its use on staff by no later than July 1, 2005. Language that IHRSA has fought for to provide legal protection for clubs and their employees has survived several rewrites of this bill.
New Jersey'Assembly Bill 1561, which is currently pending, would require clubs to have at least one AED on site. The bill provides no legal protection for clubs, and IHRSA is lobbying to include such an amendment.
New York'Assembly Bill 5084 would require that all clubs with more than 2,500 members have at least one AED, and at least one employee trained and certified in its use and in CPR.
Rhode Island'House Bill 7373/Senate Bill 2948, which are currently pending, would require that every club have at least one AED, and at least one staff member trained (or scheduled to be trained) in its use and in CPR, by no later than July 1, 2005. As a result of lobbying by IHRSA and its members, this measure affords legal protection to clubs, stating that no cause of action exists for use, or nonuse, of an AED.

Consumer Protection

Attempts to amend health club consumer-protection laws, making them more stringent, constitute a growing trend and one that needs to be watched closely. Among the states where this is currently an issue are:

Arizona'In January, Senate Bill 1038, which would expand the circumstances in which a club contract could be cancelled, was considered by the Senate Committee on Commerce; after hearing our industry's concerns, however, the committee put the bill on hold.
California'The $1,000 cap on club contracts continues to be problematic. However, given the fact that California's new governor, Arnold Schwarzenegger, is 'fitness-friendly,' the threat of a veto of revised legislation no longer looms, providing IHRSA with more leverage in its ongoing negotiations with state legislators.

Sales Taxes

Despite the well publicized and constantly growing list of physical and economic benefits attributed to regular exercise, half of the states in the U.S. still tax club memberships. Efforts are now under way in a number of them to eliminate this impediment to improved fitness and health. Among them are:

Connecticut'Club operators and their members are lobbying to repeal the 6 percent tax on club services that was imposed last year following a long and heated battle. House Bill 5122, introduced by House Majority Leader Jim Amann and Deputy Majority Leader Emil Altobello, would achieve that goal.
Missouri'Senate Bill 794, introduced by Senate Minority Floor Leader Ken Jacob, would exempt fitness centers from state sales taxes if the fees and dues paid are solely for health-benefit activities; are listed separately on the bill; and don't encompass any other activities or services.
Washington'In some areas of the state, the tax on fitness services is as high as 7.8 percent. House Bill 1357, introduced by Rep. Dave Quall, would eliminate the tax. Quall notes that his proposal, which was approved by the House in February, would fulfill a longstanding promise to eliminate the tax when the state extricated itself from its fiscal difficulties. Rep. Ed Orcutt points out that the measure would also level the playing field for commercial clubs and publicly funded fitness centers; the latter are already exempt from the tax.

Tax Incentives for Exercise

New Jersey'Senate Bill 484, introduced by Senator Barbara Buono, would provide a tax credit equal to 10 percent of the amount a company expends on certain employee fitness benefits. Activities qualifying for the credit include: operating a fitness facility for the exclusive use of employees; purchasing and/or subsidizing memberships at off-site health clubs; and offering incentive awards for employees' regular participation in physical activity.
Oklahoma'House Bill 1895, introduced by Rep. Lucky Lamons, would provide a state income tax deduction for health club dues. 'Oklahomans eat too much, smoke too much, drink too much, and spend too little time exercising,' explains Lamons, who was formerly the fitness coordinator for the Tulsa Police Department. 'Collectively, we, in Oklahoma, need to get off the couch and into the gym.'

Tax-Exempt Competition

Pennsylvania'House Bill 298/Senate Bill 321, introduced by Rep. Patrick M. Browne and Senator Charles W. Dent, would prohibit the government from competing with private enterprise. Two favorable hearings have already been held on the measures, and both enjoy strong support in the legislature.

'Pennsylvania's businesses face enough competition in the global marketplace of the 21st century without having to compete against state and municipal governments,' explains Dent. 'It's about time we set ground rules to keep this playing field level and equal. This legislation would do just that.'

Another issue in Pennsylvania is the state's Purely Public Charities Act. The YMCA is expected to try to amend the act, which prohibits charities from using their tax-exempt status to compete with small business. Thus far, health clubs have been successful at convincing the state's courts that the Y can legitimately be sued under the act.
Utah'Senate Bill 222, introduced by Senator Scott Jenkins, would require communities to conduct a feasibility study for any nonessential public project that would be located within 15 miles of a similar privately owned business. The measure stipulates that the study must include detailed expense and revenue projections, and must gauge the possible impact on private firms offering similar services. 'This would bring information to the front so decisions can be made in the public eye,' says Jenkins.

Miscellaneous

Maryland'House Bill 861/ Senate Bill 707 would double the registration and renewal fees paid by clubs; IHRSA facilities are actively lobbying against the proposal.
New York'Assembly Bill 6821, which would impose additional employee-training requirements for clubs, is expected to be approved by the Assembly. The measure would require that every club have at least one staff member certified in first aid and CPR on-premise at all times.
Virginia'Initially, IHRSA and its members were successful in stopping House Bill 390, but, recently, the measure has come back to life. The current proposal would increase the amount of the bond or letter of credit that health spas with less than 1,250 members have to file with the Commissioner of Agriculture and Consumer Services; an amended version, recently passed by the legislature, could conceivably subject health clubs to a higher bond requirement, although it would not raise bond rates.

For updates on these and other state legislative issues that affecting the fitness industry, please visit www.ihrsa.org/state.

Kristen A. Walsh is IHRSA's content editor and public policy manager. She can be reached at kaw@ihrsa.org.