University of Wisconsin Athletic Director Barry Alvarez testified at a Capitol hearing Wednesday in support of a bill that would make donations for preferential seating at UW athletic events exempt from sales tax.

Alvarez said unless the bill is passed, the Athletic Department faces a major unbudgeted liability — $400,000 for the first year these taxes would be collected and nearly $2 million if the payment would be retroactively applied from 2001.

"The failure to enact [the bill] would have an immediate negative financial impact on the Athletic Department," Alvarez said, according to a transcript released by UW Athletics.

Alvarez said the practice of taking donations for preferential seating began after the Legislative Audit Bureau's 1999 audit charged the Athletic Department to put its "financial house in order."

However, a 2006 Department of Revenue audit determined all the money taken for tickets, including the donations, should be subject to Wisconsin's 5 percent sales tax.

"The donations offered to the Badger Fund by our generous donors should not be subject to a sales tax," Alvarez said.

Rep. Samantha Kerkman, R-Genoa City, said the legislation would affect more than 60 percent of the tickets sold in Camp Randall, and added the bill would be good news for both student-athletes and fans alike.

"Obviously people benefit, getting scholarships out of those funds, and other people get preferential seating at the games," Kerkman said.

Alvarez cited a similar exemption for the Green Bay Packers, as well as policy for other Big Ten institutions.

"We recently conducted an informal survey of other universities nationally to see if any of them invoked sales tax on donations to athletics and none of the respondents did so," Alvarez said.

The Assembly Ways and Means Committee voted in favor of the bill 11-0.

While a similar bill failed to pass the Legislature last year, Rep. Robert Ziegelbauer, D-Manitowoc, said he expects this bill to pass easily. He added last year's bill failed due to its late introduction in the session.

"I presume it would pass, and I know of no opposition," Ziegelbauer said.

Rep. Gary Hebl, D-Sun Prairie, also said he predicts the bill will pass, though he said he doubted it would be completely free of opposition.

"We always have a couple of individuals who are kind of 'anti-the university.' … It probably will not be unanimous because of those individuals," Hebl said.

Mike Mikalsen, research assistant to Rep. Steve Nass, R-Whitewater, said Nass supports this legislation because he wants the UW Athletic Department to continue to support itself through donations, rather than tax dollars.

"It is not an option for the state to subsidize the sports program at the UW," Mikalsen said.

Since the bill would affect taxes on "season admission to athletic events sponsored by an institution of higher education," UW events would not be the only ones affected by this legislation.

Marquette University uses a similar policy to UW's in collecting donations for preferential seating, according to Kerkman, and for this reason Marquette interim Athletic Director Steve Cottingham also testified at the hearing.