Another state is joining the debate on whether not-for-profit hospitals should pay property taxes.
Four months after Pennsylvania passed a law sheltering not-for-profit hospitals from tax-hungry municipalities, North Dakota's Legislature is grappling with the idea of allowing communities to levy property taxes on previously tax-exempt hospitals.
Local governments clamoring for additional revenues have raised the issue almost annually since the early 1990s, said Chip Thomas, president of the North Dakota Healthcare Association.
"There are a lot of shifting demographics in North Dakota," Thomas said. "For some communities, relying on property taxes to fund infrastructure is difficult because people are moving out. In growing areas, it's hard to keep pace and fund the infrastructure you need with only (existing) property taxes."
An interim tax committee formed by the Legislature to study the issue has informally generated a few ideas about how the state's 49 not-for-profit hospitals could be taxed.
One, proposed by state Rep. Ralph Kilzer (R-Bismarck), would force hospitals to pay property taxes on outpatient service areas such as clinics, sports medicine facilities and home health agencies.
Kilzer, a physician, wants to level the paying field between for-profits and not-for-profits, which often adopt some for-profit strategies to survive and thrive in the changing marketplace.
"I'm concerned about hospitals going beyond being hospitals," he said. "I've seen what hospitals have done, and I've seen a lot of property come off the tax rolls in the name of not-for-profits."
Other ideas circulating among committee members include allowing a limited tax to fund fire and police services and giving local governments the option to tax whole hospitals.
"It's an ongoing issue," Thomas said. "Providers must define what they do and how they fit into the community. What this (debate) is saying is that we lack accountability criteria and that our tax structure hasn't caught up with what providers are doing."
The North Dakota Legislature, which isn't in session, will convene next in January 1999.
In Idaho, both houses of the Legislature have passed a bill that would create a committee to study the issue of taxing not-for-profits.
The debate there was sparked by Ada County's decision to levy a property tax on St. Luke's Regional Medical Center, a 312-bed facility in Boise. The hospital appealed and eventually sought relief in the Legislature. The bill would give St. Luke's a moratorium on paying its $3.7 million tax bill until March 1999, when Idaho's next legislative session will end.
Gov. Phil Batt is expected to sign the bill into law within the next few weeks.