A much-anticipated Idaho district court ruling that calls for property tax payments by St. Luke's Regional Medical Center in Boise has both the Ada County Commission and the medical center claiming victory.
Judge Daniel Eismann's opinion adds further fuel to a statewide debate over whether counties can levy property taxes on not-for-profit hospitals.
In his 12-page ruling handed down Aug. 20, Eismann ordered the 303-bed St. Luke's to pay property taxes to Ada County for its Meridian Medical Center-a tax bill that totals more than $150,000. Because the not-for-profit facility began operations in April 1996 and was not operating by Jan. 1 of that year, St. Luke's can't claim the property was used for charitable purposes in 1996, Eismann said. He reversed a decision by the state Board of Tax Appeals.
However, Eismann also ruled that another St. Luke's satellite, Carepoint Park Center, was being used for tax-exempt purposes as of Jan. 1, 1996. St. Luke's does not have to pay taxes on that property, Eismann said.
The Ada County commissioners said in a statement that they "are extremely pleased with this outcome."
"While this decision applies to 1996 taxes, the commissioners feel that the decision confirms their application of the current law to all tax exemptions in Ada County," the statement read.
Added Roger Simmons, an Ada County commissioner: "We felt strongly about the fact that we were right or we wouldn't have taken it to the state district court."
On the other hand, St. Luke's, in its prepared statement, termed the ruling "favorable."
"In essence, the court allowed the tax appeal board's ruling that St. Luke's is a charitable organization entitled to a property tax exemption under Idaho law to stand," the hospital's statement read.
Ada County first revoked St. Luke's exemption in July 1997, when the commission ruled that the hospital system should put all its property on the tax rolls because it was not a charitable corporation (Aug. 11, 1997, p. 38). St. Luke's took the matter to the Board of Tax Appeals, which sided with the hospital. Ada County subsequently appealed to the state district court.
Bill Bodnar, St. Luke's vice president for corporate relations, said the hospital hasn't decided whether it will appeal the ruling on Meridian. Each side will have 42 days to appeal after Eismann issues a written order with specific payment information.
St. Luke's tax-exempt status for 1997 is under review by the Board of Tax Appeals. That decision could be strongly influenced by state legislation regarding county taxation of hospitals, an issue under study by an ad hoc committee formed by the Idaho General Assembly.
The study committee, which met for the first time last month, was expected to hear testimony last week from the Idaho Hospital Association and the Association of Idaho Counties, leaders of the opposing sides. Each was asked by the committee to try to negotiate a consensus proposal, and each nixed the idea.
"Unfortunately, both parties were unable to do that because we are so significantly apart in our approaches to this issue," Bodnar said.