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Idaho legislator introduces new bills to remove hospital tax exemptions

Clark Corbin | Idaho Capital Sun

Committee members questions whether bills would create hardship for rural hospitals


A first-year legislator is pushing a new bill in the Idaho Legislature that would give local county commissions the authority to remove the property tax exemptions in place for hospitals.

Rep. Josh Tanner, R-Eagle, also is sponsoring a second new bill that would immediately remove the property tax exemption for a hospital’s outlying administrative and medical facilities that are not a part of a hospital’s main facility.  

Tanner said the bills would provide property tax relief for homeowners and other businesses by bringing hospitals back onto the property tax rolls and thereby reducing the share of the burden other taxpayers shoulder. 

But several members of the House Revenue and Taxation Committee questioned Tanner about the reasons he was bringing the county commission-related bill, the amount of property tax relief such changes would actually produce and the potential hardships that would be created for rural and remote hospitals.

Tanner said his bill is about moving the decision down to the local level, rather than having a blanket exemption in state law. 

“So what we have found is that hospitals are exempt and what that does is takes that exemption, that amount, off the rolls of the property value and by doing that we are shifting the levy rate up for everybody else,” Tanner told the House Revenue and Taxation Committee. “So if you were to put hospitals back onto the roll it would lower the levy rates, it would lower everybody’s taxes (because) it would more spread out those taxes.” 

If the bill is enacted, county commissioners would not have to remove the property tax exemption for hospitals, but they would have the authority to do so.

Rep. Stephanie Jo Mickelsen, R-Idaho Falls, worried that suddenly removing the exemption could cause rural and remote hospitals to close their doors.

“Are they still going to be able to have the ability to have the hospitals have that tax exemption? Because right now we have two or three rural hospitals on my side of the state that could possibly go out of business if they had additional property tax burdens, so I just want to clarify what this is really focused at,” Mickelsen told Tanner. 

Without citing specific examples, Tanner said that he found some of the properties rural hospitals use aren’t owned by the hospital and are instead owned by someone else and leased to the hospital. In that regard, Tanner said his bill wouldn’t really affect rural hospitals. Tanner said the purpose of his bill was to target populated areas. 

Rep. Ned Burns, D-Bellevue, asked Tanner why the bill only targets the property tax exemptions for hospitals and not any of the property taxes for other entities, such as religious limited liability companies, societies or corporations, government property or fraternal, benevolent or charitable limited liability companies.  

Tanner told Burns he only looked at hospitals. 

Burns also asked Tanner if he knew how much money in property taxes is not being collected through the exemption for hospitals. 

“Are we talking a substantial adjustment to the levy rate? Are we talking a miniscule adjustment to the levy rate when you consider the total amount of properties?” Burns asked. “And I guess the question would be, is the juice worth the squeeze?”  

Tanner said he didn’t have an overall dollar amount but said the potential impact could be large.

What will happen next with the hospital bills in the Idaho Legislature?

After a short discussion, the House Revenue and Taxation Committee voted to introduce both of Tanner’s new bills. The bills will be assigned a bill number and posted online at the Idaho Legislature’s website once they are read across the desk on the floor of the Idaho House later Thursday or on Friday. 

House Revenue and Taxation Committee Chairman Jason Monks, R-Meridian, told the committee at the end of Thursday’s hearing that he doesn’t necessarily anticipate both bills moving forward.

Thursday’s hearing was only an introductory bill hearing and no public testimony was accepted. 

After the meeting, Monks told the Idaho Capital Sun he believes there is value in introducing, or printing bills, so that the proposals can circulate among the public and give Idahoans a chance to discuss them and provide feedback. 

Introducing the bills on Thursday does clear the way for them to return to the committee for a full public hearing. Monks told the Sun it is possible he will schedule a full public hearing for at least one of the bills.


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