This winter, as I contemplated how to address our burdensome property tax issue, I took into consideration that expanding our property tax base should be an option.
Thus, with the passage of Medicaid expansion in November, I wondered why so-called non-profit hospitals needed to be exempted from property taxes.
Our state Constitution states, “The Legislature by general law may classify and exempt from taxation…property owned and used exclusively for educational, religious, charitable, or cemetery purposes, when such property is not owned or used for financial gain or profit.”
There are 104 hospitals in Nebraska.
Eight are for-profit, tax-paying facilities (Kearney Regional Medical Center, for example); 37 are tax-exempt, government-owned and operated (Gothenburg, Callaway and Imperial are examples) and the remaining 59 are classified as non-profits (Great Plains Health in North Platte, for example).
Does anyone believe that their mission fits under the 100% “exclusively charitable” classification in the Constitution?
I believe that answer to be no, especially with the passage of Medicaid expansion and the expected infusion of more than $600 million in Medicaid, most of which will end up in hospital coffers.
In most cases, patients who received charitable care in the past will now be covered by Medicaid. Considering that Nebraska hospitals only gave $131 million in charitable care in 2017, the $600 million expansion of Medicaid adds up to a nice profit.
A recent study by the Urban Institute shows that hospitals in Medicaid expansion states have more revenue, lower uncompensated care cost (charity?), and fatter operating margins. Margins improved by 2.5%.
Charities normally do not have profit margins.
Another reason why non-government-owned hospitals should pay taxes is the recent announcement of CHI Health system’s recent purchase of the naming rights of the former CenturyLink Center in Omaha for $23.6 million.
In addition to the naming rights, CHI Health will get to use one corporate suite and four club level seats for all events at the arena. Why does a nonprofit need to advertise? Who is CHI competing with in Omaha, the government-run University of Nebraska Medical Center?
Hospitals, like most profitable businesses, pay high compensation to administrators and other highly educated employees. This is unlike the compensation offered to employees and volunteers at what one would consider a true charity, such as a soup kitchen or a public health clinic.
What better way for a hospital to support a local community than to become a taxpaying member of the community, helping to support our schools, public safety and maintaining the community’s infrastructure?
If a hospital is going to operate like a for-profit corporation, I believe they need to pay taxes like one. My bill to address this issue, LB 529, was heard in the Revenue Committee last Thursday, Feb. 28.
I also sponsored these bills:
LB 63, our bill to make positive changes to the Mutual Finance Organizations and allow for local property tax control by rural fire districts, passed Final Reading on March 1 by a 45-0 vote.
LB 65, our bill to modernize the State Electrical Act, thus allowing underground boring contractors to install electrical conduit without being a licensed electrician and instead only being supervised by an electrician, passed Final Reading on March 1 by a 44-0 vote, with one ‘present not voting’.
LB 148, our Open Meetings Bill concerning local government budget hearings, requiring meeting announcements in newspapers, and the necessity for the NRDs’ interlocal agreement-N-CORPE to have a budget and hearing, was advanced out of the Government, Military and Veterans Affairs Committee.
LB 606, our bill to define in law the ability of NRDs to sell land without jeopardizing the NCORPE augmentation project, will be heard in the Natural Resources Committee next Wednesday, March 13.
We would appreciate emails of support for LB 606. Please send them by 5 p.m. on Tuesday to the committee.
Property tax relief is still a top priority for the Legislature this year. The Revenue Committee, led by Sen. Lou Ann Linehan, and of which I am a member, is working on a package to reduce property taxes and find a solution to fund it.
I regret my columns have not been available weekly; time management is at a premium this session. I am not one to report what should be done, but instead what has been accomplished.
Contact Sen. Mike Groene at firstname.lastname@example.org or 402-471-2729.