Local governments should have the option of levying property taxes on hospitals, National Guard armories and YMCAs to defray the cost of providing them with fire and police protection, a North Dakota state legislator said.
Lobbyists for hospitals and nonprofit groups bridled Wednesday at the proposal by Rep. George Keiser, R-Bismarck, saying they already provide extensive public services that local governments could not afford.
MeritCare Health System of Fargo alone provided $61 million in charity health care for uninsured and underinsured patients last year, said Beverley Adams, administrator of the Health Policy Consortium. The group includes MeritCare, Altru Health System of Grand Forks, Bismarck's Medcenter One hospital and Trinity Health of Minot.
Adams told the North Dakota House's Finance and Taxation Committee on Wednesday that paying property taxes would put another strain on North Dakota hospitals.
"There's this concept out there that health care facilities are just loaded with funds, and that their coffers are overflowing," Adams said. "I am here to tell you that that is definitely not the case."
The committee took no immediate action on Keiser's legislation, which would give city and county governments the option of levying property taxes against some nonprofit groups to cover the cost of providing emergency services and police and fire protection.
The affected organizations would include hospitals, nursing homes and group homes for the developmentally disabled; nonprofit lodges, such as the Elks, Moose and Eagles; college fraternities and sororities; and North Dakota National Guard armories. Churches or state government property would not be affected.
Revenue source
During Wednesday's hearing, Keiser displayed a map of tax-exempt property scattered throughout Bismarck, including its two hospitals, the state Capitol and a number of nursing homes.
The city's public safety budget for 2009 is $17.1 million while its property tax income and sales tax revenues earmarked to offset property taxes totals only $14.9 million, he said.
"About 50 percent of the property holders in our city get to pay 100 percent of $15 million," Keiser said.
Bismarck charges nonprofit organizations to provide water and sewer service, and it is not much of a stretch to conclude they also should be paying for emergency services, Keiser said.
"What we have now is a taxing situation that isn't quite right," Keiser said. "We simply are at a point where property tax ... is out of control."
Rep. Louis Pinkerton, D-Minot, wondered why Keiser was singling out nonprofits as potential sources of new property tax income.
"You're trying to create fairness, but there is unfairness no matter how we go," Pinkerton said. A YMCA, he said, is "not a big user of police service ... as compared to the bar down the street."
A burden on nonprofits
Laurie Kirby, president of the board of directors of Bismarck's YMCA, said the organization offers a number of programs for seniors and young children at little to no cost.
"At a time when charitable contributions are down, we would find this to be a burden that would then mean that we couldn't continue to provide the kind of programs that we do," she said.
Arnold "Chip" Thomas, president of the North Dakota Healthcare Association, pointed to a provision in the North Dakota Constitution that bars taxation of property "used exclusively for schools, religious, cemetery, charitable or other public purposes."
"The hospitals cannot be the deep pockets that local political subdivisions turn to in order to address their spending habits," Thomas said.