by Logan Finney, Idaho Reports
Senators want to take a closer look at a House bill that would grant county commissioners direct control over which specific hospital properties qualify for property tax exemptions.
“I have an interest in understanding the use of the properties. I’m not particularly wild on the added discretion here for the county commissioners,” said Senate Majority Leader Lori Den Hartog, R-Meridian. “I think there is more work to be done here.”
House Assistant Majority Leader Josh Tanner, R-Eagle, presented House Bill 130 to the Senate Local Government and Taxation Committee on Tuesday. The panel sent the bill out for amendments after debating the problem it purports to fix and whether the language has any unintended consequences.
Nonprofit hospitals are one of many properties currently exempt from property taxes under state law. However, as health systems have grown in the modern era to include large campuses and many affiliated medical offices, some lawmakers want to revisit the criteria.
The bill would grant each county board of commissioners explicit discretion over whether or not to grant the exemption to nonprofit hospitals, and repeal sections of law governing how much of a facility may be unrelated to the nonprofit purpose as well as hospital-owned land that is under development but not yet operational.
“This does not take away their exemptions, or force them to pay property taxes,” Tanner said. “My intention is to give the county commissioners those discretionary decisions.”
Tanner has worked for several years to give counties more control over the exemption.
Seth Grigg, director of the Association of Idaho Counties, described the legal test from the Idaho Supreme Court that governs property tax exemptions for charitable organizations.
The ‘Sunny Ridge’ factors, named after the court case, outline how counties must evaluate an organization’s charitable purpose and community value when granting an exemption.
“Every other nonprofit in the whole state – except for a few hospitals – go by the Sunny Ridge factors. We use those. They’re the law,” said Ada County Commissioner Rod Beck. “That’s what we want, is uniformity.”
Ada County Commissioner Tom Dayley also spoke in support of the policy change.
“Each one of those exemptions have a definition and how they’re exempt. They qualify based on their section of the code,” Dayley said. “The commissioners [should] be able to look at all the data of the hospitals, just like they do for all the other nonprofits, analyze… and see if in fact they do qualify.”
Brian Whitlock, director of the Idaho Hospital Association, said the bill would upset the existing framework in code that clearly dictates which hospital properties are not taxed.
“All we’re doing in HB 130 is removing all of the criteria by which we know whether or not we qualify,” Whitlock said. “In every single section of Idaho code it says, ‘the following property is exempt,’ and then it lists the criteria – whether you’re a church, whether you’re a charitable organization, whether you’re an educational institution. ‘The following property is exempt.’ We’re changing that in this one section.”
Anna Courtney, general counsel for St. Luke’s Health System, argued that state law already lets county commissioners deny or only partially grant exemptions for all property types. She said an additional layer of discretion, specific to hospitals, would cause uncertainty.
“Each year, it could vacillate between exempt and non-exempt,” Courtney said.
Lobbyist David Lehman spoke on behalf of Bingham Memorial Hospital in Blackfoot, which estimates their hospital would face roughly $600,000 to $1,000,000 in property taxes in a given year if not exempt.
“Taxes should be predictable,” Lehman said. “This is the opposite of that.”
Some senators also expressed concern about uncertainty across different jurisdictions.
“What happens if a hospital has properties in multiple counties across the state?” asked Sen. Treg Bernt, R-Meridian.
Den Hartog told Idaho Reports she thought it would take more than simple amendments to advance the bill, so the Senate may wait until next session to tackle the issue head on.
Logan Finney | Producer
Logan Finney is a North Idaho native with a passion for media production and boring government meetings. He grew up skiing, hunting and hiking in the mountains of Bonner County and has maintained a lifelong interest in the state’s geography, history and politics. Logan joined the Idaho Reports team in 2020 as a legislative session intern and stayed to cover the COVID-19 pandemic. He was hired as an associate producer in 2021 and they haven’t been able to get rid of him since.