HB 2161: Hospitals lose their property tax charity exemption

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Oregon Hospitals May Lose Their Property Tax Exemption
By Taxpayer Association of Oregon Foundation,

Oregon hospitals just got hit with a $320 million revenue tax last year with House Bill 2161 (also known as Measure 101). Now Oregon lawmakers are coming back to tax them again by stripping away their charitable property tax benefits.  It’s been a long-standing policy that hospital and healthcare clinics that provide charity care can be exempt from property taxes. That may end soon in Oregon with HB 2161.

With increased mandated insurance coverage, especially through the Medicaid expansion, charity care has plummeted. In fact, charity care in Oregon fell to about $429 million in 2017 for the state’s 60 hospitals. That is about half of the $844 million from 2013, according to data from the Oregon Association of Hospitals and Health Systems.

Under HB 2161, if a hospitals or health clinic claims a charitable exemption from property taxes, the organization must report how much it spent on charitable care. Also, the provider must report all compensation paid to individual directors or employees that exceeded $1 million. Then, the property tax exemption is limited to amount spent on charity care—and this amount reduced by compensation reported in excess of $1 million.

It will be an administrative nightmare: How would the state allocate a health system CEO’s pay across multiple hospitals and clinics with multiple tax bills in multiple jurisdictions?