Salt Lake County commissioners and local hospital officials are cheering a state Tax Commission decision to set statewide guidelines for exempting or taxing non-profit health care facilities.
The decision indefinitely postponed a hearing scheduled last week before county commissioners in their role as the Board of Equalization at which several local hospitals would have sought to regain their tax-exempt status. But neither party is complaining about the delay."We certainly support the development of objective standards," said Douglas J. Hammer, vice president and general counsel for Intermountain Health Care. "That is certainly something we have prodded the Board of Equalization and the Tax Commission to develop for years."
"We're very pleased with the decision," said County Commission Chairman Bart Barker. "We've been trying to bridge the gap between legislative intent and (a 1982 Utah) Supreme Court decision, and county commissioners should not be in a position to do that."
In a letter to Barker last week, state tax commissioners said they are putting on hold all county Board of Equalization hearings concerning the tax exempt status of non-profit health care facilities until the tax commission sets uniform guidelines for when those properties should be liable for taxes and when they should be exempt because of charity care provided to the community.
The letter expressed concern that since each county board of equalization renders its own rulings on whether individual non-profit hospitals in that county are tax exempt, the rulings may not be consistent from county to county or with state Supreme Court decisions.
To foster consistency, the Tax Commission will set guidelines that conform to the Utah Constitution, state law and to court rulings for boards to refer to when deciding whether to exempt hospitals, the letter said.
The question of whether traditionally tax-exempt hospitals in Salt Lake County should be taxed has been an issue since 1982, when an amendment to the state constitution forced all tax-exempt property owners to rejustify their exemptions, Barker said.
A 1985 Utah Supreme Court ruling said health care providers had to meet a six-point test to qualify for a charity tax exemption. But both county commissioners and hospital officials felt the test was too vague.
County commissioners had to not only decide in each case whether a hospital deserved a charity exemption, but also whether the criteria to judge that facility were deserving.
The commissioners' decision last year was to tax some of the medical facilities. It was the first time any non-profit hospitals were taxed in Utah. Shortly after those facilities appealed the commission's decision, the Salt Lake County's assessor filed an appeal with the Tax Commission asking that the five exempt facilities - Primary Children's Medical Center, St. Joseph Villa, and Holy Cross, LDS and Wasatch Canyons hospitals - also be taxed because they are not used exclusively for charitable care.
Currently, all of the non-profit medical facilities have filed appeals with the State Tax Commission.
Now Barker hopes that the confusing matter will be cleared up with the Tax Commission's decision.
"The hospitals have been saying, `Let us know what the standards are and we'll meet them,' " he said. "I don't know what form the quidelines will take. But I hope they're clear enough so we can apply the information to them and make a decision like we do in other (board of equalization) cases."