By Danburg H.B. No. 538
74R2960 SMH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the exemption from property taxation of a charitable
1-3 organization that promotes economic development in the United
1-4 Mexican States, Central America, or South America.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 11.18(d), Tax Code, is amended to read as
1-7 follows:
1-8 (d) A charitable organization must be organized exclusively
1-9 to perform religious, charitable, scientific, literary, or
1-10 educational purposes and, except as permitted by Subsection (h) of
1-11 this section, engage exclusively in performing one or more of the
1-12 following charitable functions:
1-13 (1) providing medical care without regard to the
1-14 beneficiaries' ability to pay, which in the case of a nonprofit
1-15 hospital means providing charity care and community benefits as set
1-16 forth in Paragraph (A), (B), (C), (D), (E), or (F):
1-17 (A) charity care and government-sponsored
1-18 indigent health care are provided at a level which is reasonable in
1-19 relation to the community needs, as determined through the
1-20 community needs assessment, the available resources of the
1-21 hospital, and the tax-exempt benefits received by the hospital;
1-22 (B) charity care and government-sponsored
1-23 indigent health care are provided in an amount equal to at least
1-24 four percent of the hospital's net patient revenue;
2-1 (C) charity care and government-sponsored
2-2 indigent health care are provided in an amount equal to at least
2-3 100 percent of the hospital's tax-exempt benefits, excluding
2-4 federal income tax;
2-5 (D) a nonprofit hospital that has been
2-6 designated as a disproportionate share hospital under the state
2-7 Medicaid program in either of the previous two fiscal years shall
2-8 be considered to have provided a reasonable amount of charity care
2-9 and government-sponsored indigent health care and shall be deemed
2-10 in compliance with the standards in this subsection;
2-11 (E) for tax years before 1996, charity care and
2-12 community benefits are provided in a combined amount equal to at
2-13 least five percent of the hospital's net patient revenue, provided
2-14 that charity care and government-sponsored indigent health care are
2-15 provided in an amount equal to at least three percent of net
2-16 patient revenue; or
2-17 (F) for tax years after 1995, charity care and
2-18 community benefits are provided in a combined amount equal to at
2-19 least five percent of the hospital's net patient revenue, provided
2-20 that charity care and government-sponsored indigent health care are
2-21 provided in an amount equal to at least four percent of net patient
2-22 revenue;
2-23 (2) providing support or relief to orphans,
2-24 delinquent, dependent, or handicapped children in need of
2-25 residential care, abused or battered spouses or children in need of
2-26 temporary shelter, the impoverished, or victims of natural disaster
2-27 without regard to the beneficiaries' ability to pay;
3-1 (3) providing support to elderly persons or the
3-2 handicapped without regard to the beneficiaries' ability to pay;
3-3 (4) preserving a historical landmark or site;
3-4 (5) promoting or operating a museum, zoo, library,
3-5 theater of the dramatic arts, or symphony orchestra or choir;
3-6 (6) promoting or providing humane treatment of
3-7 animals;
3-8 (7) acquiring, storing, transporting, selling, or
3-9 distributing water for public use;
3-10 (8) answering fire alarms and extinguishing fires with
3-11 no compensation or only nominal compensation to the members of the
3-12 organization;
3-13 (9) promoting the athletic development of boys or
3-14 girls under the age of 18 years;
3-15 (10) preserving or conserving wildlife;
3-16 (11) promoting educational development through loans
3-17 or scholarships to students;
3-18 (12) providing halfway house services pursuant to a
3-19 certification as a halfway house by the Board of Pardons and
3-20 Paroles;
3-21 (13) providing permanent housing and related social,
3-22 health care, and educational facilities for persons who are 62
3-23 years of age or older without regard to the residents' ability to
3-24 pay;
3-25 (14) promoting or operating an art gallery, museum, or
3-26 collection, in a permanent location or on tour, that is open to the
3-27 public;
4-1 (15) providing for the organized solicitation and
4-2 collection for distributions through gifts, grants, and agreements
4-3 to nonprofit charitable, education, religious, and youth
4-4 organizations that provide direct human, health, and welfare
4-5 services;
4-6 (16) performing biomedical or scientific research or
4-7 biomedical or scientific education for the benefit of the public;
4-8 (17) operating a television station that produces or
4-9 broadcasts educational, cultural, or other public interest
4-10 programming and that receives grants from the Corporation for
4-11 Public Broadcasting under 47 U.S.C. Section 396; <or>
4-12 (18) in the case of a nonprofit hospital, providing
4-13 health care services without receiving any payment for providing
4-14 those services to inpatients or outpatients from any source
4-15 including but not limited to the patient or person legally
4-16 obligated to support the patient, third-party payors, Medicare,
4-17 Medicaid, or any other state or local indigent care program.
4-18 Payment for providing health care services does not include
4-19 charitable donations, legacies, bequests, or grants or payment for
4-20 research; or
4-21 (19) promoting economic development in the United
4-22 Mexican States, Central America, or South America.
4-23 For purposes of this subsection, the terms "charity care,"
4-24 "government-sponsored indigent health care," "net patient revenue,"
4-25 "nonprofit hospital," and "tax-exempt benefits" have the meanings
4-26 set forth in Sections 311.031 and 311.042, Health and Safety Code.
4-27 A determination of the amount of community benefits and charity
5-1 care and government-sponsored indigent health care provided by a
5-2 hospital and the hospital's compliance with the requirements of
5-3 Section 311.045, Health and Safety Code, shall be based on the most
5-4 recently completed and audited prior fiscal year of the hospital.
5-5 The providing of charity care and government-sponsored
5-6 indigent health care in accordance with Paragraph (A) of
5-7 Subdivision (1) shall be guided by the prudent business judgment of
5-8 the hospital which will ultimately determine the appropriate level
5-9 of charity care and government-sponsored indigent health care based
5-10 on the community needs, the available resources of the hospital,
5-11 the tax-exempt benefits received by the hospital, and other factors
5-12 that may be unique to the hospital. These criteria shall not be
5-13 determinative factors, but shall be guidelines contributing to the
5-14 hospital's decision along with other factors which may be unique to
5-15 the hospital. The formulas contained in Paragraphs (B), (C), (E),
5-16 and (F) of Subdivision (1) shall also not be considered
5-17 determinative of a reasonable amount of charity care and
5-18 government-sponsored indigent health care.
5-19 The requirements of this subsection shall not apply to the
5-20 extent a hospital demonstrates that reductions in the amount of
5-21 community benefits, charity care, and government-sponsored indigent
5-22 health care are necessary to maintain financial reserves at a level
5-23 required by a bond covenant, are necessary to prevent the hospital
5-24 from endangering its ability to continue operations, or if the
5-25 hospital, as a result of a natural or other disaster, is required
5-26 substantially to curtail its operations.
5-27 In any fiscal year that a hospital, through unintended
6-1 miscalculation, fails to meet any of the standards in Subdivision
6-2 (1), the hospital shall not lose its tax-exempt status without the
6-3 opportunity to cure the miscalculation in the fiscal year following
6-4 the fiscal year the failure is discovered by both meeting one of
6-5 the standards and providing an additional amount of charity care
6-6 and government-sponsored indigent health care that is equal to the
6-7 shortfall from the previous fiscal year. A hospital may apply this
6-8 provision only once every five years.
6-9 SECTION 2. This Act takes effect January 1, 1996.
6-10 SECTION 3. The importance of this legislation and the
6-11 crowded condition of the calendars in both houses create an
6-12 emergency and an imperative public necessity that the
6-13 constitutional rule requiring bills to be read on three several
6-14 days in each house be suspended, and this rule is hereby suspended.