By Galloway S.B. No. 428
74R4864 JD-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the exemption from ad valorem taxation of property
1-3 owned by certain charitable organizations.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 11.18(d), Tax Code, is amended to read as
1-6 follows:
1-7 (d) A charitable organization must be organized exclusively
1-8 to perform religious, charitable, scientific, literary, or
1-9 educational purposes and, except as permitted by Subsection (h) of
1-10 this section, engage exclusively in performing one or more of the
1-11 following charitable functions:
1-12 (1) providing medical care without regard to the
1-13 beneficiaries' ability to pay, which in the case of a nonprofit
1-14 hospital means providing charity care and community benefits as set
1-15 forth in Paragraph (A), (B), (C), (D), (E), or (F):
1-16 (A) charity care and government-sponsored
1-17 indigent health care are provided at a level which is reasonable in
1-18 relation to the community needs, as determined through the
1-19 community needs assessment, the available resources of the
1-20 hospital, and the tax-exempt benefits received by the hospital;
1-21 (B) charity care and government-sponsored
1-22 indigent health care are provided in an amount equal to at least
1-23 four percent of the hospital's net patient revenue;
1-24 (C) charity care and government-sponsored
2-1 indigent health care are provided in an amount equal to at least
2-2 100 percent of the hospital's tax-exempt benefits, excluding
2-3 federal income tax;
2-4 (D) a nonprofit hospital that has been
2-5 designated as a disproportionate share hospital under the state
2-6 Medicaid program in either of the previous two fiscal years shall
2-7 be considered to have provided a reasonable amount of charity care
2-8 and government-sponsored indigent health care and shall be deemed
2-9 in compliance with the standards in this subsection;
2-10 (E) for tax years before 1996, charity care and
2-11 community benefits are provided in a combined amount equal to at
2-12 least five percent of the hospital's net patient revenue, provided
2-13 that charity care and government-sponsored indigent health care are
2-14 provided in an amount equal to at least three percent of net
2-15 patient revenue; or
2-16 (F) for tax years after 1995, charity care and
2-17 community benefits are provided in a combined amount equal to at
2-18 least five percent of the hospital's net patient revenue, provided
2-19 that charity care and government-sponsored indigent health care are
2-20 provided in an amount equal to at least four percent of net patient
2-21 revenue;
2-22 (2) providing support or relief to orphans,
2-23 delinquent, dependent, or handicapped children in need of
2-24 residential care, abused or battered spouses or children in need of
2-25 temporary shelter, the impoverished, or victims of natural disaster
2-26 without regard to the beneficiaries' ability to pay;
2-27 (3) providing support to elderly persons or the
3-1 handicapped without regard to the beneficiaries' ability to pay;
3-2 (4) preserving a historical landmark or site;
3-3 (5) promoting or operating a museum, zoo, library,
3-4 theater of the dramatic or performing arts, or symphony orchestra
3-5 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.
4-21 For purposes of this subsection, the terms "charity care,"
4-22 "government-sponsored indigent health care," "net patient revenue,"
4-23 "nonprofit hospital," and "tax-exempt benefits" have the meanings
4-24 set forth in Sections 311.031 and 311.042, Health and Safety Code.
4-25 A determination of the amount of community benefits and charity
4-26 care and government-sponsored indigent health care provided by a
4-27 hospital and the hospital's compliance with the requirements of
5-1 Section 311.045, Health and Safety Code, shall be based on the most
5-2 recently completed and audited prior fiscal year of the hospital.
5-3 The providing of charity care and government-sponsored
5-4 indigent health care in accordance with Paragraph (A) of
5-5 Subdivision (1) shall be guided by the prudent business judgment of
5-6 the hospital which will ultimately determine the appropriate level
5-7 of charity care and government-sponsored indigent health care based
5-8 on the community needs, the available resources of the hospital,
5-9 the tax-exempt benefits received by the hospital, and other factors
5-10 that may be unique to the hospital. These criteria shall not be
5-11 determinative factors, but shall be guidelines contributing to the
5-12 hospital's decision along with other factors which may be unique to
5-13 the hospital. The formulas contained in Paragraphs (B), (C), (E),
5-14 and (F) of Subdivision (1) shall also not be considered
5-15 determinative of a reasonable amount of charity care and
5-16 government-sponsored indigent health care.
5-17 The requirements of this subsection shall not apply to the
5-18 extent a hospital demonstrates that reductions in the amount of
5-19 community benefits, charity care, and government-sponsored indigent
5-20 health care are necessary to maintain financial reserves at a level
5-21 required by a bond covenant, are necessary to prevent the hospital
5-22 from endangering its ability to continue operations, or if the
5-23 hospital, as a result of a natural or other disaster, is required
5-24 substantially to curtail its operations.
5-25 In any fiscal year that a hospital, through unintended
5-26 miscalculation, fails to meet any of the standards in Subdivision
5-27 (1), the hospital shall not lose its tax-exempt status without the
6-1 opportunity to cure the miscalculation in the fiscal year following
6-2 the fiscal year the failure is discovered by both meeting one of
6-3 the standards and providing an additional amount of charity care
6-4 and government-sponsored indigent health care that is equal to the
6-5 shortfall from the previous fiscal year. A hospital may apply this
6-6 provision only once every five years.
6-7 SECTION 2. This Act takes effect January 1, 1996.
6-8 SECTION 3. The importance of this legislation and the
6-9 crowded condition of the calendars in both houses create an
6-10 emergency and an imperative public necessity that the
6-11 constitutional rule requiring bills to be read on three several
6-12 days in each house be suspended, and this rule is hereby suspended.