1-1  By:  Galloway                                          S.B. No. 428
    1-2        (In the Senate - Filed February 2, 1995; February 6, 1995,
    1-3  read first time and referred to Committee on Finance;
    1-4  April 7, 1995, reported favorably by the following vote:  Yeas 11,
    1-5  Nays 0; April 7, 1995, sent to printer.)
    1-6                         A BILL TO BE ENTITLED
    1-7                                AN ACT
    1-8  relating to the exemption from ad valorem taxation of property
    1-9  owned by certain charitable organizations.
   1-10        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-11        SECTION 1.  Subsection (d), Section 11.18, Tax Code, is
   1-12  amended to read as follows:
   1-13        (d)  A charitable organization must be organized exclusively
   1-14  to perform religious, charitable, scientific, literary, or
   1-15  educational purposes and, except as permitted by Subsection (h) of
   1-16  this section, engage exclusively in performing one or more of the
   1-17  following charitable functions:
   1-18              (1)  providing medical care without regard to the
   1-19  beneficiaries' ability to pay, which in the case of a nonprofit
   1-20  hospital means providing charity care and community benefits as set
   1-21  forth in Paragraph (A), (B), (C), (D), (E), or (F):
   1-22                    (A)  charity care and government-sponsored
   1-23  indigent health care are provided at a level which is reasonable in
   1-24  relation to the community needs, as determined through the
   1-25  community needs assessment, the available resources of the
   1-26  hospital, and the tax-exempt benefits received by the hospital;
   1-27                    (B)  charity care and government-sponsored
   1-28  indigent health care are provided in an amount equal to at least
   1-29  four percent of the hospital's net patient revenue;
   1-30                    (C)  charity care and government-sponsored
   1-31  indigent health care are provided in an amount equal to at least
   1-32  100 percent of the hospital's tax-exempt benefits, excluding
   1-33  federal income tax;
   1-34                    (D)  a nonprofit hospital that has been
   1-35  designated as a disproportionate share hospital under the state
   1-36  Medicaid program in either of the previous two fiscal years shall
   1-37  be considered to have provided a reasonable amount of charity care
   1-38  and government-sponsored indigent health care and shall be deemed
   1-39  in compliance with the standards in this subsection;
   1-40                    (E)  for tax years before 1996, charity care and
   1-41  community benefits are provided in a combined amount equal to at
   1-42  least five percent of the hospital's net patient revenue, provided
   1-43  that charity care and government-sponsored indigent health care are
   1-44  provided in an amount equal to at least three percent of net
   1-45  patient revenue; or
   1-46                    (F)  for tax years after 1995, charity care and
   1-47  community benefits are provided in a combined amount equal to at
   1-48  least five percent of the hospital's net patient revenue, provided
   1-49  that charity care and government-sponsored indigent health care are
   1-50  provided in an amount equal to at least four percent of net patient
   1-51  revenue;
   1-52              (2)  providing support or relief to orphans,
   1-53  delinquent, dependent, or handicapped children in need of
   1-54  residential care, abused or battered spouses or children in need of
   1-55  temporary shelter, the impoverished, or victims of natural disaster
   1-56  without regard to the beneficiaries' ability to pay;
   1-57              (3)  providing support to elderly persons or the
   1-58  handicapped without regard to the beneficiaries' ability to pay;
   1-59              (4)  preserving a historical landmark or site;
   1-60              (5)  promoting or operating a museum, zoo, library,
   1-61  theater of the dramatic or performing arts, or symphony orchestra
   1-62  or choir;
   1-63              (6)  promoting or providing humane treatment of
   1-64  animals;
   1-65              (7)  acquiring, storing, transporting, selling, or
   1-66  distributing water for public use;
   1-67              (8)  answering fire alarms and extinguishing fires with
   1-68  no compensation or only nominal compensation to the members of the
    2-1  organization;
    2-2              (9)  promoting the athletic development of boys or
    2-3  girls under the age of 18 years;
    2-4              (10)  preserving or conserving wildlife;
    2-5              (11)  promoting educational development through loans
    2-6  or scholarships to students;
    2-7              (12)  providing halfway house services pursuant to a
    2-8  certification as a halfway house by the Board of Pardons and
    2-9  Paroles;
   2-10              (13)  providing permanent housing and related social,
   2-11  health care, and educational facilities for persons who are 62
   2-12  years of age or older without regard to the residents' ability to
   2-13  pay;
   2-14              (14)  promoting or operating an art gallery, museum, or
   2-15  collection, in a permanent location or on tour, that is open to the
   2-16  public;
   2-17              (15)  providing for the organized solicitation and
   2-18  collection for distributions through gifts, grants, and agreements
   2-19  to nonprofit charitable, education, religious, and youth
   2-20  organizations that provide direct human, health, and welfare
   2-21  services;
   2-22              (16)  performing biomedical or scientific research or
   2-23  biomedical or scientific education for the benefit of the public;
   2-24              (17)  operating a television station that produces or
   2-25  broadcasts educational, cultural, or other public interest
   2-26  programming and that receives grants from the Corporation for
   2-27  Public Broadcasting under 47 U.S.C. Section 396; or
   2-28              (18)  in the case of a nonprofit hospital, providing
   2-29  health care services without receiving any payment for providing
   2-30  those services to inpatients or outpatients from any source
   2-31  including but not limited to the patient or person legally
   2-32  obligated to support the patient, third-party payors, Medicare,
   2-33  Medicaid, or any other state or local indigent care program.
   2-34  Payment for providing health care services does not include
   2-35  charitable donations, legacies, bequests, or grants or payment for
   2-36  research.
   2-37        For purposes of this subsection, the terms "charity care,"
   2-38  "government-sponsored indigent health care," "net patient revenue,"
   2-39  "nonprofit hospital," and "tax-exempt benefits" have the meanings
   2-40  set forth in Sections 311.031 and 311.042, Health and Safety Code.
   2-41  A determination of the amount of community benefits and charity
   2-42  care and government-sponsored indigent health care provided by a
   2-43  hospital and the hospital's compliance with the requirements of
   2-44  Section 311.045, Health and Safety Code, shall be based on the most
   2-45  recently completed and audited prior fiscal year of the hospital.
   2-46        The providing of charity care and government-sponsored
   2-47  indigent health care in accordance with Paragraph (A) of
   2-48  Subdivision (1) shall be guided by the prudent business judgment of
   2-49  the hospital which will ultimately determine the appropriate level
   2-50  of charity care and government-sponsored indigent health care based
   2-51  on the community needs, the available resources of the hospital,
   2-52  the tax-exempt benefits received by the hospital, and other factors
   2-53  that may be unique to the hospital.  These criteria shall not be
   2-54  determinative factors, but shall be guidelines contributing to the
   2-55  hospital's decision along with other factors which may be unique to
   2-56  the hospital.  The formulas contained in Paragraphs (B), (C), (E),
   2-57  and (F) of Subdivision (1) shall also not be considered
   2-58  determinative of a reasonable amount of charity care and
   2-59  government-sponsored indigent health care.
   2-60        The requirements of this subsection shall not apply to the
   2-61  extent a hospital demonstrates that reductions in the amount of
   2-62  community benefits, charity care, and government-sponsored indigent
   2-63  health care are necessary to maintain financial reserves at a level
   2-64  required by a bond covenant, are necessary to prevent the hospital
   2-65  from endangering its ability to continue operations, or if the
   2-66  hospital, as a result of a natural or other disaster, is required
   2-67  substantially to curtail its operations.
   2-68        In any fiscal year that a hospital, through unintended
   2-69  miscalculation, fails to meet any of the standards in Subdivision
   2-70  (1), the hospital shall not lose its tax-exempt status without the
    3-1  opportunity to cure the miscalculation in the fiscal year following
    3-2  the fiscal year the failure is discovered by both meeting one of
    3-3  the standards and providing an additional amount of charity care
    3-4  and government-sponsored indigent health care that is equal to the
    3-5  shortfall from the previous fiscal year.  A hospital may apply this
    3-6  provision only once every five years.
    3-7        SECTION 2.  This Act takes effect January 1, 1996.
    3-8        SECTION 3.  The importance of this legislation and the
    3-9  crowded condition of the calendars in both houses create an
   3-10  emergency and an imperative public necessity that the
   3-11  constitutional rule requiring bills to be read on three several
   3-12  days in each house be suspended, and this rule is hereby suspended.
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