State May Charge Fee To Charities Exemptions Given To Nonprofits Examined

Churches could be asked to pay a fee to cover the costs of police and fire protection.

Idaho could revamp its rules on which nonprofit hospitals are exempted from property tax - possibly forcing some to pay.

Those possibilities were raised Wednesday at the first meeting of a legislative committee charged with re-examining Idaho’s rules for exempting charities from property taxes. But the committee, headed by Sen. Clyde Boatright, R-Rathdrum, sent no clear signals to allay the fears of the more than two dozen worried nonprofit groups that crowded into a state capitol meeting room.

“I think it’s very important to keep in mind that churches have not been taxed for 100 years - they’ve never been taxed,” said Tim Brennan, who spoke for the Catholic Diocese of Boise.

But Brennan said he’d consider a suggestion from Sen. Jerry Thorne, R-Nampa, chairman of the Senate Local Government and Taxation Committee, that churches and charities pay fees. Brennan said he’d contact other churches to discuss the idea.

Charities, churches and hospitals have “all of these real expensive facilities that need fire protection, need police protection,” Thorne said. “There just needs to be a time where those who receive the services help pay for them.”

In Idaho, tax exemptions are funded by other taxpayers in the county. When one group gets an exemption, everyone else pays a little more to make up the difference. So if large charities were to lose their exemptions, total county tax collections wouldn’t change, but each taxpayer would pay less.

The legislative committee was formed after Ada County revoked the property tax exemption of a large nonprofit hospital, St. Luke’s Regional Medical Center, because it said the hospital made too much money to qualify as a charity. The Legislature last year put that move on hold - though it’s still on appeal at the state Board of Tax Appeals - so the committee could re-examine Idaho’s laws.

St. Luke’s is facing a possible property tax bill of nearly $3.5 million.

“This is a big issue,” said Rep. Jim Clark, R-Hayden, who sat in on the meeting. “It’s not just St. Luke’s - it’s all nonprofits.”

Mike Jones, president of the Idaho Youth Ranch, said, “The word nonprofit is misleading.”

Nonprofit doesn’t mean the group has to lose money each year, he said. “It means that no profits inure to any individual. That should be the real test - that all the revenues of a charitable organization go to serve a public purpose.”

The Idaho Youth Ranch has property-tax exemptions for its operations that rehabilitate troubled youngsters, including Anchor House in Coeur d’Alene. But Jones said a portion of the group’s office building that is rented out is subject to property taxes. That’s appropriate, he said.

Several speakers urged the committee to limit its review to tax exemptions for hospitals and leave out other charities, but committee members said the legislation that set up the panel requires them to look at everything.

Though most North Idaho hospitals are public, there are a few that are private nonprofit organizations and could be affected by changes in the law. They include Bonner General Hospital in Sandpoint, Gritman Medical Center in Moscow and St. Joseph’s Regional Medical Center in Lewiston.

The committee decided to deal first with rules for hospitals, but requested information about other exemptions to study.

Some lawmakers said the committee might not have time to get to the other issues. Though most interim legislative committees have been meeting since June, this one is just starting.

“I did that myself,” Boatright said. “I’m a farmer, so I waited until my harvest was completed.”