Show o o For Against r Official Proposition No Ballot Title: Shall Article XIII Section 2 be amended to allow property owned by a nonprofit entity that is used exclusively for hospital or nursing home purposes to be exempt from property tax and to provide an effective date of January 1 1986? 1 PROPERTY TAX EXEMPTION FOR HOSPITALS AND NURSING HOMES Vote cast by the members HOUSE (75 members): SENATE (29 members): of Yeas Yeas the 1986 Legislature 61 Nays 25 Nays 9 Absent 2 Absent on final passage: or not voting or not voting 5 2 IMPARTIAL ANALYSIS Proposal state constitution provides for the taxation of property Any exemption from the property tax must also be included in the constitution The Utah Constitution has always allowed property used exclusively for ‘‘charitable purposes” to be exempt from property taxes Property owned by a entity used exclusively for hospital or nursing home purposes was considered exempt from property taxes under the charitable exemption until the Utah Supreme Court issued an interpretation of this language in 1985 The court decided that in determining if a hospital deserves the charitable exemption the following six factors must be weighed: The 2 3 4 5 6 whether the hospital exists to provide a service without expecting to be paid whether donations and gifts play a large role in supporting the hospital whether patients are required to pay for services whether the income from all sources (including gifts) is greater than operating and other expenses whether those who may benefit from the charity are restricted to certain groups or unrestricted whether the hospital provides financial benefit to any private person or interest Many hospitals and nursing homes that were previously tax exempt find it difficult to meet the court's new requirements As a result they will be required to pay property taxes If Proposition passes hospitals and nursing homes would be exempt from property taxes without having to meet the court’s fails the Utah Supreme Court's requirements If Proposition requirements would be used to determine if individual hospitals and nursing homes should be taxed Effective Date If approved by the voters this amendment would apply to the 1986 Taxes imposed on certain nontax year beginning January profit hospitals and nursing homes under the requirements of the Supreme Court’s 1985 decision would not have to be paid for 1986 Fiscal Impact If the proposed constitutional amendment is adopted nonnursing homes will not have to begin profit hospitals and hospitals and paying property taxes If it is not adopted nursing homes will begin to pay property taxes to local governments and school districts The estimated property tax revenue from nonprofit hospitals and nursing homes will be $7 to $10 million per year Page 7 |