Landmark tax bill nixed
House skips bill to levy taxes on nonprofit hospitAl
WOONSOCKET – Though a compromise version of the measure had passed the Senate, a bill designed to prevent Landmark Medical Center from claiming the usual tax exemptions for nonprofit hospitals, protecting a $1.7 million revenue stream for the city, died in the House Saturday as the 2018 legislative session came to a close.
State Rep. Michael Morin (D-Dist. 49, Woonsocket), the lead sponsor, said he vigorously lobbied House Speaker Nicholas Mattiello to allow lawmakers to vote on the bill, but it never happened. Mattiello and other lawmakers were concerned that other cities and towns would attempt to apply similar standards to other nonprofit hospitals, even though the measure was clearly targeting just one – Landmark.
Opponents also argued that carving out an exception to the general rule that nonprofit hospitals are tax exempt might be unlawful, violating the equal protection clause of the Constitution and raising the likelihood of a legal challenge to the measure that Landmark could potentially win, according to Morin.
“I was frustrated that I wasn’t able to get it through,” said Morin, “but there was no support to try to treat one hospital as different than every other hospital in the state. The bill was clearly targeting only Landmark, but there was also concern we were violating the equal protection clause. And they felt it would be litigated and Landmark would have won.”
The collapse of the effort to compel Landmark to continue paying property taxes marked the second year in a row that state lawmakers had killed such a measure, which has been introduced at the behest of local officials. Mayor Lisa Baldelli-Hunt testified in behalf of the measure this year, while members of the City Council, particularly Councilman James Cournoyer, was pushing a similar measure in the 2017 legislative session.
Morin’s bill would have required Landmark to continue paying 100 percent of its taxes on property and medical equipment. The Senate had passed a compromise version, championed by State Sen. Roger A. Picard (D-Dist. 22, Woonsocket, Cumberland), that would have cut the figure to 65 percent.
Owned by the California-based Prime Healthcare Services, Landmark and the Hospital Association of Rhode Island, the state’s leading hospital-interest lobby group, opposed the bills.
Baldelli-Hunt’s proposed $144.3 million budget for the fiscal year that begins July 1 – fiscal year 2019 – emphasizes the continuing improvement of the city’s financial condition, but she calls the prospect of losing $1.7 million in revenues from Landmark “a new elephant in the room” that could destabilize future budgets.
Prime purchased Landmark in 2013 on condition that the hospital, then a nonprofit hospital, be converted to a for-profit facility. In late 2016, however, Prime unexpectedly applied to the state Department of Health to switch back to nonprofit status.
Because of the timing of Landmark’s reversion to nonprofit status – approved by DOH – the hospital still owes the city full taxes as a for-profit entity in the coming fiscal cycle. Landmark could begin taking advantage of the exemption for nonprofit hospitals in fiscal 2020, however.
Founded in 2001, Prime Healthcare Services operates 45 hospitals in 14 states, including 15 facilities it runs as nonprofits under the umbrella of its charitable arm, Prime Healthcare Foundation.
Though city officials hotly opposed the move, Health Director Nicole Alexander-Scott approved Prime’s application to shift the hospital’s assets to the foundation last December, in effect restoring Landmark’s nonprofit status. But Alexander-Scott also hit Prime with a $1 million fine for transferring the assets to the foundation on the same day it applied to DOH to do so – Dec. 31, 2016 – roughly a year before the agency approved the request.