Rural hospital tax credit program gets clean bill of health
Georgia’s rural hospital tax credit program has received such a positive audit that the report doesn’t recommend any improvements.
The annual evaluation of the tax credit by the Georgia Department of Audits & Accounts, released Thursday, April 28, concluded that all participating hospitals, taxpayers and third parties are complying with the law that created the program to help struggling rural hospitals make ends meet.
Polk Medical Center is the only eligible hospital in the 10-county Coosa Valley region. It received $592,495 from the program last year, bringing total contributions to just under $1.8 million for the four years the tax credit has been in effect.
The program brought in $59.4 million in contributions to the 56 eligible rural hospitals last year, the audit found, nearly hitting the annual cap of $60 million. Supporters in the General Assembly introduced legislation this year to raise the cap to $100 million but were forced to settle for $75 million.
Contributions have approached the $60 million cap during most years since the program was launched in 2016. However, donations fell to $46.5 million in 2019 after a change in federal law rendered individual taxpayers ineligible to receive an income tax deduction for charitable donations if they received a state tax credit for the same contribution.
Also, the 2019 audit found that donations to the program weren’t necessarily going to the neediest hospitals, a trend that continued the following year. In 2020, eight of the 10 neediest received less than the average collections of $970,000 per hospital, the audit found.
Still, the 2020 audit concluded that both hospitals and taxpayers were complying with the law governing the tax credit. As a result, contributions in 2020 rebounded to $54.3 million.
The state Department of Community Health addressed the unequal distribution of contributions by steering all donations not designated for a specific hospital by donors to the neediest hospital on a list compiled by the state agency.
As a result, Dorminy Medical Center in Fitzgerald received all undesignated contributions until reaching the $4 million limit for donations to individual hospitals. Undesignated contributions were then directed to the second hospital on the list.
Based on a recommendation made in the 2020 audit report, the Georgia Department of Revenue implemented a new process to make sure corporate tax credits to the program were within legal limits.
The December 2020 audit found that while most 2019 taxpayer contributions to rural hospitals complied with state law, the Department of Audits & Accounts identified a small number of credits totaling about $96,000 that exceeded statutory limits. The revenue agency has adjusted the tax credits for those accounts, according to the 2021 audit.
The new audit also concluded that administrative fees the 56 rural hospitals that participate in the tax credit paid the Georgia HEART Hospital Program remained within the 3% limit set by state law. Georgia HEART contracts with the hospitals to market the program and process taxpayer contributions.