Hospital officials want nonprofit tax break to stay

Published 12:00 am Saturday, June 15, 2013

SALISBURY — Rowan hospital officials say a state Senate proposal limiting sales tax refunds for nonprofits would “devastate” the hospital and others statewide.
Staff and supporters gathered at Novant Health Rowan Medical Center on Friday to write and sign letters to state legislators.
The letters oppose a provision in the N.C. Senate’s tax overhaul that would limit sales tax refunds for nonprofit and not-for-profit agencies.
“It’s going to hit hospitals very hard, because of the amount of items we’re required to purchase to take care of our patients,” said Rowan Medical Center President Dari Caldwell. “We are very concerned about the devastation that this is going to cause at not-for-profit hospitals across the state.”
The Senate’s tax bill would first cap sales tax refunds at $7.5 million per agency and gradually lower that cap until it reaches $100,000 in July 2017. This would make it more expensive for large nonprofits to take on building projects and buy medical equipment.
If passed, Caldwell said the provision would cost Rowan Medical Center several million dollars. She said it would be difficult for the hospital to keep providing community services like charity care, which is free medical care for low-income, uninsured patients.
The Senate passed its bill, which would lower personal income taxes and gradually repeal corporate taxes, on a first reading Thursday. A final vote is scheduled for Tuesday.
After that, the state House and Senate will hold a conference committee to work out the differences between their proposals. The House version doesn’t include the sales tax change for nonprofits.
The hospital’s letter-writing campaign began at 6:45 a.m. Friday and continued until 2 p.m. By 12:30 p.m., the hospital had already collected about 1,200 letters.
Caldwell said staff members were encouraged to add their own messages to make the letters personal and not “canned.”
“I think our staff are mostly concerned that people don’t really realize that this is happening,” Caldwell said. “The average community member does not know that it could create financial hardship for our hospitals across the state.”
Dr. Rachel Ross, medical director of the laboratory at the hospital, said she sent a letter because it’s already difficult for Rowan and other hospitals to make ends meet.
“We’ve lost a lot of people we’ve had to let go because we can’t support their salaries,” Ross said. “We can’t take any more financial pressure. We really can’t.”
She said this is especially the case in Rowan County, where the unemployment rate is high and many patients can’t afford to pay for their care.
Shawn Peters, the hospital’s director of radiology, helped stick address labels and stamps on the envelopes holding each letter Friday.
He said his own letter to state legislators will be handwritten.
“It’s important that our representatives know the impact this will have on our community,” he said. “It concerns me that we would have to reduce our charity care. In this community, with high unemployment, that’s too valuable to lose.”
N.C. Sen. Andrew Brock said the provision would not affect the vast majority of nonprofits in the state. It would cap refunds for the largest ones that spend the most money.
“If you’re sitting on billions of cash reserves, and we’re paying you back millions, is that really a nonprofit?” Brock said.
He said the Senate’s tax reform bill would create a better business climate in North Carolina, and it would help people afford to pay their medical bills.
“We need jobs more than anything,” Brock said. “The only way we can fight our way through a recession is through business.”
N.C. Rep. Carl Ford said it’s important to realize that the tax reform discussion is “far from over” in the General Assembly.
“I think there’s a lot that will be hammered out in the next couple weeks,” he said.
Ford said he believes the sales tax exemption for nonprofits should stay, but it may need some changes.
“The way it is now, they have to pay sales tax first, then do paperwork to get the refund,” Ford said. “There’s got to be a better way of doing it, but they need to be able to keep that.”
N.C. Rep. Harry Warren said hospital workers have a “legitimate concern,” and they are encouraged to voice it.
“It’s important, at this particular time, that various organizations and business entities get their opinions out… as we get into joint session,” Warren said. “I’d say reach out to your local delegates, then to the appropriate committee members and then to the general membership in both the House and Senate.”
Contact reporter Karissa Minn at 704-797-4222.