Healthcare News & Insights

Not-for-profit hospitals face new threat from states

Cash-strapped states and local governments are turning to non-profit organizations for more revenue. Many hospitals and health centers could take the brunt of it.

Although there have been many attempts in the past to roll back some of the tax protections in place for non-profits, the ongoing economic malaise is forcing many states, counties and cities to push harder than they have in the past. It’s an effort one non-profit expert likened to scavenging for change under the sofa cushions.

The range of taxes, fees and levies that governments are considering is staggering. Just a few examples:

  • A bill in Hawaii would require charities to pay a 1% tax.
  • Kansas is weighing the possibility of making non-profits subject to sales tax.
  • The state of Pennsylvania, and several Kansas counties, may remove the exemption from property taxes for non-profits.
  • Minneapolis recently made charities subject to the same fees for street lighting that residents and businesses already pay. The change is expected to bring in a whopping $155,000.

Critics worry that charging non-profits more will only hurt in the long-term. And with fewer funds, non-profit hospitals (and other organizations) will be able to provide less help with public health programs, educational tools, mental health outreach, etc. Those are services that are already underfunded by many governments — non-profits’ services help plug the gap.

But like it or not, too many states and cities are on the verge of financial crisis and someone’s going to have to pick up the tab.

Do you think non-profits should pay more for the government services they use? Share your thoughts in the comments.

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