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November 20, 2012

Tacoma, Wash., Mulls Bigger Tax on Nonprofit Hospital Systems

Tacoma, Wash., officials are considering a proposal to levy the city's full business and occupation tax on its two largest nonprofit health-care networks as the city looks for new revenues to bridge a gaping budget gap, says The News Tribune. The city council is scheduled to debate competing proposals on taxing the MultiCare and Franciscan systems at a meeting Tuesday.

The health groups are subject to a rate of 0.1 percent of revenue, a quarter of the rate for commercial entities. A measure put forth by the city's manager as part of a 2013-14 budget plan would simply boost the systems to the full rate, while a Tacoma councilman proposes charging them 0.4 percent for two years then cutting the levy to 0.2 percent in 2015.

A Franciscan spokeswoman said the organization welcomed the proposal to reinstate a partial tax break in two years. Backers of imposing the full rate without a sunset said the two systems should not get a significant tax break when they report tens of millions of dollars in operating surpluses and pay top executives seven-figure salaries.